Beware the Blacklist: Home Insurance Exclusions to Know

Homeowners insurance has four main components -- coverage for the home, coverage for other structures on your property, personal property protection, and personal liability insurance.

The "other structures" coverage applies to constructed features on your property that are not attached to your house. Examples are detached garages, fencing, guest homes or casitas, pools, pool houses, and sheds. 

Property that is not fixed to your land falls under the personal property limits of your homeowner's policy. Coverage limits on personal property are often low. Plus, your policy may specifically exclude things like collectibles or jewelry.¹ Any equipment used for business or farming -- from storage shelving to tractors -- will also be excluded.²

You would think that having coverage on your home plus these other structures would be sufficient to cover all areas of your property -- but that's not always the case. There are a few types of buildings your insurer may resist covering. These are: 

Any building you use for business.

Homeowners insurance usually doesn't cover any structure you use for business. That includes a shed or guest home that you use as an office or for inventory storage.  

Boat docks.

Your insurance should cover a permanent boat dock unless you are using it for business. Coverage for seasonal boat docks is less consistent. Your insurer might consider a seasonal boat dock personal property instead of a structure. You should have limited personal property coverage, but it may not be enough to cover dock damage. 

Barns and horse facilities.

Most homeowners policies exclude farming activities, even if the farm isn't a business that supports your family.³ You might, for example, have a paddock and covered stall where you keep retired show horses. Your insurer may deny any claims for damage to those facilities on the argument that you are running a hobby farm.⁴

You should also know that homeowners insurance only covers certain types of damages. That means your insurer could deny a claim for your garage due to the nature of the damage -- even though the garage is clearly one of your "other structures."  

Note that negligence or wear and tear may be a much bigger category of circumstances than you'd expect. For example, an unknown leak behind your washing machine that leads to water rot and mold is negligence. A bedbug infestation is also negligence -- the rationale is that you brought the bugs into the home. A leaky roof on an older home is wear and tear unless a downed tree caused the roof to leak.

Most homeowner's policies do not cover damage related to:⁵ 

Flood

This requires a separate policy from the National Flood Insurance Program.

Earthquakes

While any fires caused by an earthquake should be covered, damage from a quake itself is not. Coverage is available, but must be added on or bought separately either as a traditional earthquake policy or via parametric insurance.

Mudslides

Like floods, mudflow is not covered by traditional homeowners insurance, but also like flood, is is covered by FEMA's National Flood Insurance Program. It is also available from smoe private insurers as well.

Acts of war

Unlike the others, there aren't many options for securing separate coverage for acts of war. The potential costs are so high that the insurance premiums required to cover them typically don't make economic sense.  

Government actions 

Homeowners policies generally contain exclusions for damage due to governmental or public authority's destruction, seizure, or confiscation. That doesn't mean there aren't exceptions though.

Nuclear accidents

As with earthquakes, fire exclusions apply, so damage caused by a fire caused by a nuclear incident is covered, but damage from the incident itself is not. Fortunately, nuclear plant operators carry insurance of their own, which could compensate nearby homeowners in the event of an accident.

Negligence or wear and tear 

As discussed elsewhere, negligence is not covered, nor is there coverage for it (aside from buying warranties).

Your homeowner's liability coverage protects you against lawsuits arising from injury or damages you cause to someone else. This could involve a guest tripping over a toy in your home and breaking an ankle. Or maybe your kid put a softball through the neighbor's window. Either incident could lead to a liability claim against your homeowner's insurance. 

The liability coverage doesn't help you in certain scenarios, however. Many homeowner's policies exclude high-risk activities. Injuries related to the following are often not covered:⁶  

Diving boards

Trampolines 

Treehouses 

Home-based business activity

Waterskiing, tubing, or other risky water sports.⁷

Dog bites -- if the dog is an aggressive breed as defined by the policy 

According to Policygenius, Rottweilers, pit bulls, German shepherds, Staffordshire terriers, Doberman pinschers, Akitas, Alaskan Malamutes, and Siberian huskies are commonly written out of homeowners coverage.⁸