Does home insurance cover foundation damage?

Home insurance may help you to avoid paying the substantial cost of foundation repair, but your policy may only cover foundation damage in some cases, such as when the damage is caused by specific events.

When it comes to home and contents insurance policies in Australia, the terms of disaster coverage can be quite broad. This can sometimes result in underinsurance, where you need to pay a huge proportion of the cost of repairs out of pocket, despite having home insurance.

Understanding if your house’s foundation repair will or will not be covered by homeowners insurance could be the difference between a successful claim and having to dip into your savings in an emergency.

When can you use your home insurance for your home’s foundation?

Cracks, leaks, a shift in the soil and other types of damage to your home’s foundation are not only harmful to the structure, but expensive to repair. If you have home insurance and your policy covers an event that causes foundation damage, these repairs may be covered. For example, if your policy covers floods, you’ll be covered for repairs if a flood damages the foundation.

Some commonly included insured events are:

• Vandalism
• Fire
• Falling objects such as trees
• Storms

You may want to consider the location of your house and its risk of insured events when choosing your home insurance policy. For example, if your area is vulnerable to bushfires, consider opting for a policy that includes this cover. You might also have to pay an additional premium to get cover in events like floods and earthquakes.

To find out which events an insurance policy covers, along with any exceptions or limitations that apply, thoroughly read the policy’s product disclosure statement (PDS).

When does your home insurance not cover your home’s foundation?

Home insurance coverage can vary from one insurer to another, including what events are specifically covered or not covered. However, most policies don’t cover events that are avoidable or preventable like:

• Pre-existing damage
• Faulty construction
• Periodical wear and tear
• Shifting soil
• Damage caused by tree roots
• Damage caused by termites
• Damage caused due to negligence or illegal activities

Insurers often believe you should notice these events in their early stages and prevent them from escalating. If damage caused by these events could’ve been prevented, insurers are unlikely to include them in your policy cover.

Is soil shift caused by floods covered by home insurance?

While floods may be covered in your home insurance policy, soil shifts often aren’t. But if soil is shifted due to a flood, you may still be able to raise a claim.

The success of your claim may depend on whether the flood is the direct or indirect cause of the shifting soil. If you can demonstrate that a flood directly caused a landslide or erosion event and your policy provides flood cover, you may be eligible to claim. However, if the flood caused a subtle change to the soil’s consistency, which then shifted later, your claim may be rejected, even if your policy covers floods.

Working out if you’re covered or not can be confusing, especially because each insurer uses different definitions for the insured events in their policies. It’s always a good idea to read the PDS carefully before choosing an insurer. You could also consider contacting the insurer directly to understand the exact details of your cover.

What to do if the damage to your foundation isn't covered

In most cases, if the damage to your house’s foundation is caused by a source that is not covered by your insurance, you will need to pay for the repairs yourself.

But before you give up, you could consider contacting a foundation specialist for a second opinion if your claim is denied. For example, if your insurer claims that flooding was an indirect cause of your house’s foundation damage, a foundation specialist may be able to confirm it was the direct cause.

Before selecting a home insurance policy that covers foundation repair, you could browse through different home insurance options to choose one that matches your requirements.

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