4 Major Disasters Homeowners and Renters Insurance Won't Cover

Money Girl explains 4 major disasters that are surprisingly not covered by home or renters insurance.

Laura Adams, MBA
6-minute read
Episode #369

Having homeowners or renters insurance is an important part of protecting your personal finances. But just because you have a policy doesn’t mean that every potential claim or cost will be covered.

Unfortunately, many people don’t realize this until after a disaster strikes and it’s too late. So, in this episode, I’ll review what is and isn’t covered by home or renters insurance. You’ll learn 4 major disasters that are surprisingly not covered, and what to do to stay safe.

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What Homeowners Insurance Covers

Last week, after the strongest earthquake in 25 years hit northern California, I was chatting with a Money Girl Facebook follower named Mariela. She said, “I’m so glad I got earthquake insurance because of you!” She gets a virtual high-five.

Sadly, many people without earthquake insurance won’t be feeling so grateful when they attempt to make a claim and find out that their damage isn’t covered by a typical homeowners or renters policy.

Before I tell you more about what is not covered by a home policy, let’s back up so you understand what is. A standard homeowners policy gives you 4 main types of coverage:

  1. Dwelling coverage: pays to rebuild or repair damage to the structure of your home caused by a covered event, such as a fire, hurricane, hail, lightning, vandalism, or other disaster listed in your policy.
  2. Contents coverage: pays to repair or replace your damaged or stolen personal belongings, such as furniture, sporting equipment, and clothes. You're covered anywhere in the world, as long as the loss is caused by a covered event.
  3. Liability coverage: protects you if you’re sued because you, family members, or pets cause property damage or medical injury on your property, or while you’re away from home.
  4. Additional living expenses: pays you a certain amount if you’re temporarily unable to live in your home due to a covered event, such as a fire, lightning strike, or storm.

See also: 5 Ways to Save Money on Home Insurance

What Renters Insurance Covers

If you rent an apartment, condo, or house, you need renters insurance. It gives you many of the same protections as homeowners insurance, except that you don’t insure the physical dwelling—that’s the landlord’s responsibility.

A standard renters policy protects you against the same covered disasters as home insurance, such as fire, lightning, storms, and theft. It covers your personal belongings, liability, and additional living expenses, if you have to move out while repairs are being made.

Renters insurance is a very inexpensive policy that costs $185 a year on average across the U.S. Remember that in the event of a disaster, your landlord might be sympathetic about your damaged or stolen possessions, but he or she isn’t obligated to replace them for you.

Read or listen to Your Guide to Renters Insurance, to learn more.

See also: Do College Students Need Renters Insurance?


About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura's previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.