There are many ways your home’s foundation can be damaged, but insurance doesn’t cover all of them. Homeowners insurance policies usually only cover foundation damage that originates above the slab and is caused by perils like fire, water or vandalism. Foundation damage under the slab, regular wear and tear, and damage due to poor upkeep generally aren’t covered.
This article will explain:
Does home insurance cover foundation repair?
Homeowners insurance covers damage caused by many risks. The most commonly covered problems that may affect your foundation include:
- Fire and lightning
- Damage due to vehicles or aircraft
- Riot or civil disturbance
- Falling objects
- Water damage from plumbing, overflow or HVAC
If your slab weakens and cracks due to a fire, your home insurer should pay out to repair the damage. A standard homeowners policy, otherwise known as an HO-3, covers the above risks on an “open peril” basis. This means that unless the cause of the damage to your slab is excluded in your home insurance policy, it should be covered.
Standard homeowners policies pay out for covered structural damage, including your foundation, up to the dwelling coverage limit stated in your policy.
How does an insurance policy pay for foundation damage?
Home insurance policies reimburse you for property damage after covered losses through actual cash value coverage or replacement cost coverage.
Actual cash value policies pay to rebuild your home or replace damaged items based on their depreciated value. Replacement cost policies do not factor in depreciation. It's common for dwelling coverage to be paid out at replacement cost coverage.
Homeowners insurance exclusions to foundation repair
Standard homeowners insurance tends to exclude damage that isn’t sudden, accidental or sourced from above the slab. Commonly excluded foundation events include:
- General wear and tear
- Uneven compacted soil underneath the foundation
- Water damage caused by poor drainage or leaks
- Ground collapse under the slab due to a sinkhole or mine subsidence damage
- Tree root damage
- Earthquakes and flood damage
- Defects in the foundation due to poor construction
Dwelling foundation insurance riders may provide coverage for some of the sources of damage noted above. However, soil compaction and erosion are almost never covered by these riders.
Damage from floods and earthquakes is always excluded in standard home insurance policies. If you live in an area prone to floods or earthquakes, we recommend purchasing separate policies for them. Flood and earthquake insurance policies can provide the necessary coverage in the event of these catastrophes.
Are foundation cracks covered by home insurance?
Cracks are usually not covered by a home insurance policy. This is because cracks due to age or settling fall under general wear and tear, which isn’t covered by home insurance.
What to do if you see foundation damage
Once you see any foundation damage, it's important to act quickly in order to avoid further problems. Having a plan can reduce a lot of the stress that comes with the claims process:
- Hire a licensed contractor to inspect your house’s foundation damage. Get written documentation of the extent of the damage, the causes of the damage and an estimate of what it would cost to repair.
- Once you have the estimate, use it to decide if filing a claim is worthwhile. Any home insurance claim you make may result in a premium increase. If the cost to fix the foundation is close to your homeowners insurance deductible, you should consider paying for the repairs out of pocket.
- If you decide to file the claim, contact your home insurance company.
- Your home insurer will arrange an appointment with you for an adjuster to come to your home and examine the damage.
- Your home insurer will read the adjuster’s final report. If the damage reported is covered by your policy, your home insurance company will send you a check for the repair cost, up to your policy’s limits.
How much does foundation repair cost?
The cost to repair foundation damage depends on the issue. According to HomeAdvisor, major foundation repairs can cost $10,000 or more, and most homeowners pay between $2,000 to $7,500.
If your homeowners insurance claim is denied
If your home insurer denies your claim for foundation damage, you still have a chance. Your denial letter regarding the claim will state the reason for the denial of coverage. If the reason conflicts with your contractor’s statement, contact the contractor to help dispute the reasons with you. Your home insurer will consider the contractor’s assessment.
Should your claim still be denied, consider hiring a public adjuster to assess the damage. The public adjuster is on your side to make sure you get the best outcome possible with your foundation claim. Hiring one can be well worth avoiding paying for a foundation repair on your own.
How to prevent foundation damage
To prevent foundation damage, it’s important to get your home inspected before you move into it. Your home insurance won’t cover defects in the foundation from bad construction. You should also inspect the inside and outside of your house regularly for cracks, moisture in the basement and slanted floors.
Depending on the climate of the area where you live, you should make sure the soil around your home isn't too wet or dry. If the soil is too dry, you should water your land regularly. If it’s too wet, make sure water is directed away from your home.
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