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If terrorists destroy a home, will insurance pay?

Test your knowledge. Can you score 100% on this insurance pop quiz?

By MSN Money Partner Aug 28, 2014 12:12PM

This post comes from Maryalene LaPonsie at partner site Money Talks News. 


Money Talks News on MSN MoneyIt's time for a Money Talks News pop quiz, and this time, we're delving into the world of insurance.

You may be spending a lot of money on insurance each month, but is the company going to come through when you need it?

Let's see how many of these insurance questions you get right.

Your $50,000 stamp collection goes up in flames, along with your house. Will your insurance company pay?

Not unless your homeowners policy has a rider specifically for your stamp collection. Even then, it may not pay the whole amount.

Insurance company Travelers notes that standard homeowner policies may restrict payouts for valuable items. For example, these are common limits for popular personal possession categories:

  • Jewelry or furs -- $1,000.
  • Firearms -- $2,000.
  • Silverware -- $2,500.

Policies may also limit coverage for home contents to a certain percentage of the home's value. Either way, it may be tough to get the insurance company to cough up $50,000 for your lost stamps.

However, you should be able to buy a rider for high-value items. Unfortunately, even these riders can have limitations. Travelers says a typical rider might only cover up to $10,000 per item. If you can't get enough coverage through your homeowners plan, you may want to take out a separate policy specifically for your valuables.

Terrorists bomb your house. The insurance company will definitely pay, right?

Right, so long as it's just a standard explosion, and we aren't at war.

The Insurance Information Institute told Business Insider that nuclear, biological, chemical or radioactive weapon attacks probably won't be insured losses. However, if it is your run-of-the-mill explosion or damage caused by resulting fire or smoke, you should be all set.

Most homeowners policies also typically exclude acts of war. You may think it's a good thing we haven't actually declared war since 1942, but your insurance company may define war a little more broadly and include insurrection and rebellion, among other things.

House on fire © Comstock Select/CorbisOther common exclusions on homeowners policies include:

  • Earth movement.
  • Flooding or water damage.
  • Mold.
  • Losses related to government ordinances or action (i.e., condemnation or seizure).
  • Faulty workmanship.
  • Pest removal.
  • Ordinary wear and tear or losses that are the result of neglected maintenance.

Your child is heading off to college and will be living in the dorms this year. Do they need to buy their own renters policy?

No, your policy should have them covered.

Here's what Wells Fargo has to say on the subject:

If your child lives in a dorm, your homeowners or renters insurance policy may extend to cover their belongings. Most policies limit a student's coverage to 10 percent of the parent's coverage. In other words, if your homeowners policy has a personal property limit of $300,000, your child's belongings will be covered up to $30,000, after the deductible.

However, that generally applies only to full-time students living in a dorm. Part-time students or those who are staying in off-campus housing may need to get their own coverage. Check with your insurance company to find out the particulars of your policy.

Some *&$#!@ person put sugar in your gas tank and ruined the engine. What will your car insurance company do?

Pay out the claim … if you have comprehensive coverage.

Just as your insurance company will pay out for a stolen car, most comprehensive policies also cover vandalism such as graffiti, key damage and, yes, even sugar in the gas tank.

Esurance suggests you take these steps if you’ve been the victim of a vandal.

  • Call the police to file a report.
  • Take photos of the damage, if possible.
  • Contact your insurance company.
  • Wait to clean up or make repairs until the police have given the OK.

Don't forget that your deductible will still apply to vandalism claims.

So how did you do?

The moral of the story is to always read the fine print on your insurance policies before assuming something is, or is not, covered. When in doubt, call the company or your broker for help in deciphering the legalese.

More from Money Talks News

Aug 28, 2014 3:06PM
I don't know but I'll be calling my agent either Flo or Dennis Haysbert to the scene on that one.
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