diff --git a/homeassistant/util/yaml.py b/homeassistant/util/yaml.py
index cf773bb999f..42776241843 100644
--- a/homeassistant/util/yaml.py
+++ b/homeassistant/util/yaml.py
@@ -43,6 +43,9 @@ def load_yaml(fname: str) -> Union[List, Dict]:
     except yaml.YAMLError as exc:
         _LOGGER.error(exc)
         raise HomeAssistantError(exc)
+    except UnicodeDecodeError as exc:
+        _LOGGER.error('Unable to read file %s: %s', fname, exc)
+        raise HomeAssistantError(exc)
 
 
 def clear_secret_cache() -> None:
diff --git a/tests/util/test_yaml.py b/tests/util/test_yaml.py
index 7c7bb0b9255..79cae43b845 100644
--- a/tests/util/test_yaml.py
+++ b/tests/util/test_yaml.py
@@ -92,6 +92,7 @@ class TestYaml(unittest.TestCase):
         mock_walk.return_value = [
             ['/tmp', ['tmp2'], ['zero.yaml']],
             ['/tmp/tmp2', [], ['one.yaml', 'two.yaml']],
+            ['/tmp/ignore', [], ['.ignore.yaml']]
         ]
 
         with patch_yaml_files({
@@ -123,6 +124,7 @@ class TestYaml(unittest.TestCase):
         mock_walk.return_value = [
             ['/tmp', ['tmp2'], ['first.yaml']],
             ['/tmp/tmp2', [], ['second.yaml', 'third.yaml']],
+            ['/tmp/ignore', [], ['.ignore.yaml']]
         ]
 
         with patch_yaml_files({
@@ -155,6 +157,7 @@ class TestYaml(unittest.TestCase):
         mock_walk.return_value = [
             ['/tmp', ['tmp2'], ['first.yaml']],
             ['/tmp/tmp2', [], ['second.yaml', 'third.yaml']],
+            ['/tmp/ignore', [], ['.ignore.yaml']]
         ]
 
         with patch_yaml_files({
@@ -191,6 +194,7 @@ class TestYaml(unittest.TestCase):
         mock_walk.return_value = [
             ['/tmp', ['tmp2'], ['first.yaml']],
             ['/tmp/tmp2', [], ['second.yaml', 'third.yaml']],
+            ['/tmp/ignore', [], ['.ignore.yaml']]
         ]
 
         with patch_yaml_files({
@@ -208,6 +212,13 @@ class TestYaml(unittest.TestCase):
                     "key4": "four"
                 }
 
+    @patch('homeassistant.util.yaml.open', create=True)
+    def test_load_yaml_encoding_error(self, mock_open):
+        """Test raising a UnicodeDecodeError."""
+        mock_open.side_effect = UnicodeDecodeError('', b'', 1, 0, '')
+        self.assertRaises(HomeAssistantError, yaml.load_yaml, 'test')
+
+
 FILES = {}