August 2013 Monthly Memo: Perils, Loss and Misunderstanding
A sailboat’s stolen from your yard. Covered? A motorcycle is damaged in your driveway. Covered? Your home is damaged due to a sewer line break. Covered?
The answers in brief are depends, depends, and depends, based upon specific policies and circumstances. But a recent survey by the National Association of Insurance Commissioners reveals that many homeowners misunderstand what is included in their homeowners policies. For instance, despite extensive media coverage on Hurricane Katrina victims whose claims were denied because they lacked flood insurance, 33% of respondents incorrectly believe flood damages would be covered by a standard homeowners or property and liability policy.
The survey revealed a number of misunderstandings related to common losses:
- 35% of respondents think damages from earthquakes are covered. Most homeowners policies exclude earthquake-related claims. An endorsement can be purchased for losses that arise from an earthquake event.
- 34% of survey participants think damages from mold are covered. Moisture damage such as rust, rot, mold and mildew is specifically excluded in most standard homeonwners policies. Mold contamination is only covered on a limited basis, and only if it is the result of a covered peril.
- 22% of respondents think pets stolen from or injured on their property are covered. This is another “depends” situation; there is no coverage for theft of a pet under most policies, although injuries may be partially covered based upon policy specifics.
- 31% of people who took the survey think damages from termites or other infestation are covered. Most policies do not cover such claims.