You know you need insurance for your home and car, and you may be spending a lot of money on coverage each month. But in all that fine print there are exceptions and exclusions, as well as some surprising things included in standard coverage. Is your insurance company going to come through when you need it? Do you really know what is covered by your policies?
Here’s a little quiz to test your knowledge:
What if your $50,000 stamp collection goes up in flames with your house?
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The collection is not covered unless your homeowners policy has a rider specifically for it. Even then, it may not pay the whole amount.
Insurance company Travelers notes that standard homeowners policies may restrict payouts for valuable items. For example, these are common limits for popular personal possession categories:
- Jewelry or furs — $1,000.
- Firearms — $2,000.
- Silverware — $2,500.
Policies may also limit coverage for home contents to a certain percentage of the home’s value. Either way, it may be tough to get the insurance company to cough up $50,000 for your lost stamps.
However, you should be able to buy a rider for high-value items. Unfortunately, even these riders can have limitations. Travelers says a typical rider might only cover up to $10,000 per item. If you can’t get enough coverage through your homeowners plan, you may want to take out a separate policy specifically for your valuables.
What if terrorists bomb your house?
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Your loss will be covered — so long as it’s just a standard explosion, and we aren’t at war.
The Insurance Information Institute told Business Insider that nuclear, biological, chemical or radioactive weapon attacks probably won’t be insured losses. However, if it is your run-of-the-mill explosion or damage caused by resulting fire or smoke, you should be all set.
Most homeowners policies also typically exclude acts of war. You may think it’s a good thing we haven’t actually declared war since 1942, but your insurance company may define war a little more broadly and include insurrection and rebellion, among other things.
Other common exclusions on homeowners policies include:
- Earth movement
- Flooding or water damage
- Losses related to government ordinances or action (i.e., condemnation or seizure)
- Faulty workmanship
- Pest removal
- Ordinary wear and tear or losses that are the result of neglected maintenance
What if your kid’s computer is stolen from their college dorm room?
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Your student’s belongings should not require a renter’s insurance policy — that is, your homeowners insurance should cover them.
Here’s what Wells Fargo has to say on the subject:
If your child lives in a dorm, your homeowners or renters insurance policy may extend to cover their belongings. Most policies limit a student’s coverage to 10 percent of the parent’s coverage. In other words, if your homeowners policy has a personal property limit of $300,000, your child’s belongings will be covered up to $30,000, after the deductible.
However, that generally applies only to full-time students living in a dorm. Part-time students or those who are staying in off-campus housing may need to get their own coverage. Check with your insurance company to find out the particulars of your policy.
What if some *&$#!@ person put sugar in your gas tank and ruined the engine?
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They will pay out the claim … if you have comprehensive coverage.
Just as your insurance company will pay out for a stolen car, most comprehensive policies also cover vandalism such as graffiti, key damage and, yes, even sugar in the gas tank.
Esurance suggests you take these steps if you’ve been the victim of a vandal.
- Call the police to file a report.
- Take photos of the damage, if possible.
- Contact your insurance company.
- Wait to clean up or make repairs until the police have given the OK.
Don’t forget that your deductible will still apply to vandalism claims.
So how did you do?
The moral of the story is to always read the fine print on your insurance policies before assuming something is — or is not — covered. When in doubt, call the company or your broker for help in deciphering the legalese.
Tell us your insurance story in the comments below or on our Facebook page. What were you surprised to have covered or what was a shock to have denied?