Sinkholes! Potholes! Are You Covered or are there Holes in Your Insurance?

Photo (cc) by Editor B

Editor’s Note: This post by Kat Zeman comes from partner site Insure.com.

You may dismiss holes as innocuous because they are, well, empty. How much damage can empty space do? But holes can be filled with financial risk. Recently, a giant sinkhole swallowed up a home in Canada and killed its four occupants. That got us thinking: What other types of holes cause damage? And will our insurance pay? Here’s what we found.

Sinkholes: Unfortunately for folks who live in prone areas, sinkholes are not covered by home insurance in the United States. Most standard home insurance policies have an exclusion for “earth movement” that includes earthquakes, land shockwaves, tremors from a volcanic eruption, landslides and mud flows. A catastrophe cased by the “earth sinking, rising or shifting” is not covered unless it is directly caused by a fire or explosion.

Potholes: These craterlike holes in the road can be a royal pain in the asphalt. The damage to your car caused by potholes can be instantaneous, such as a punctured tire, or cumulative and costly, such as misalignments to the steering system. However, if you have collision coverage included in your auto insurance policy, pothole damage is covered. Collision coverage, which is optional, reimburses you for damage to your vehicle caused by potholes, according to the Insurance Information Institute. But remember that you’ll have to pay your deductible.

Roof holes: If a meteor or tree punches a hole in your roof, your home insurance will pay for repairs. But if your roof hole is due to lack of maintenance, you’re on your own.

Bullet holes: If your neighbor decides to hold target practice in his backyard and a stray bullet pops your window or puts a hole into your house, home insurance would pay for the damage. However, your insurer is likely to go after your neighbor — in the form of subrogation against your neighbor’s insurance company – to recoup its expenses.

In another scenario, if your car is the victim of a drive-by shooting and you have comprehensive coverage, insurance would pay for any bullet hole damage. However, coverage likely won’t apply if you were involved in the shooting.

Holes in judgment: Fortunately for some people, insurance can cover stupidity. Did you leave your keys in your car and it was stolen? Comprehensive auto insurance covers the theft.

Some holes in judgment lead to insurance gray areas. Take the Massachusetts man who tried to melt ice off his porch with a blowtorch and ended up setting his home on fire. If his act is deemed negligent or intentional, his claim would be denied.

Golf holes: If you scored a hole-in-one while playing golf, you’d probably do some fist pumping. And you’d jump for joy if it wins you a substantial prize, perhaps $1 million. In many cases, organizers of “hole-in-one” contests insure against someone actually winning by buying hole-in-one insurance. It helps cover the cost if the prize is paid out. Although it’s called “hole-in-one” insurance, it can also be purchased to cover sporting contests, sweepstakes, gaming jackpots, fishing tournaments and car dealership and radio promotions.

Black holes: While scientists agree that it is unlikely that Earth will be sucked into a giant black hole, the even better news is that you’ll have plenty of time to buy home insurance if you see it coming. A standard HO-3 home insurance policy covers everything except the perils it excludes, and there’s no exclusion for black holes.

Doughnut holes: Arguably the most dangerous of all holes, because consuming too many of these empty calories will cause you to pack on the pounds. And that will force you to pay substantially higher life insurance rates. In fact, obesity is one of the top 5 most expensive medical conditions for life insurance shoppers.

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