Sinkholes, sex parties and other freaky apartment mishaps: what's insured and what's not?

By Virginia K. Smith | May 29, 2014 - 3:30PM

We've heard a lot of nightmare apartment stories over the years, but last month's tale of a Florida woman gutting her home after an "exploding" corpse leaked into her apartment from the unit above may be the all-time worst.

After a seven-year legal battle, an appeals court recently decided that, while her insurance policy did cover explosions, this incident didn't fit the bill. "The plain meaning of the term 'explosion,'" the court wrote, "does not include a decomposing body's cells explosively expanding, causing leakage of bodily fluids."

Sure, this is a one-in-a-million event, but it actually has wider implications, as apartment insurance broker Jeff Schneider of Gotham Brokerage explains: "There are two kinds of policies. Most people have a 'named perils' policy which states that the policy covers nothing except specifically listed perils--fire, theft, smoke, explosion, windstorm, certain water overflows, among them."

But for a price increase of about 20 percent, a renter or owner can get broader "all risk" coverage, which Schneider says probably would have covered the exploding corpse.

"The quotation marks always appear because 'all-risk' is not in fact all-risk," says Schneider. "But the policy states all perils are covered unless excluded, so the burden falls on the insurance company to show why something is excluded."

In general, he says, insurers tend to exempt earthquakes, war, neglect, pollution, and "flooding from rising waters" from the coverage.

So what other types of, shall we say, unexpected home damage would be covered?

Airbnb sex parties (or any other damage from short-term renters)

Back in March, comedian Ari Teman rather infamously rented out his Chelsea apartment to an Airbnb guest, only to have the place trashed by a $20-a-head sex party thrown by his renter. In this case, Airbnb reimbursed Teman for $23,817, but he wouldn't have been so lucky with his insurance. "Airbnb rentals are excluded on virtually all policies, as are all other short term rentals," Schneider tells us.

If you threw a rager that ended up causing damages, you'd likely have coverage, says Schneider, but if you charge admission, you'd probably be out of luck.

Sinkholes

It's not a problem you see a lot in New York (other than that chasm that opened up outside of Katz's last week), but on the off-chance you do encounter a sinkhole-related home issue, know that you're likely not covered; even in states where this type of thing is common, insurers are rarely required to offer sinkhole coverage, and generally don't. (Missouri's currently working on a bill to make it a requirement, however).

Sewer Damage

Though it's more common than we'd care to think about, sewage-related damage is only sometimes covered. Issues within the building--like, say, an apartment dweller who had his entire building's sewage spew out of his sink after an artist neighbor clogged the pipes with latex paint--can be added to coverage in both named peril and all-risk policies, says Schneider. But backups that come from the street are "usually not covered," he says, and trying to get money from the city for negligence is generally a dead end.

Run-ins with the Animal Kingdom

It's that time of year when we hear a surprising number of stories about massive local bee swarms--really, way more than you'd think. Every couple of years we also seem to hear a new story about an apartment full of say, alligators and boa constrictors, and let's just say it ~~haunts~~ sticks with us.

If your tarantula, snake or swarm of bees injures a neighbor, will you have to pay out of pocket? Possibly. Standard policies generally cover dog bites, so if Rover goes feral, your insurance will likely foot the bill. As for injuries from less common pets, most policies don't cover them, but there might still be reason to call the insurance company. "If you have the policy and then later get an exotic pet or a bee hive and neighbors are injured," he says, "coverage would apply."

Even with illegal animals, "there might well be coverage" for the costs of a lawsuit if you got the insurance after getting the pet. Probably not a strategy to take up for supporting your love of venomous snakes, but good information if you have any kind of incident with someone else's pet. It's comforting, in its way.

Fracking

Plenty of concerns come up with this invasive mining technique, particularly if you own property upstate. But if the drilling causes damage in the form of contaminated water, you almost certainly won't be covered, as this falls under the umbrella of "pollution" damage, "which is virtually always excluded" from policies, says Schneider. Of course, in most cases, you'd have to have given consent for drilling to take place on or around your property, so worth considering before you sign off on anything.

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