Does Homeowners Insurance Cover Foundation Damage?
A standard homeowners policy includes four types of coverage: dwelling, personal property, additional living expenses and liability. Of those four policy components, only dwelling coverage insures against foundation issues. However, your home insurance claim for your house's specific foundation problems may not be covered by your specific homeowners policy.
For example, a standard homeowners policy will not cover foundation damage due to the improper use of soil, improper drainage, tree roots and temperature changes. In short, an insurance claim related to your house's foundation will be successful only when the cause of that foundation damage is one of the "covered perils" recognized by your homeowners insurance policy.
Named vs. Open Perils: What's Covered by Your Policy?
There are three common types of homeowners insurance coverage: HO5 insurance recognizes more perils and costs more than HO3, just as HO3 insurance covers more perils and costs more than HO2 ("HO" stands for "homeowner"). In short, most HO2 policies cover only the following perils and absolutely no others:
Fire and smoke
Tornado and windstorm damage
Water damage from pipes that suddenly, unexpectedly burst
Damage caused by vehicles and airplanes
Damage due to the weight of ice, snow or sleet
Vandalism and mob violence
An HO2 policy is a "named perils" policy, because it covers only the specific perils named in the policy. HO3 and HO5 are "open perils" policies, meaning they cover hazards that your policy doesn't specifically exclude.
An HO3's dwelling coverage covers open perils and its personal property coverage covers only named perils, HO5's dwelling and personal property components both cover open perils, which is one reason an HO5 policy costs more than an HO3 policy. Nevertheless, HO3 and HO5 dwelling coverage typically exclude the following perils:
Nuclear disasters and war
Foundation Issues That Are Not Covered
Homeowners insurance doesn't cover basic, everyday wear and tear and home insurance also does not cover negligence. As a homeowner, you have the responsibility to stay on top of everyday maintenance and general upkeep. Most insurance will not cover foundation problems caused by these conditions, according to the American Society of Home Inspectors:
Misuse of Soil
The misuse of soil is a big cause of foundation damage. Over time, the weight of your home will condense the soil beneath it; if the soil is compacted unevenly at the start, your residence may settle unevenly and begin to crack, potentially causing access problems (jammed doors) and, ultimately, structural damage.
Having poor drainage can lead to wet and dry patches beneath your home. Wet patches expand, pushing under a house's base, and dry patches shrink. Of course, all this expansion and contraction affects the substructure. To prevent foundation damage from this type of earth movement, make sure your gutters lead water far away from your residence. Also, make sure that the ground around your crib slopes away from the building. Updating your drainage helps prevent water damage and keeps moisture levels uniform.
Will homeowners insurance cover foundation problems related to tree roots? Sadly, your insurance company will not cover this slow-moving, years-long event. In fact, insurers consider any disruption from tree roots to be negligence on the owner's part and saddle the owner with the repair costs.
When a tree is too close to or has direct contact with your residence, it can push against your home's structure and drain high volumes of the soil's water beneath your residence. This change in moisture levels can have drastic results on your substructure. Since this event is not covered by insurers, you'll have to contact and pay a contractor if you can't take care of the problem yourself to impede further damage.
Foundation damage caused by hot and cold temperatures is not covered by homeowners insurance. The changing temperature can cause water molecules in the soil to shrink and expand. As time passes, this fluctuation can result in damage to your home's substructure. Unfortunately, homeowners insurance will not cover foundation damage of this variety. You would have to pay for any repairs out of your own pocket.
When Do You Need a Foundation Specialist?
A foundation engineer and a foundation repair specialist cover substructure issues, each offering their own expertise and range of services. While most policies will decline to pay for a foundation specialist, such an expert can help you to manage the responsibility for which insurers hold the homeowner responsible. In short, an engineer is for big problems, and a repair specialist is for smaller problems.
A Foundation Engineer
A foundation does not come with a warranty for future foundation repairs. While insurers loathe to pay a claim for settlement and other long-standing structural issues, you can always access the assistance of a foundation engineer. If you can see large cracks in your substructure or your doors and windows are sticking or jammed, an engineer can assess your substructure, determine the cause of the problem, develop a solution and oversee that the repairs are done correctly.
A Foundation Repair Specialist
Unless you are dealing with the aftermath of poor construction or downright faulty construction, you should call a repair specialist long before you call an engineer. A repair specialist deals with smaller substructure cracks and other evidence of early movement. For a reasonable price, a substructure repair specialist can cover foundation issues that are not drastic, and some carriers insure some repair methods. In fact, a repair specialist will tell you if you need an engineer!
About Your Home's Substructure
Whether your home's substructure is poured concrete, block or stone, it is important for a home to have a solid base. Most foundations are built using poured concrete; if poured correctly and on a firm footing, a concrete substructure can last a lifetime.
But even concrete foundations are susceptible to the forces of nature, such as water erosion. Water erosion is the No. 1 cause of problems for home foundations. If too much water accumulates, whether from heavy rainfall or a burst pipe, the land under the foundation can be washed away, causing the substructure to move. So, you should stop any leaks, no matter how small, as soon as possible. To get your foundation fixed, you may have to hire a repair specialist for small problems or an engineer for big problems.
On the flip side, a long drought may cause your home's base to settle. So, too much and too little water can have a negative impact on your home's platform. Monitor both situations carefully and consider having a specialist check out the extent of the damage. You can save today what you might have to pay for tomorrow.
Does Homeowners Insurance Cover Cracked Walls?
A standard homeowners policy will cover cracked walls if the cracking was caused by a covered peril. For example, if your walls cracked as the result of a hurricane or a vehicle that careened into your house, the damage will most likely be covered.
Most home insurers will cover the cost to address the gradual sinking of the land upon which your house stands, called "subsidence," but some insurers may only pay to stop the subsidence and stabilize your house, not fix the cracks that resulted from the subsidence. Homeowners insurance will not cover cracks in the wall that result from your house settling, which is less serious than subsidence, but can also cause damage to walls.
Home insurance will never cover cracks that are the result of the builder's incompetence or cracks that can be repaired with drywall and paint.
However, if you have large, diagonal or stair-step cracks, you may have a structural problem that's covered by the dwelling coverage of your homeowners insurance policy. But before you file a claim, hire a licensed engineer to inspect your home to determine the underlying cause of cracking.
Warning Signs of a Compromised Substructure
Not sure if something is wrong with your home's substructure? Here are some key warning signs that may signal trouble for the platform upon which your residence sits and your residence itself.
It is normal for a substructure to sink and develop tiny cracks in the first two or three years after construction. While hairline cracks are common, larger cracks are cause for concern. So, if your cracks are anything but tiny, you may have foundation damage. While vertical cracks are usually the result of ordinary settlement, horizontal, wall-to-wall cracks may be evidence of water pressure and unbalanced soil and should be investigated immediately. Diagonal and stair-step cracks suggest your house is settling unevenly due to uneven soil conditions, which may occur due to freezing, drought and heavy rainfall.
A Settling or Sinking Substructure
If your home appears to be sinking or having settlement issues, be sure to have your home's foundation checked out by a professional who can assess the damage. Remember, an insurer will not cover this claim, even if the settling or sinking is due to incompetent or faulty construction.
If your home's slab foundation has moved in an upward direction, the insurance industry calls this "foundation upheaval." This upheaval generally affects the perimeter area of your home's slab platform, but it can also affect your home's interior, including doorways and hallways.
If you notice that your home's doors are sticking or not opening and closing properly, this could be a sign there is a problem with your home's base. Unfortunately, this kind of slow damage is not recognized as the basis for a legit insurance claim.
Gaps Around Windows and Doors
Homeowners often notice gaps around their exterior window frames and exterior doors. They may even notice that doors no longer latch. These are all red flags.
If you notice floors that are off level and appear to be sagging or dipping, you may have problems with your home's substructure.
A Wet Crawl Space
Finding heavy moisture in a crawl space is a red flag that your house has a substructure problem. Have a professional investigate this problem immediately.
Cabinets Separating from the Walls
If your kitchen cabinets and countertops seem to be pulling away from the wall, this movement is another red flag that you may have substructure issues. When walls aren't level, the cabinet and countertops won't be level, either.
What To Expect When You File a Foundation Claim
If you suspect your foundation damage is compromising your house's overall structure, you should check your policy's declarations page to see if you're covered. The first page of your policy summarizes the scope of your coverage and will help you to quickly determine whether or not filing a claim makes sense.
The claims process begins when you inform your home insurance carrier of your foundation issue. Your insurance agent will fill out a "loss notice," which will include the details of your report. After that, you should expect a claims adjuster to inspect the foundation damage to verify the legitimacy and accuracy of your claim; further, the claims adjuster will determine whether your home policy covers the reported damage, then make a final report to your carrier.
If your claim is successful, you will receive two checks. The first check will be an initial down payment on the claim. Later, you will receive a second check to cover the balance of the claim. You may be offered an on-the-spot, lump-sum settlement, but you typically don't have to accept this offer. Finally, if the damage is more serious than initially estimated, you can open your initial claim to file for further compensation.
Have You Thoroughly Vetted Your Home Policy?
Does your homeowners insurance cover foundation damage that is repairable? Now is the time to ask your agent about the specifics of your insurance policy and find a new insurance agent if you're not happy with your coverage. For instance, note that a standard homeowners insurance will not cover small cracks in your foundation.
Here are some frequently asked questions to ask your insurance agent about foundation repairs:
Does my policy cover substructure damage that's repairable and in what instances?
Will my policy cover the repair of small cracks in the foundation?
What foundation repair methods does my insurance cover?
How much will insurance cover the cost of substructure fixes?
What kind of evidence is needed to establish a foundation problem?
How Foundation Damage Affects Property Value
Your home's structure and substructure have a direct impact on your home's property value. In fact, most foundation problems can reduce a home's value by up to 15%. For a $250,000 home, that would mean a drop in value of up to $37,500. Another downside to foundational damage is how the home appears to potential buyers. Potential home buyers think twice about sagging floors, ceiling cracks and foundation cracks.
If you are having a foundation issue, you have two choices: You can hire a contractor to fix it or you can reduce the sale price of your home to offset the expense of the needed repair.
The price tag of the repair varies based on the type of foundation, the severity of the problem, the materials and house size. Minor cracking can be repaired for a few hundred dollars. A more severe problem could cost thousands.
Maintaining Your Home's Foundation
Here are some tips to help you maintain your crib's substructure:
Maintain your gutters and downspouts.
Look out for puddles.
Watch out for cracks.
Inspect your plumbing every year.
A leaking sprinkler system or sewer line can lead to water damage to your house foundation, and it's a smart move to have them inspected each year. Contact a specialist for their expert opinion.
Get the Homeowners Insurance You Deserve
While the dwelling portion of a standard homeowners policy will pay for foundation damage when that damage is the result of a named peril—fire, lightning, a water-heater explosion or the impact of a vehicle, for example—it will not cover damage that stems from other hazards: improper use of soil, improper drainage, tree roots and temperature changes. However, every insurer and every policy is different, so it's best to ask your insurance agent to clarify what your policy covers and doesn't cover and what you can expect from the insurance company if you file a claim.
If you decide you want a better policy at the cheapest price, shop around, comparing home insurance companies and their prices for the same or similar policies. SmartFinancial can do all the comparison-shopping for you, sorting through all the homeowners policies in your area to find the best, cheapest policy based on your profile and home. What's more, SmartFinancial's team of licensed insurance experts can answer any question you might have. Just enter your zip code below or call 855-214-229 for a free quote.
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