Insurance Coverage For Natural Disasters – Homeowner’s insurance covers many – but not all – of the dangers your home may experience. If you’re wondering if home insurance covers natural disasters, you’ve come to the right place.
Today, our team of licensed insurance agents are here to explore the perils covered by a traditional home insurance policy, and help you decide if you need more insurance coverage in an unbiased way.
Insurance Coverage For Natural Disasters
The short answer is mostly “No.” Homeowner’s insurance does not cover all natural disasters. But it may cover some of them, or it may help pay for certain damages related to a natural disaster.
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You may be wondering, “Does home insurance cover hurricane damage?” Or “Does home insurance cover volcanic eruptions?” We will answer these questions today.
Before we go any further, it’s time to establish some vocabulary. This way, you will be able to read and understand your property insurance policies, and this article will make more sense.
When shopping for property insurance, the following words and phrases will come up often. As a consumer, you should understand them.
Perils are specific events and types of damage that your policy covers. Most traditional homeowner’s policies cover perils such as:
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You’ll notice that there aren’t many major disasters on that list. A standard home insurance policy will not cover:
Most insurance companies do not cover these major regional problems, as they are too expensive to insure. If an insurer covered these events, and someone else was involved in your neighborhood, the insurance company would not be able to pay the claims. They could become insolvent, and the state government would have to step in.
Ultimately, some of the claims would be paid by taxpayers, the state would lose a ton of money, and many policyholders would not collect the funds they deserve. The insurance company would probably go out of business, and many more people would be left without any insurance.
Sometimes, homeowners buy an “all risk” policy, believing it will cover floods, hurricanes, landslides and so on. But if you read the policy, you will see that those hazards are excluded. The phrase “all risk” policy is incorrect, and some states are trying to prevent insurers from using this phrase in their paperwork, because it is so often misunderstood.
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To be clear here, an “all risk” policy does not automatically cover natural disasters such as floods or earthquakes.
The terms “riders,” “endorsements” and “amendments” are interchangeable. These are additional types of insurance that can be added to a policy. For example, depending on your situation, you may be able to add a rider for earthquake coverage to your standard home insurance policy.
This is not a separate policy, but an additional insurance to protect you in case of an earthquake. You’ll pay a little more for this coverage, but many homeowners feel it’s a worthwhile investment.
Now that we know what is, and isn’t, covered by a typical homeowner’s insurance policy, let’s talk about natural disaster coverage in terms of residential property.
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There is no all-inclusive natural disaster insurance policy for homeowners. Don’t confuse this with natural disaster insurance for your crops, which is a different type of insurance, for farmers.
Aside from a single catastrophe policy, you’ll need to shop for the unique perils that affect your region. Several types of natural disaster insurance coverage are available in some states through certain insurers. The availability of these policies or endorsements, and your need for them, is highly dependent on local weather patterns and risks.
For example, a Utah homeowner has little need for financial protection against tropical storms and hurricanes, so this type of policy or rider is likely not available in UT, and insurers there do not cover these perils on a policy. exclusion, either. They simply do not happen.
The answer is this: If you believe you could lose your home due to an erupting volcano, tidal wave or hurricane, then yes, a more comprehensive insurance policy will probably ease your worries. If you lose sleep at night because hurricanes are common in your region, you should consider shopping for more insurance.
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In the regions of Oklahoma, Kansas and Texas known as “Tornado Alley,” homeowners are rightly concerned about tornado damage. Wind damage is usually covered on a home policy. And damage caused by a falling tree limb or flying debris is covered. Homeowners in Tornado Alley are wise to discuss these points with their insurance company and seek additional property insurance for their structure and belongings if needed.
As we look at the coasts, homeowners there are worried about storms and tropical hurricanes. There are no specific “hurricane” policies on the market yet. But you can make sure your insurance policy covers wind damage, damage from falling limbs or debris, and water damage that can occur from broken windows.
Flooding is often associated with hurricanes, and it is important to remember that flooding is never included in a traditional home policy.
Flood insurance is another matter, entirely. Flood damage is not a peril covered on a standard insurance policy.
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For a long time, the only way to buy flood insurance was through the Federal Emergency Management Agency (FEMA.) National Flood Insurance Plan (NFIP) policies called these policies.
Today, we see large insurers offering flood insurance as riders or as comprehensive policies. Remember, your “all risk” policy probably doesn’t even cover flooding.
Homeowners, and even licensed insurance agents who do not deal in flood insurance, commonly misunderstand the phrase “100-year floodplain.” This phrase implies that an area is flooded once every hundred years.
Know that Mother Nature is not counting down the years until the next flood, 99, 98, 97…. A 100-year floodplain has a 1% chance of flooding in any given year. A property may experience flooding two or three years in a row, or twice in the same decade, in a 100-year floodplain.
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Legally, there is no law that requires you to carry flood insurance anywhere in the US. However, if your property has experienced flooding in the past, it may be wise to invest in a flood policy.
If your mortgage — the bank or the person you make a mortgage payment with — requires you to have a flood policy, you must comply with the terms of the mortgage contract.
Remember, your property does not need to be classified as a flood zone of any kind in order to flood. Think of it this way, if it rains, it can flood!
As of 2023, there is no comprehensive natural disaster insurance policy that covers all catastrophic perils. There is no single policy that will protect you against hurricanes, earthquakes, floods, and so on.
Natural Disaster Insurance Coverage
If such a policy existed, the premium – your insurance bill – would be based on the value of your property, your claim history, and other claims in your neighborhood.
There is no single set price for disaster insurance coverage, as such a policy does not exist. We have shown some costs in the table below, and these would be added to your normal home owner insurance costs.
Since you are concerned about natural disasters destroying your home, your best course of action is to have an open discussion with a licensed insurance agent about your current policy. Read it carefully, think about the dangers most likely to affect your home, and ask your insurance company about endorsements or additional policies.
For example, a California homeowner may worry about wildfires, earthquakes and landslides. In CA, a typical home policy will cover wildfires, earthquakes are not covered at all, and some insurers provide landslide coverage.
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Covered but you may be concerned about flood damage, hail damage, and water damage caused by ice dams after freezing rain and blizzards.
We know this seems like a repeat, but read your policy, know what perils you are insured against, and ask for endorsements if you need them. Insurance is complicated, so there’s no such thing as a silly question when talking to your agent.
To prepare you for that conversation, we’ve answered some of the most frequently asked questions about homeowner insurance and natural disasters, below.
Not exactly. Many of the perils associated with hurricanes are covered by your standard homeowner’s policy (HOP.) including:
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If your home is subject to massive landslides, mudslides or sinkholes, they may or may not be covered. In the future, your policy may or may not cover mold remediation, to remove and repair mold damage after a flood.
Again, most damage caused by a tornado should be covered by a normal HO policy. Wind damage, falling tree limbs, and even a fire started by a tornado will be covered by your homeowner’s policy.
Still, be sure to read your policy closely. Insurance companies can legally exclude some types of damage. And regional flooding is never covered.
Most homeowners insurance policies will cover the direct damage caused by a volcanic eruption. And that’s good news, because from 2023, there is no such thing as volcano or lava flow insurance. But this is also something to discuss with your preferred insurance agent.
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For example, if a volcano were to erupt and cover your yard in lava,
