Insurance Agencies Don’t Cover Foundation Repairs

Homeowners insurance can compensate you when your home or property is damaged in ways that your policy covers.

Damage to the foundation is one of the most serious — and one of the most expensive — types of damage your home could sustain. Though homeowners insurance carriers sometimes cover foundation damage, a homeowner with a damaged foundation is often left holding the bill.

Damage to the home’s foundation is typically excluded from a standard homeowners insurance policy. That’s because the foundation is the structural basis of a home, and insuring it presents a financial risk to an insurance carrier, so many simply don’t. Most major insurance carriers offer a “dwelling foundation” rider on your homeowners policy for an additional fee. This rider typically covers specific, limited perils, such as water damage due to a burst pipe or water seepage. Each insurance carrier has a different set of perils that are covered on the foundation rider.

Your insurance carrier is legally required to list, in detail, the perils that are covered by your homeowners insurance policy. Your policy and dwelling foundation rider lists the perils covered, such as burst pipes, water seepage and fire damage. Perils typically excluded in a standard policy and its riders are defective construction, flood damage and earthquake damage. Flood and earthquake policies must be purchased separately.

Another way to insure against damage to your foundation is to purchase different types of “endorsements” that can added to your policy. No specific endorsement applies to foundation damage, as it is considered a specific peril. But if you have an endorsement for a specific peril that damages your foundation, your foundation repairs will be covered. For example, if you added an endorsement covering sewers and drains, and your foundation is damaged due to a sewer problem, it will be covered under the endorsement.

If your foundation is damaged, and you believe it should be covered under your policy’s rider or endorsement, you have options if your carrier denies your claim. No federal agency regulates insurance companies, but each state has an office of insurance regulations or a state insurance commissioner to protect the consumer against insurance carriers that fail to honor legitimate claims.