Trampolines, Terrorists, and Trees – Odd Things In Our Homeowner’s Policy
I have owned my house for 15 years and have yet to read past the first few lines of my homeowner’s insurance policy. Not ever. It’s at about the third line that my eyes begin to glaze over; before I ever make it to the fourth line, I start fiddling with the corners of the page and it seems like a really good idea to go pick ticks off of the dog. I’d rather do the dishes after Thanksgiving dinner, or goad my children into having a full-on brawl over the iPad than actually read a sheaf of top-stapled pages filled with loopholes, legalese, and exclusions.
This article is written for all the folks who would prefer to cross their fingers and hope for the best rather than read the fine print.
In these 15 years of Outer Banks living, we haven’t encountered any bedbugs, carpenter ants, termites, or other vermin, except for the occasional gutsy squirrels that infiltrate our bird feeder. And I actually marvel at their ingenuity. So far, these “mid-size rodents” haven’t tried to move in with me or eaten away at my siding. Knock on wood… and hopefully that wood isn’t rotten, because apparently, neither the squirrel damage nor the rotten wood would likely be covered under most policies.
But what would happen if a wild animal sneaked into my home and caused damage? While the rodent squirrel is not covered, rest assured that your friendly neighborhood raccoon is covered because it is classified as a wild animal. If it manages to find its way into your house and has a serious animal party by tearing apart your furniture and woodwork, you should be covered because that is considered vandalism. Same goes if a skunk enters your home and does its Yankee Candle best to give you and your furniture a new signature scent.
But (and you knew this was coming, right?) you are covered only if your home has not been vacant for more than 30 days… or unoccupied for 60 to 90 days. Wondering what is the difference between those two? More fun with words. Your agent will be happy to fill you in, or you may find that explanation somewhere in your policy around page 30. I’m just guessing, of course.
Does it seem like the actuaries who live among us are part of a secret society with their own language and sense of what is normal? What else can you expect from an industry that speaks of acts of God or religious phenomena like they are part of a grocery list? Read on:
Did an image of the Virgin Mary appear on your drywall after oil of unknown origins seeped in through the ceiling? Well, after you’ve cashed in on your 15 minutes of YouTube and network fame (and convinced your kids it is safe to fall asleep again), chalk the whole event up as a “religious phenomenon” and breathe a sigh of relief knowing that you are covered.
As long as we’re getting some religion, what about acts of God? An act of God is a natural catastrophe which no one could prevent through caution or foresight.
Examples of Acts of God:
Earthquakes, tornadoes, extraordinarily high tides, violent winds, and floods.
Oddly enough, an act of God will not be covered in your standard homeowner’s policy as it does not fall under the “religious phenomenon” definition. Making any sense yet? There’s more about acts of God coming up.
Acts of war are not covered; but acts of terrorism typically are. The explanation is that in contrast to a targeted terrorist event, a war typically destroys many properties over a wide swath of land creating a “correlated risk” that insurance companies cannot absorb all at once.
Perhaps now, the acts of God exclusion is making more sense now? Flood and hurricanes are other examples of “correlated risk” that are sidestepped with exclusions or handled in separate policies.
Water Water Everywhere:
With water on all sides of us, no wonder, we find it to be our biggest friend and sometimes foe. Throw in the fact that Outer Banks homeowners need to be fairly well-versed in flood insurance as well as wind and hail insurance; it’s enough to have you reaching for a glass of something just a wee bit stronger than water.
The knocking on (rotten) wood example at the beginning of this article – and its lack of coverage – is likely to set off some alarms with homeowners around here. Damage from a sudden discharge of water is covered under most policies, but not the slow and undetected corrosion of your siding near a leaky door or window. However, both are a fairly common scenario on the Outer Banks. Those leaks would be termed as negligence and/or a maintenance issue and you would be held responsible.
Don’t expect to have much luck filing a claim for water damage after city sewer or drain pipe issues. That is unless you’ve purchased a special endorsement. Fortunately, the more common Outer Banks scenario of damage due to a septic system back up is often covered – partially.
A standard homeowner’s policy may also cover the freezing of pipes, cause flooding in a basement or kitchen but not flooding from rivers or other sources of water from outside the home overflowing their banks.
So what else could possibly happen that would cause you to reach for the phone while humming a familiar jingle from an insurance company’s TV ad? Well, before you imagine your name written in the “To” line on a claim check, following are a few more oddball scenarios – with differing outcomes.
• A plane (train or automobile) just crashed into my living room.
No worries (besides the obvious). You are likely covered from vehicles hitting your house as well as other objects falling out of the sky. But do not use this as an excuse to avoid removing a dead tree that is leaning precariously toward your (or your neighbor’s) home. That won’t be covered.
• My prized 70-inch TV was destroyed when the fish tank on the shelf above the TV came crashing down.
In contrast to the ‘objects falling from the sky’ scenario above, the fish tank is not considered as an object falling out of the sky. The falling object must first damage an exterior wall of your home on its way down. You put the fish tank there. Your responsibility.
• A nuclear power plant leak has caused dangerous levels of radiation in my home and water supply. Nuclear accidents are a standard exclusion. Expect a protracted legal battle with the power company that owns the nuclear plant to get any compensation.
• My house was swallowed by a sinkhole (or my home slid down a cliff).
Not to get religious again, but the foundation that a house is built on is not just of biblical concern; standard policies will not pay for “earth movement” causing your house to re-locate itself (or disappear entirely).
• My home’s value took a nosedive after the town built a prison near my neighborhood. Sorry, home value and selling cost are not insurable.
• Lightning struck a power line leading into my home causing damage to electronics. Damage caused by lightning which then results in a fire or power surge is usually covered.
• A power outage caused damage to the contents of my home. Unlike the lightening example above, if your electronics, are damaged from a surge when the power comes back on, they are not covered under standard home insurance policies. However, you probably will be reimbursed for a set dollar amount to cover lost food from your refrigerator and freezer.
• My washing machine caught on fire which caused my hot water heater to explode. You’re covered. Insurance companies call that ‘sudden and accidental loss.’
So, cancel that flame-throwing contest in the basement with old college buddies. Insurance carriers save big bucks by assigning some responsibility and expectations to the homeowner. They don’t want to give you an excuse to engage in risky behavior just because you knew you were covered; they call that ‘moral hazard.’ So use good judgment and keep up your property. Do not drag in every piece of second-hand furniture that you see discarded during the large item pickup day. Preventing a bedbug infestation is your responsibility.
The reality is that policies are riddled with loopholes and exclusions that can leave homeowners scratching their heads. Tree houses, ‘high-risk’ dog breeds, and trampolines are just a few more examples of what you may find mentioned in your insurance policy.
We don’t have a trampoline or tree house. My dog acts more like a sloth than any kind of threat when a visitor arrives so it’s understandable that I haven’t spent time reading our policy for such exclusions. If reading through the above quirky and humorous scenarios inspires you to ask a few questions or read a little more of your policy, then maybe you will find yourself prepared for the next religious phenomenon that comes your way.