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Eight Things Homeowner's Insurance Doesn't Cover

By Melissa Gannon, Director of Insurance and Bank Ratings

Despite all of the press about lawsuits against insurers related to damage wreaked by Hurricane Katrina in 2005, a surprising number of homeowners are still pretty clueless about their coverage, according to a recent survey of 673 insured homeowners by The National Association of Insurance Commissioners (NAIC).

About two-thirds of homeowners and three-quarters of businesses did not have the additional coverage necessary to cover flood losses. And the entire U.S. is a flood zone. It's just a matter of the level of flood risk you face in your particular area. But, "Flood damage hasn't been part of standard policies since 1968," says Florida Insurance Commissioner Kevin McCarty.

The definition of Flood means a partial or complete inundation of water on normally dry ground. It must involve two or more properties or be over 2 acres if all on the same property. Most importantly – it must be temporary and have a beginning and an end.

Flood coverage must be purchased separately from your standard homeowners policy. In addition, consumers must purchase separate policies to cover earthquakes or damage from mold. Likewise, you can purchase an endorsement, or rider (add-on coverage to your standard policy), for water back up to cover losses from breaks in your water line.

Among other findings of the NAIC survey: 68% of respondents mistakenly thought their homeowner's insurance covered theft or damage to their autos or boats; 35% believed that they were insured against earthquake damage and 31% thought they were protected from termites and other insect home-wreckers.

"Many homeowners could be seriously harmed financially by misunderstandings about their insurance," according to Walter Bell, NAIC President and Alabama Insurance Commissioner. "It's critical that consumers look closely at their policies and ask their insurance agents detailed questions to become fully aware of what is, and what is not, covered."

So, what are the eight things not covered by a standard or basic policy?.

1. Flood damage
2. Cars, boats, and motorcycles stolen or damaged
3. Break in the water line on your property supplying water to your home
4. Break in sewer line on your property that connects to municipal sewer system
5. Earthquake
6. Mold
7. Termites or Other Infestations
8. Stolen or Injured Pets

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