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4 things homeowners insurance doesn’t cover


Homeowners insurance can keep what’s probably your biggest purchase safe. And if you have a mortgage, you probably have to take out a policy.

A standard homeowners insurance policy, sometimes referred to as an HO-3, will cover your dwelling, belongings and personal liability under many common situations, including theft and fire.

Learn more: Best homeowners insurance companies

But even the best policy doesn’t cover everything. We look at several scenarios that are excluded from homeowners insurance policies and explain how you ensure you’re protected.

Floods

“There are a lot of consumers who are unaware that their home insurance policy won’t cover a flood,” said Charlie Wendland, vice president and head of claims at Branch, an Ohio-based insurance company. “They just think ‘Oh, this must be covered by my policy.’ And often it’s not.”

To cover flood damage you can either work with an insurer that underwrites its own flood policies or one that partners with the National Flood Insurance Program (NFIP), a division of the Federal Emergency Management Agency (FEMA).

The NFIP underwrites more than 90% of the flood policies in the US, with an average annual premium for of $851 in 2023. (You can find participating insurers on NFIP’s flood insurance provider tool.)

Learn more: Best flood insurance companies

There are drawbacks to NFIP coverage, however: Premiums can be higher and policies don’t cover basement contents, external buildings or pools and don’t provide temporary living expenses. In addition, payouts are typically capped at $250,000 for dwellings and $100,000 for belongings.

For more robust coverage, you’ll have to get private flood insurance. CNBC Select recommends Neptune Flood Insurance for its widespread availability and high limits (up to $4 million for building coverage and up to $500,000 for contents).

Neptune Flood Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • Maximum coverage

    Dwelling coverage: $4 million, contents coverage: $500,000

  • App available

  • Policy highlights

    Neptune Flood Insurance offers relatively high dwelling and contents coverage for homeowners who need higher amounts of coverage than those offered by the NFIP. Neptune also offers coverage for things like the contents of your basement, temporary living expense coverage if your home is damaged and uninhabitable, and pool repair and refill.

Earthquakes

Homeowners insurance also doesn’t cover damage caused by earthquakes or landslides.

An earthquake insurance policy can help you rebuild your home, replace personal belongings and cover your living expenses while repairs are being done. It covers fires caused by a quake, though flooding would require separate flood insurance.

Earthquake insurance looks different from state to state. In California, for example, insurers are required to offer earthquake insurance, though buying it is optional.

Jewelry and other valuables

Most insurance policies cover valuables but “things like jewelry and silverware typically carry a pretty small limit,” according to Wendland.

A standard policy caps theft coverage for jewelry at about $1,500. If your items are worth more, you can protect them one of three ways: By raising the limit on your policy, by “scheduling” each piece with separate floater policies or by buying a separate jewelry insurance policy not tied to your home insurance.

Learn more: Best jewelry insurance companies

Scheduling each item means your premiums will be higher— and you’ll need to get them appraised by a professional — but it typically covers any kind of loss, from theft to accident.

A standalone jewelry insurance policy will replace your ring, watch, or other valuables in the event of a loss or theft.

Annual premiums on jewelry insurance typically cost about 1% to 2% of the item’s value. While you’ll need to get it appraised, if you have to file a claim it won’t impact your homeowners insurance premiums.

Founded in 1913, Jewelers Mutual is a standout for its long history and its coverage of preventative maintenance — like replacing old clasps and tightening settings.

Jewelers Mutual Jewelry Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • Maximum coverage

  • Policy highlights

    Jewelers Mutual policies are a strong option for those wanting more than just insurance coverage. Policies cover normal wear and tear, and can include things like prong retipping, broken or bent prongs, pearl restringing, and stone tightening. Coverage can be optioned to include a deductible.

Chubb Masterpiece Valuables Jewelry Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • Maximum coverage

  • Policy highlights

    For those with large jewelry collections to cover, Chubb’s jewelry insurance could be a good fit. Coverage can extend to new purchases, and an agreed value option can help you cover unique pieces. Policies are available as a blanket coverage for your entire collection, or by scheduling individual pieces.

Home-based businesses

The average home insurance policy only provides a small amount of coverage for business-related equipment, according to the Insurance Information Institute, usually about $2,500. You can add a home-based business to your policy, but it’ll likely max out at about $10,000.

If your merchandise, equipment or other physical assets are worth more, you’ll want to get a business owners policy, or BOP. In addition to damages, BOPs usually cover things like liability and business interruption and may include spoilage, forgery, theft and equipment breakdown.

CNBC Select named Nationwide the best insurer for small businesses. Available in all 50 states, it earns high marks for customer satisfaction and offers a BOP that combines coverage for commercial property, liability, business income and equipment breakdown. 

Nationwide Business Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • Policy highlights

    Nationwide offers insurance policies for small and large businesses alike in a variety of industries. A number of insurance types also help business owners to tailor their coverage.

  • App available

Next Insurance is a standout for independent contractors, with rate quotes available online and certificates of insurance available immediately.

Next Business Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • Policy highlights

    Next covers small businesses in dozens of industries, and a number of different coverage types to choose from. Quotes and claims online make the process quick and digital-friendly.

  • App available

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Bottom line

Homeowners insurance can give you the peace of mind that comes with knowing your home and belongings are protected. But there are several in a variety of situations. However, it’s important to know which situations are not covered by standard home insurance policies.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.



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