Although floods and earthquakes are widespread in the U.S., the damage they cause is not covered by the standard HO-3 policy. Almost 90 percent of the U.S. population lives in earthquake-prone areas; since 1900 earthquakes have occurred in 39 states and caused damage in all 50. If your home is located in a flood-prone area, you are 26 times more likely to suffer a flood loss than a loss from fire. Of course, the cost of flood and earthquake coverage reflects the high risk involved. If you live along a shoreline, you can expect to pay a higher premium for flood coverage than someone living in the mountains.
Other exclusions can include neglect, intentional loss, earth movement, general power failure and even damage caused by war. A costly exclusion is the ordinance or law exclusion, which refers to changes in building codes that can drive up the cost of rebuilding or repairing. Thus, if you discover when replacing damaged property that current law requires a higher grade of electrical wiring, the difference in cost between the old wiring and the new wiring is your responsibility.
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