Insurance is not a maintenance policy

October 29th, 2015 | in Insurance

"I own a house and I have insured it. No worries. If something happens I can get my insurance to cover the damages right?” You’re right in agreeing with this statement, but only partially.

Insurance is not designed or meant to be a maintenance policy on your property

Normal wear and tear is not covered by insurance. If this was the case, then the insurance cost to cover the eventual failure of any item would be astronomical. There would be a 100% guarantee that at some time the insurance would pay out. Insurance companies normally underwrite risks based on a couple of things; the chance of something happening (frequency) and the size of the loss (severity). The combination of these occurrences along with a few other variables like type of risk and location all help determine the appropriate amount of premium to charge for coverage. Of course, this is not a complete list of variables but it will help you understand the approach used by insurers.

So, what happens when something does fail and there is damage to my property?

Subsequent damage to other parts of the property is generally covered. An example would be a house fire that caused extensive smoke and water damage that was started by a faulty electrical connection. All of the damage would be covered, subject to the policy deductible (except for the faulty connection). However, this is usually a moot point since the cost of that item would be very small in comparison to the overall damage costs.

When it comes to water damage, there is a lot more to consider in assessing coverage. Gradual deterioration of a water hose or fitting that had been leaking for many months, causing mold and mildew may not be covered. This damage should have been noticed earlier by the property owner and the problem corrected. Similarly, if your roof leaks and causes damage to the soffits and interior walls, then that damage may not be covered because the integrity of the roof had not been maintained. This would include housekeeping items such as keeping the moss off your roof and cleaning your gutters regularly.

A rather simplistic explanation would state that if the damage was sudden and accidental then there is a good chance that you insurance policy will cover the damage, providing of course that exposure is part of your insurance policy such as sewer backup, which used to be automatically included.