How to know if property damage is covered by insurance

How to know if property damage is covered by insurance

Your home is your haven. Beyond that, it’s an asset and investment that should be protected from losses. Having your home insured does more than provide you with a reliable safety buffer for your valuable investment — it also gives you peace of mind and confidence, knowing you’ll get compensation if disaster strikes and unexpected damage occurs.

There are several types of property damage typically covered by insurance. However, in the event of damage to your property, you may be uncertain whether it falls under the category of damage that your insurance covers.

Learning to identify what types of property damage your insurance covers will empower you to respond correctly when issues arise. Performance Adjusting Public Insurance Adjusters compiled this detailed guide to provide you with all the information you need.

Understanding Homeowners Insurance Coverage

Property damage is not something you expect to happen. However, it’s something you should plan for in the event of unforeseen circumstances, whether it’s an accident or a natural disaster out of your control. Homeowners insurance is one way to protect your finances against the potentially devastating effects of property damage.

Types of Homeowners Insurance Coverage

Let’s examine the standard types of coverage a homeowners insurance policy might include.

Home Structures

Homeowners insurance provides broad protection for your home itself and other structures attached to it, including your porch, deck and garage. It could also cover stand-alone structures on your property, such as a shed or a fence. Depending on the details of your policy, this insurance could cover damage caused by wind, fire, hail and lightning, among other things.

Personal Property

This coverage includes your personal belongings, such as furniture, clothes and jewelry. It’s typical for homeowners insurance policies to cover personal property, whether located inside your house or anywhere else — for instance, if your jewelry is stolen at a party away from your home, it’ll most likely be covered. Some disasters that a homeowners insurance policy will protect your personal property against include fire, storm and water damage.

Liability Coverage

Homeowners insurance offers coverage for bodily injuries or damage to the property of others caused by you, or any member of your household, including your pets. There are strict provisions that guide liability coverage. For example, while your policy may cover dog bites to other people, it won’t cover intentional acts to harm others.

Additional Living Expenses

Severe damage to your home may render it temporarily uninhabitable, resulting in increased costs for alternative accommodations. In such a case, homeowners insurance will cover extra expenses you incur living away from home, pending when your home is rebuilt. However, some insurance policies limit the time frame for this coverage.

Types of Damage Commonly Covered by Homeowners Insurance

The types of damaging events or perils covered in a homeowners insurance policy are not set in stone. However, you can expect each provider to cover some common types of damage. These include:

• Fire: Fire is a common cause of property damage — statistics from a five-year period show that fires led to direct property damage of $8.9 billion. Most homeowners insurance policies offer coverage for property damage caused by fire. In some cases, these policies may also cover the damage caused by smoke resulting from the fire.
• Lightning: This is a commonly covered peril in standard homeowners insurance policies. Lightning strikes can cause several types of damage to property, including igniting fires and causing power surges that damage electrical appliances. It can also cause struck trees to fall into your property or cause further damage.
• Vandalism and theft: Homeowners insurance policies typically cover losses and damage to property resulting from vandalism and theft. However, each policy may have different coverage limits for various values of personal property it covers.
• Water damage: This is typically covered under most homeowners insurance policies as a peril. Water damage can range from minor cleanup and repairs to extensive structural issues that disrupt your home.
• Storms and hail: There were 203 confirmed severe storm events in the United States between 1980 and 2024, contributing to over $1 billion in losses. These natural disasters can cause damage to property, including dents and shattered windows, and are commonly covered perils in many homeowners insurance policies.
• Roof leaks: Most homeowners insurance policies offer coverage for roof leaks, provided it’s not caused by wear and tear. This means you must demonstrate that the damage to your roof is a result of an unexpected or accidental occurrence, such as falling objects or a storm.

What’s Not Covered in Standard Policies

While you can expect most homeowners insurance policies to cover specific perils, some types of perils are usually not covered. These include:

• Earthquakes: Property damage caused by earthquakes is generally not covered by most homeowners insurance policies — landslides and sinkholes may also not be covered. To receive protection against such damage, you’ll need to get earthquake insurance.
• Floods: Standard homeowners insurance policies typically don’t cover property damage caused by floods, such as those resulting from overflowing rivers and torrential rain.
• Wear and tear: Over time, your property and its structures may experience wear and tear without proper maintenance. Since you have a duty to maintain your property and keep it in good condition, most homeowners insurance policies will not cover damage resulting from wear and tear.
• Infestations: Homeowners insurance generally excludes coverage for infestations involving termites, mice, bedbugs and other pests. However, you may get coverage under certain infestation-related circumstances. For instance, if a rodent infestation leads to secondary damage such as electrical issues that cause a fire, you’ll likely be covered.
• Molds: Unless the molds damaging your property are caused by something sudden or unexpected, such as a burst pipe, most homeowners insurance will generally exclude them.
• Nuclear hazards: Property damage insurance coverage excludes damage from nuclear hazards or accidents due to the catastrophic nature of the damage such hazards can cause.
• Government action and war: When property damage occurs as a result of government action or war, most insurance policies will not offer coverage for repairs or replacement.
• Premeditated loss: If damage to your property is the result of deliberate actions or neglect, you will not get coverage from a homeowners insurance policy.

What Are Homeowners Insurance Policy Endorsements?

If specific types of property damage aren’t included in your policy’s covered perils and you want coverage for them, you can obtain a policy endorsement. A policy endorsement is a written amendment that allows you to change, add or restrict the coverage terms of a standard insurance policy. For instance, if you want coverage for property damage caused by infestation, you can obtain a policy endorsement to cover it.

Some common policy endorsements you can explore are:

• Personal property replacement cost coverage: This type of endorsement offers replacement for damaged belongings with brand-new equivalents at full, nondepreciated value.
• Flood insurance endorsement: If your property is in a flood-prone area, a flood insurance endorsement will provide coverage against damage caused by flooding.
• Sinkhole coverage endorsement: A sinkhole coverage endorsement is a crucial add-on to consider if you want coverage for sinkholes and other forms of earth movement.
• Equipment breakdown coverage: Most policies only cover home appliances if the damage is caused by a peril covered in the policy. Equipment breakdown coverage is a type of endorsement that provides repairs or replacements for appliances that break down due to causes other than those under the covered perils — these can include electrical or mechanical failures.

How to Know What’s Covered Under Your Policy

Insurance companies offer varying coverages for different types of perils. To know for sure what your particular homeowners insurance policy covers, follow the steps below.

Review Your Insurance Policy

Obtaining a homeowners insurance policy is the first, but not the only, step in securing your home investment. It’s crucial to examine and review the details of your specific policy. Some important details to note when reviewing your policy are:

• Covered perils: This section of your insurance policy outlines the perils it will cover.
• Exclusions: Your policy will also highlight a list of perils that are excluded from coverage. If a specific type of damage you might be exposed to is listed among the excluded perils, consider obtaining a policy endorsement for it.

Review Policy Endorsements

If the damage to your property is not included in the covered perils section, the next step is to review the policy endorsements section. This step will determine if you purchased additional protection for specific risks not included in the base policy.

Assess the Nature of the Damage

Whether they’re included in the covered perils section of your insurance policy, some specific types of property damage require consideration of the nature of the damage. Most insurance policies will only cover damage that is sudden, unexpected or accidental.

For instance, some homeowners insurance policies will cover property damage resulting from mold caused by an abrupt dehumidifier failure. On the other hand, if the mold results from neglect or inadequate maintenance, most policies typically will not cover any damage it causes.

What Should You Do if Your Property Damage Is Covered by Insurance?

If you’ve experienced property damage that is covered by your homeowners insurance policy, you’ll need to take several steps to set things in motion.

Contact the Police

This step is only required in cases like theft and vandalism, both of which are covered perils under most homeowners insurance policies. Promptly alerting the police and filing the necessary reports in such cases can significantly improve your claim. Conversely, delaying or failing to report altogether can result in the case getting denied.

Document the Damage

It’s crucial to document every detail of the damage to your property, whether it’s caused by vandalism, fire, storm or any other disaster. Documenting the damage helps provide proof to support and expedite your claim. Take pictures and walk-through videos, and create detailed documentation that covers the extent of the damage.

Take Reasonable Steps to Prevent Further Damage

Where it’s safe, you should take reasonable actions to prevent the damage from worsening. These actions may include shutting off water sources, turning off electricity or covering exposed openings. Most insurance policies highlight this step as your duty to mitigate, an obligation required to minimize additional loss or deterioration after the initial incident. Failing to carry out this obligation may weaken your claim.

Begin the Claim Process

Once you have adequately documented the damage, the next step is to begin the claim process. You can start by reaching out to one of the following:

• Your insurance company: You can contact your insurance company to initiate the claim-filing process. Most insurance companies have a specified time frame within which you’ll be required to file a claim. Upon contact, your insurer will open a claim and assign an independent insurance adjuster to evaluate the extent of the damage. It’s crucial to note that the assigned adjuster represents the insurer’s interest, not yours. If you contact the insurer first without independent representation, it can make later adjustments and corrections more difficult or impossible.
• A licensed public adjuster: A public adjuster will work with you to review your property damage, guide your documentation process and ensure you file your claim accurately for the best possible compensation. It’s advisable to contact a public adjuster before reaching out to your insurer. However, you can contact one after you’ve filed a claim or within a reasonable period after a claim has been paid, in which case they can help you negotiate for more money.

Wait for the Decision of the Claim

After you’ve initiated the claim, a thorough assessment process will begin. If you hire a public adjuster, they will negotiate on your behalf to secure properly valued insurance claim settlements. When a decision is reached regarding your claim, the insurer will notify you.

Take Next Steps

The insurance company’s decision about your claim will determine the next steps you’ll take. If your claim is approved and the settlement amount confirmed, you’ll be required to review and accept the settlement offer if it’s suitable for your repair or replacement needs. You are also allowed to negotiate or dispute the settlement offer if it underestimates the actual cost of the damage or loss.

Your insurance claim may be denied for several reasons, including a lack of evidence or inaccurate application information. If this happens, you can explore several options, including mediation and arbitration, formal appeal and legal action. Unfortunately, at this point, it may be too late to seek the help of a public adjuster if you didn’t already have one — many public insurance adjusters steer clear of already denied insurance claims.

Begin Repairs or Replacement

Once the insurance claim settlements have been paid, you can begin the process of restoring your property. Depending on the nature of the damage, you can choose to repair it yourself or hire a professional to do the job.

Understand Your Property Damage Coverage

Your home is a valuable asset, and as such, you should take every possible step to protect your investment. Insurance coverage for your property can vary depending on several factors, including the type of policy, the cause of the damage and any exclusions that may apply. Understanding your property damage coverage helps you know what losses are protected and allows you to make informed decisions when filing a claim.

This story was produced by Performance Adjusting and reviewed and distributed by Stacker.