What isn't covered by my homeowners insurance policy?

When Hurricane Michael hit the Florida Gulf Coast as a Category 5 storm in 2018, it caused over $25 billion in damage.^{See note1} Almost $5 million of that damage was at Tyndall Air Force Base.^{See note1}

For some homeowners it was more than a natural disaster. Many thought their standard home insurance policies would cover damage from the storm.

They were in for a rude awakening.

Homeowners policies may have exclusions or limitations for damages due to certain weather conditions like wind or hail. Flooding is also typically excluded, which can limit coverage for damage from heavy rains and storm surge.

Sadly, it seems many residents were not aware of the financial risks they faced — even if they knew they were in hurricane territory. Less than 40% of homes in the Florida Panhandle had active National Flood Insurance Program (NFIP) policies in place when Michael made landfall.

You might be thinking, "That would never happen to me!" But the unfortunate reality is that misconceptions about homeowners insurance are quite common, both in high- and low-risk areas. Far too many people live under the assumption that their policy covers just about everything. That's not the case.

"Gaps in homeowners insurance aren't always well-understood,” says Sean Scaturro, Advice Director at USAA. "But misunderstanding the limits of your policy can be an expensive mistake."

If you want to reduce the unexpected costs of getting caught without coverage, it's important to understand what homeowners insurance doesn't cover. You may be able to insure against some additional unexpected losses with an endorsement or another insurance policy.

Are floods covered by homeowners insurance?

Don't assume just because you aren't near a river or coastline that you aren't susceptible to flooding, which occurs any time groundwater enters a house. "If it can rain, it can flood," Scaturro says.

Keep these facts in mind:

• In 2021, the average residential flood claim resulting from Hurricane Ida was more than $55,000.^{See note1} Just a few inches of water in a home can cause tens of thousands of dollars in damages.
• Flood insurance is available through USAA via the NFIP, which is underwritten by the Federal Emergency Management Agency (FEMA).
• There is usually a 30-day waiting period from the date of purchase before the policy goes into effect. So don't wait until disaster looms to buy coverage.

Earthquake insurance 101

You don't need to live on a fault line to incur earthquake damage, as defined by insurers. "It can be any kind of earth movement," Scaturro says. "So, if there is shifting, it's not covered by a standard homeowners policy."

Earthquake coverage can help protect against these potentially life-shaking events. Keep in mind:

• Quakes aren't limited to California. A temblor damaged the Washington Monument in 2011.
• The U.S. Geological Survey (USGS) updated its long-term seismic hazard maps in 2014, and they showed increased earthquake risk for half the country. In 2016 and 2017, USGS published short-term seismic hazard models from induced and natural earthquakes. They assessed the risk in various parts of the country for natural quakes and earth shifting caused by mining operations like hydraulic fracturing or fracking.
• You may be able to reduce damage from minor quakes by making improvements to potential trouble spots in your home.
• USAA offers coverage that can be added to homeowner policies. In California, members can buy a policy from the California Earthquake Authority.^{See note1}
• Renters get earthquake coverage at no extra cost when they purchase a USAA renters insurance policy.

Supplemental protection from wind and hail damage

Mother Nature is unpredictable and often severe weather events like wind or hailstorms — including tornadoes or hurricanes — can damage your home. While your homeowners coverage will typically cover most weather-related events, your insurer may have certain coverage limitations, or you may have a different deductible for certain types of weather.

For example, supplemental windstorm insurance coverage from the USAA Insurance Agency usually protects your property from hail damage if you have broken windows, or dents in shingles and siding. Hurricane damage from collapsed walls, or damage to your roof, doors and windows from a tornado, may also be covered.

In some states (such as Florida and other high-risk areas), wind and hail damage are excluded as part of a general homeowners policy and requires separate windstorm coverage. It's important to review your policy to understand how your coverage would apply.

Why you may need general liability protection

Weather isn't the only thing that can put your property and your finances at risk. Liability protection is a component of most homeowners insurance policies. Depending on your situation, your baseline liability protection through your policy may be adequate, however several situations might call for an umbrella policy which provides additional liability coverage. Some extra considerations include:

• Do your children play contact sports? Do you own a large dog or have a swimming pool? That could mean you have a higher-risk property.
• Hosting get-togethers, like a Super Bowl party or dinner gathering; or hiring contractors to come into the home to clean, make repairs or babysit, can leave you open to liability if someone is injured in your house.
• Libel and slander may not be covered. Maybe you had a bad experience at a restaurant and derided their poor work on social media. If the owners decide to sue, a standard homeowners policy may not be sufficient.

Get to know your insurance.

When it comes to insurance, the best policy is to know your policy. The last thing you want when a natural disaster or other major incident occurs is to be caught without coverage you thought you had.

Talk to your insurer to make sure you understand what your policy does or doesn't cover — damage from flooding, earthquakes, wind, hail and liability — and whether you need additional home insurance coverage. Once you can clearly see the gaps in your coverage, you can decide how to protect yourself, your family and your finances. At the least, a well-stocked emergency fund can help you be better prepared.

All coverages described are subject to the terms and conditions of your policy.