Recovering from a burglary is difficult both financially and emotionally. The last thing you need after such a traumatic event is to find out that not all losses are covered by your homeowners insurance. Don’t wait until it’s too late to make sure all your needs are covered in the event of a break-in.
5 Things Your Homeowners Insurance Might Not Cover
What is homeowners insurance?
Homeowners insurance is an insurance policy for a homeowner’s property that is designed to protect them from expenses accrued in the event of property damage. It can also cover the loss of possessions due to a burglary and protect the homeowner against liability if a person is injured while on the property.
However, not all types of damage or loss are covered by a home insurance policy. Highly valued items, such as jewelry, fine art, and collectibles, are often excluded from a typical policy. In addition, damage from certain weather events, like floods or earthquakes, usually requires the homeowner to purchase additional insurance.
Homeowners insurance vs. home warranty
A home warranty is another form of protection that can help homeowners pay for unexpected repairs and costs. A home warranty is usually used in conjunction with the purchase of a newer home to cover problems with systems like plumbing or heating, and it can also help pay for repairs to appliances.
The main difference between a home warranty and homeowners insurance is that insurance covers the structure and property, while a warranty covers internal systems. The combination of the two offers extra financial protection for a broader variety of potential problems and is most useful after a recent home purchase.
Items that may not be covered by homeowners insurance
We’ve put together a list of the five most common items that may not be covered by a basic homeowners insurance policy. Use this guide to help you understand how you’re covered and what you can do to augment your coverage if needed.
1. Business equipment and assets
If you operate a business from your home, not all policies will cover business equipment and other valuable assets, such as proprietary information and client lists. And if your business is housed in a separate structure on your property, it might not be part of your primary homeowners insurance.
To make sure your home business is protected, check into adding a rider to your existing policy or purchasing additional business insurance that will take care of any business losses that occur at your home. Depending on the nature of your home-based business, there are a variety of options to help cover potential losses due to theft or other catastrophes.
2. Valuables and collectibles
Sometimes your average home insurance policy just doesn’t provide enough coverage for highly valuable items like fine art, jewelry, designer clothing, firearms, and the family silver. Standard policies usually only cover up to $1,500, according to the insurance information institute,1 which is often not enough to compensate for either the sentimental or real value of these precious items.
You can act to make sure your valuables are protected by increasing your liability limit, adding riders to cover each item, or purchasing Valuable Personal Property Insurance. Other options to explore include acquiring a safe or moving diamonds, gold, and coin collections to a safe deposit box at your bank.
While most homeowners insurance policies allow for repairs, they sometimes limit your options when it comes to selecting the most competitive bid for a project. Depending on your policy’s fine print, you may miss out on getting work done for less, and you may not be able to choose the best company to complete your home repairs after a break-in.
Find out if your policy requires that you use certain contractors or has other restrictions. Additionally, keep track of all receipts and purchase orders to make sure that the expenses you claim are processed quickly. The easier you make it for the insurance company to assess the payout, the faster you’ll be depositing that check in the bank.
4. Identity theft
It’s easy to identify the physical items you want to insure and protect, but these days a burglar can get away with so much more than a diamond ring. Identity theft is a real risk, especially if your home has been broken into, and the burglar had access to your personal information.
Because identity theft has become more common, some insurers now include it in homeowners policies, but not all do—make sure to check your policy.2 If you are concerned about the fallout from identity theft, it might be smart to add identity theft protection to your coverage. Losses that it may cover include phone bills, attorney costs, and lost wages.
If you have large amounts of cash around your home, you need to know that most policies have very limited coverage on lost cash. You can typically expect to recover no more than $200. Since cash usually falls into the same category as valuable personal property—like coins, art, and jewelry—you probably won’t recover much unless you have a special policy or provision.
This is another opportunity to explore security options including safes, alarms, and safe deposit boxes. If you must have emergency cash on hand, consider trying out some more innovative hiding strategies, like using old tennis balls as makeshift banks or turning a used shampoo or conditioner bottle into a sneaky safe.
How to avoid filing a homeowners insurance claim
The best way to insure your home and valuables against loss from a break-in is to not get burglarized in the first place. Ramping up your home security to better deter burglars is one of the smartest things you can do—and it’s easier than you might think. Here are some simple ways to increase security and minimize the chances of a break-in.
- Use a monitored security system: This is the most comprehensive form of home security, and it provides a 24/7 connection to a monitoring center where someone is always available to respond to an alert. At the first sign of trouble, the security company will contact you and send the police to make sure everything is okay.
- Install security cameras: Surveillance cameras can be part of a larger security system or installed on their own to give you extra awareness of what’s going on at home. Security cameras can be used inside and outside your home. Look for features like motion detection, night vision, and live streaming.
- Invest in enhanced lighting: Upgrading your lighting adds extra security and helps protect you and visitors from possible falls. Lights with motion sensors are perfect to scare away potential burglars. And you can use smart lightbulbs to turn lights on and off no matter where you are, ensuring that no one has to stumble along a dark walkway.
- Add smart locks: Advances in technology make it so you’ll never have to worry about leaving the door unlocked again. Smart locks come with remote apps that allow you to lock the door from your office, and some even alert you whenever someone tries to gain entry to a locked door or window.
While no security plan is foolproof, adding a monitored alarm system or a few surveillance cameras can go a long way to warding off prowlers before they target your home and valuables. For comprehensive resources on state-of-the-art home security options, use our convenient comparison tool.
1. Insurance Information Institute, “Things to Know About Coverage for Jewelry and Other Valuables”
2. Insurance Information Institute, “Identity Theft Insurance”