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Homeowner’s Insurance Exclusions Discussed


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There are many standard homeowner's insurance exclusions. For instance, insured's typically understand that flood damage is not covered unless the client specifically has flood insurance. But how many client's understand that atypical sewer backup damaging their basement is not covered under a typical policy? The last thing a client needs is that surprise on top of ther mess in their basement. Other typical exclusions include business-related claims, dog bits, and trampoline injuries... let's review.

Business-related exclusion

Most homeowner policies exclude any business-related claims. For example, if a delivery guy who’s bringing you a business package trips and falls and the guy sues, they’re probably going to be liable unless they have additional home business liability insurance. If clients have a home-based business consider adding this coverage.

Home-office coverage limited

For the client with a home office, don't assume the equipment is protected by the personal-possession coverage in your homeowners policy. Homeowners and renters policies typically cap coverage for business property at $2,500. The coverage drops even more if you take any of the property out of your house for example, it pays only $250 if your laptop is stolen while you're on a business trip.

For a low-risk home business, a rider that would hike business-property and liability coverage to the same amounts as stated in your homeowners policy would probably cost $100 per year or less, says Scott Hauge, an independent insurance agent in San Francisco. For bigger and riskier businesses--if, say, you are a computer consultant with expensive equipment--you may have to buy a stand-alone business insurance policy for $ 350 a year or more.

Sewer back-up exclusion

Standard homeowner policies don't cover damage from sewage and water backups. To get that protection, client’s need to buy special coverage for roughly $50 per year for around $10,000 in coverage. Sewage backup is one of several hazards that people widely assume is covered by their homeowners insurance--until they file a claim and are turned down.

Flood damage exclusion

Most people who live near a river or coastline know homeowners policies don't cover flood damage, and they buy flood insurance through the National Flood Insurance Program. But flooding can be a problem even if you don't live near water. Heavy rains can cause big problems as well, even without a river in the vicinity.

Flood insurance is sold by private insurance agents at set prices, depending on your proximity to a flood zone; a homeowner could pay more than $800 a year for $100,000 coverage if they're in a flood plain, or as little as $230 if they're in a low-risk area.

Dog bite exclsuion

Some companies have begun to write their policies with specific exclusions for injuries caused by dog bites. A policy containing such an exclusion would give the owner no coverage for any damages caused by a dog they own, regardless of the breed. Other companies write specific exclusions for certain types of breeds, for instance, they may insure a poodle, but not a pit bull. The owner remains liable for the injuries and damages caused by their dog, regardless of whether it may be covered by their homeowner’s insurance policy.

State Farm says it doesn’t refuse insurance based on dog breeds, but does require homeowners to answer questions about their dogs’ history on an application for coverage. The one exception is in the state of Ohio, which has determined that pit bulls meet the definition of a “vicious dog,” and therefore the insurer excludes them under its homeowners policies.

In total, State Farm paid out $90 million nationwide in 2010 as the result of 3,500 claims, 33 of which resulted in fatalities. The Insurance Information Institute estimated that insurers paid out some $412 million in dog bit claims in 2009, the most recent information available.

Firearms Exclusion

When it comes to firearms in the home carriers vary coverage drastically from one to another. Some insurers exclude firearms coverage in the home altogether and often do not provide theft coverage. Some simply exclude all firearms and suggest that a separtae policy be obtained.

Trampoline exclusion

In just the decade spanning the 1990s, trampoline injuries reported by hospital emergency rooms actually quadrupled, hitting a high of 100,000 accidents reported in 1999 alone.

A trampoline in your backyard is considered an attractive nuisance. Trampolines fall in the same category as backyard swimming pools since they are “attractive” to people entering your property but could become a “nuisance” should any physical harm come to them while using it. Even if the trampoline is used without your knowledge or permission, or even if you have warning signs on your property, you can face legal action if someone uses your trampoline and injures himself or herself is another reason why insurance companies dislike trampolines so much.

Because trampolines have become such a headache for insurance companies in recent years due to a rise in popularity and accidents, there are specific clauses in the policies usually called the “Trampoline Exclusion Clause” that address trampoline liability. These clauses can vary from each policy, but most define an exclusion of liability for any accidents that occur as a result of using trampolines. This means that while the insurance company will cover liability for any injuries taken place on your property, if it is caused by use of a trampoline it will be excluded from coverage.

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