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, only dwelling coverage is the applicable insurance policy for foundation issues.

Unfortunately, your home insurance claim for your house's specific foundation problems may not be covered by your homeowners policy. In short, an insurance coverage claim related to your domicile'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, like a fire or a tornado.

Your house is your biggest financial investment, so it only makes sense that you would want to protect that investment. Read on to learn more about the covered perils typically associated the foundation problems covered by the dwelling-insurance component of most standard homeowners policies.

Homeowners Insurance: Dwelling Coverage

Dwelling coverage pays to repair or rebuild the foundation and structure of your residence after a disaster, such as a fire. So, as a basic rule of thumb, you should purchase enough dwelling coverage from your insurance company to rebuild your house.

While your policy will cover damage caused by fire, hurricane, hail, lighting and other disasters, it does not cover other perils that threaten a home's foundation: floods, earthquakes, landslides and routine wear and tear.

Homeowners insurance does not cover foundation damage caused by floods, earthquakes or landslides.

While routine wear and tear is never covered by any insurance product, you can buy a stand-alone policy, also known as a "rider" or an "endorsement," for floods, earthquakes or landslides. If your residence is located in an area prone to these events, your insurer should recommend or even demand you get earthquake, landslide or flood insurance.

Damages Covered by Homeowners Insurance

If a tornado blew through your town, your homeowners insurance would cover any foundation damage directly caused by the twister, a covered peril. Since your homeowners insurance also covers plumbing backups, fires and explosions, it naturally covers any negative effects of those events on your foundation.

It is important to review your homeowners insurance policy. A good first step is to ask your insurance agent about the difference in coverage and liability limits between "named perils" and "open perils." For a primer continue reading.

"Named" Perils vs. "Open" Perils Coverage

While a standard homeowners insurance (HO3) policy covers only "named perils," you might ask your insurance agent about an HO5 policy, which covers "open perils" related to your house's structure as well as your personal belongings.

An "open perils" policy costs a little extra, but it covers risks that a standard policy doesn't.

Yes, an HO5 policy is more expensive than an HO3, but it covers more perils than those specified on an HO3's covered-peril list. According to the International Risk Management Institute, an open-perils policy covers "loss arising from any fortuitous cause," keeping in mind that "fortuitous cause" is "an event subject to chance without the implication of suddenness." You see, an HO3's named perils are all "sudden."

But open-perils insurance, also called "special perils" coverage, does not cover everything either. In fact, this home insurance product used to be called "all risks" home insurance, but that wording gave the impression that the product covered more than it actually did.

Contact your insurance agent to ask whether an HO5 policy would be a smart investment for your particular circumstances. If you're looking for a better advisor than the insurance agent you have now, get paired with a trustworthy agent in your area, who will offer you a free home insurance quote after you fill out some simple questions, beginning with your zip code.

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Does Homeowners Insurance Cover Foundation Foundation Repairs?

Problems That Are Not Covered

No home policy covers problems that are caused by negligence or wear and tear.

If homeowners insurance doesn't cover basic, everyday wear and tear, 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.

Improper Drainage

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 are leading 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.

Tree Roots

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.

Temperature Changes

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 are 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 the 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.

Water damage is the No. 1 cause of foundation issues.

On the flipside, 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 base 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.

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.

Foundation Cracks

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.

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.

Foundation Upheaval

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.

Sticking Doors

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.

Uneven Floors

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.

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Does Home Insurance Cover Foundation Repairs?

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 they don't seem qualified to answer your questions. 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?

Keep in mind that an insurance company may cover foundation repair costs in specific instances but not in others, such as shifting soil. If the substructure (or the structure) of your house is vandalized, your policy will most likely cover it—so file a police report to document the incident and contact your insurer. Also, contact a foundation specialist for estimates.

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.

If you are having a foundation issue, you have two choices: You can hire a contractor to fix the issue 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.

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.

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. 

Regularly inspect your home's foundation to stop any problems from getting worse.

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.

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