Building insurance, a kind of homeowner’s insurance is considered a necessity for protecting properties from various risks. If your home or building’s structure is harmed in some way, this kind of coverage will grant protections that alleviate the financial burdens of fixing it on your own. However, these policies don’t cover everything.
Follow along as we discuss what is commonly covered and, importantly, not covered by building insurance. Looking for more information about myCOI’s certificate of insurance services? Check out the rest of our blog and other free resources available on our website – or reach out to us today.
What Is Usually Covered by Buildings Insurance?
Let’s begin by discussing some of the differences between builders’ risk insurance and the most commonly covered items in a building insurance policy.
- Structural components. Building insurance typically covers the main structural elements of a property, such as walls, roofs, and floors. This ensures that in the event of damage, a policyholder is protected against the potentially high costs of major repairs.
- Permanent fixtures. Well-established fixtures and fittings, such as fitted kitchens or bathrooms, are generally covered in this policy.
- Outbuildings. Structures outside of the main structure of a property but still part of the grounds, such as garages, sheds, and fences, are often included in building insurance policies. This is also true for things like pipes, drains, and cables.
- Coverage for fire, storm, and flood damage. Most building insurance policies include coverage for damage caused by common natural disasters and perils like fires, storms, and floods.
There are different kinds of building insurance, often differentiated as “named-peril” or “all-risk” coverage. All risk coverage is more sweeping, covering any risk besides those specifically named in a policy. Alternatively, named-peril policies cover only damages listed in a policy. Be sure you’re getting the level of coverage needed to adequately protect your property before agreeing to a policy’s terms.
What Is Not Covered by Property Insurance?
When purchasing building insurance, it’s important to understand not only what is covered but also what is excluded. Below, we’ll delve into some common exclusions that are typically not covered by standard building insurance policies.
- Routine Maintenance and Wear and Tear:
Building insurance doesn’t cover the costs of routine maintenance or damage caused by regular wear and tear. Homeowners are responsible for this general upkeep, which is intended to prevent avoidable damages. Regular tasks like roof repairs, painting, and plumbing maintenance fall under this category, so it’s essential to budget for these ongoing expenses. - Damage from Pests and Vermin:
Because there are preventative pest control measures individuals can take, damages from pest infestations are typically not covered. This includes issues caused by termites, rodents, or insects. Homeowners should invest in regular pest control services to mitigate the risk of infestations, as the financial burden of damage caused by pests will be theirs to bear. - Mechanical or Electrical Breakdown:
Building insurance usually does not cover electrical or mechanical failures within a home. For instance, if your HVAC system fails or your electrical wiring needs repairs, you may need to purchase a home warranty or separate policies that specifically cover these types of breakdowns. - Acts of War or Terrorism:
It is unlikely for a building insurance policy to cover damages resulting from acts of terrorism or other warfare. This exclusion reflects the unpredictability and scale of such events. However, in some regions, additional coverage for terrorism may be available as a rider or through a separate policy, though it comes at an extra cost. - Flood Damage:
Standard building insurance policies often exclude flood damage, which is typically defined as damage caused by water from natural events like heavy rain, overflowing rivers, or coastal storm surges. Homeowners in flood-prone areas are usually required to purchase separate flood insurance to protect their properties from this risk. - Earthquake Damage:
Similarly, damage caused by earthquakes or other seismic activity is generally not covered under standard building insurance. Special earthquake insurance can be purchased as an add-on or separate policy, particularly in regions where seismic activity is a significant risk. - Mold and Rot:
Damage resulting from mold, dry rot, or similar conditions is typically not covered unless it is a direct result of a covered peril, such as a burst pipe. Preventative maintenance, proper ventilation, and moisture control are critical in avoiding these issues, as the responsibility to address mold and rot falls on the homeowner. - Intentional Damage:
Any damage caused intentionally by the homeowner or occupants is not covered under building insurance. This includes scenarios where damage occurs due to illegal activities, gross negligence, or deliberate actions. Insurance is designed to protect against accidental or unforeseen events, not willful harm.
What Are Some Items Typically Excluded from Property Insurance?
It is important to understand property insurance exclusions so that you know where you’ll need additional coverage. Here are some commonly excluded items:
- Personal belongings and contents. Property insurance will only protect the property itself, not the items inside. To protect personal items, homeowners will need to purchase contents insurance or other pertinent coverage.
- Flood damage in high-risk areas without specific coverage. While generally, flood damage is covered by building insurance, properties in high-risk flood zones may come with extra considerations such as additional, specific coverage for full protection.
- Luxury items without additional coverage. As with personal items, high-value assets such as art and jewelry should be separately protected as they are likely not covered under typical building policies.
- Mold and mildew issues. Mold damage or other related issues are usually considered the result of neglected routine maintenance efforts, which are, again, not covered by property insurance.
Does Building Insurance Cover Everything?
As we’ve discussed, there are limitations and exclusions in standard building COI insurance policies, making it necessary to obtain additional coverage for high-value items and specific cases. For example, when beginning a construction project on your property, it is a best practice to carry out a commercial general liability policy to protect yourself and your workers if any third-party damages occur.
Carefully reading and understanding your policy is crucial so that you actually know how you’re being protected, under what cases, and to what limits. This will help you identify gaps in coverage so you can take steps to obtain comprehensive protection before an uncovered issue arises.
To ensure adequate protection, homeowners should take practical steps like regularly reviewing their insurance policies, making changes to coverage as necessary or extending coverage if set to lapse, and considering additional coverage if needed to safeguard property effectively.
Get Your Coverage Needs Covered with Our Premier Team
Don’t let the complexity of insurance coverage scare you away from staying protected and compliant throughout your building projects.
If you need help getting your third-party insurance verification and COI management under control or just want to learn more about building insurance coverage, reach out to us today.