Will my homeowners insurance policy pay for repairing my foundation?
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Asked May 5, 2014
Insurance companies use statistical risk tables as part of the calculation to set your premiums. To do that, they include a number of predictable risks, such as the likelihood of a fire or major storm. When there is no way to determine a specific risk, traditional insurance companies are reluctant to provide coverage and the foundation of a home is one of those unpredictable risks.
The problem is that there are too many variables which can have an impact on the foundation of the home. Digging near the home, burst pipes, and pools or saunas are all possible problems for the foundation that could be partially inspected and possibly predicted. But the dangers run much deeper and there is no way to predict when a sinkhole or ground settling will cause the foundation to crack or fail. For insurance companies, these risks are simply too high to guard against, so they exclude the foundation from standard home coverage.
This does not mean you cannot insure the foundation of the home, but doing so will entail purchasing a rider for your home policy or even buying coverage from a separate, high risk insurer. When the home is appraised for coverage, inspecting the foundation is standard practice, but that information is used to determine whether the company will provide coverage for the home rather than coverage for the foundation itself. If problems are found during that inspection, such as cracks in the foundation or evidence of settling, your house may be denied coverage until repairs are made.
Even worse, if the foundation of your house settles and causes damage to the home, claims for repairs to the covered portion of the home may be denied and the insurance company can even cancel your policy pending repairs and subsequent inspections. For this reason, it is a good idea to have the home thoroughly inspected before you buy it, so that you can make suitable repairs a condition of the home purchase before you sign any papers. Once you have bought the home, repairing the foundation is almost always going to be an out of pocket expense.
Answered May 5, 2014 by Anonymous