Does Homeowners Insurance Cover Foundation Problems?
When you bought homeowner’s insurance, chances are you were worried about a destructive storm or a freak accident. But what about more insidious damage – like the kind your foundation is subject to?
If you have foundation issues, your homeowner’s insurance might not be as helpful as you think. Some homeowner’s insurance policies cover foundation damage when the damaged is caused by a covered peril. Read on to see if your insurance company would lend you a hand (or, hey, a buck) in the event of some serious foundation damage.
Why Foundations Crack
Barring construction defects, foundation problems usually happen because the ground on which they sit changes. If the soil expands, it will push your foundation up; if the soil underneath your foundation erodes, your foundation can sink into it. When your foundation changes shape, it impacts the overall structure of your house and can cause cracks in your bricks, drywall or in window and door frames.
Your Insurance Policy
Determining whether or not your insurance policy covers foundation issues is a two-step process.
- Look at your policy or talk to your agent to see if your policy specifically covers foundation damage. Typically, the small cracks that come from settling will be excluded, but other types of damage may be covered.
- Review your policy to see when foundation damage is covered. Some types to coverage to look for include:
- Earth movement coverage. Related to earthquake insurance, this will protect you against movement in the soil that could damage your foundation.
- Flood insurance. This can protect you from major water damage to your home and foundation.
- Ground cover collapse coverage. Used in places like Florida where sinkholes are common, this coverage could insure a damaged foundation.
In addition, damage to your foundation that comes from erosion caused by a burst pipe may be covered. Unfortunately, one of the most common causes of foundation damage — the normal compression and expansion of the ground through the seasons — is rarely covered by homeowner’s insurance. The clay soils present in much of Texas are particularly subject to compression and expansion.
Repairing Your Foundation
Good maintenance of your home’s foundation, including having proper drainage in place, is key to saving yourself from costly repairs. But if a repair is unavoidable, your first step should be to call your homeowner’s insurer. If they won’t cover the repair, you have some choices to make.
Unfortunately, not making the repair is usually not an option. Over time, your house can continue to settle, leading to more structural damage – eventually becoming unlivable, in some cases. If the damage stems from a foundation issue that isn’t covered, your insurer could refuse to pay claims on any of the necessary repairs.
The first step in getting your foundation repaired is to have a qualified and experienced contractor come out and determine what you need to have done. Then, you can choose from one or a mixture of the following financing sources to pay for the work:
- Cash or check. Paying for your repairs outright is usually the least expensive option.
- Your home’s equity. Whether you do a cash-out refinance, use a home equity line of credit or take out a second mortgage, your home can frequently pay for its own repairs. The interest on this loan may be tax-deductible.
- Credit cards and personal loans. Other forms of financing can also help.
- Contractor financing. Many contractors offer their own payment plans. Some, like Ram Jack’s financing options, have low interest rates and a same-as-cash or zero down payment option to reduce your costs.
Even if your homeowner’s insurance doesn’t cover foundation repair, remember that your foundation supports your biggest investment: your home. Protect it with help from the experts!