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.
Do you really know what is covered by your policies? Can you expect your insurance company to come through when disaster strikes?
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 unlikely to be covered unless your homeowners insurance policy has a rider specifically for it. Even then, your insurance company may not pay the whole amount.
Insurance company Travelers notes that standard homeowners policies may restrict payouts for valuable items, which can include:
Some policies may also limit coverage for the contents of your home to a certain percentage of the home’s value.
You should be able to buy a rider for high-value items. Unfortunately, even these riders can have limitations, such as covering only up to $10,000 per item, for example. 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 should be covered — so long as we aren’t at war.
“Standard homeowners insurance policies include coverage for damage to property and personal possessions resulting from acts of terrorism. Terrorism is not specifically referenced in homeowners policies. However, the policy does cover the homeowner for damage due to explosion, fire and smoke — the likely causes of damage in a terrorist attack.”
Personal and commercial insurance policies have long-standing exclusions for war as well as nuclear, biological, chemical and radiological attacks, according to the I.I.I. This is because damage from acts of war and the aforementioned types of attacks “are fundamentally uninsurable due to the nature of the risk,” the institute says.
Other common exclusions on standard homeowners policies include earthquakes, flooding and mold. To learn more, check out “Floods, Wildfires and Earthquakes: Are You Covered?”
What if your kid’s computer is stolen from a college dorm room?
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Your homeowners insurance policy should cover your child’s belongings. However, that generally applies only to full-time students living in a dorm.
Part-time students or those living in off-campus housing may need to get their own coverage. Check with your insurance company for the particulars of your policy, including policy limits, as we detail in “How to Insure Your College Student.”
What if someone puts sugar in your gas tank and ruins the engine?
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Your auto insurance company should pay out the claim — if you have comprehensive coverage. Many comprehensive policies cover vandalism such as graffiti, key damage and, yes, even sugar in the gas tank.
Esurance Insurance Services suggests taking these steps if your vehicle is victimized by a vandal:
- Contact the police to file a report.
- Take photos of the damage, if possible.
- Contact your insurance company to confirm whether the damage is covered.
- Wait to clean up or make repairs until the police have given the OK.
Don’t forget that even if your policy covers the damage, your deductible will still apply to vandalism claims.
So how did you do on the quiz?
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 insurance 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?