Your home is the most expensive investment you’ll make in your lifetime. It’s crucial to protect your investment with comprehensive homeowner’s insurance to cover your home in the unlikely event of a disaster. In today’s world, climate change has increased the number and intensity of occurrences like windstorms, hail, and rain. The typical homeowner’s policy protects you from events including accumulating snow, heavy rain, wind, and fire. Most policies extend protection to extreme natural disasters including wildfires, volcanic eruptions, tornadoes, and even falling meteors.
However, despite the wide coverage you get from most typical homeowner’s policies, it’s still important to understand that your policy doesn’t cover everything. In fact, common disasters like earthquakes, floods, and intense storms like hurricanes are not covered in most policies and require supplemental insurance.
Disasters Not Typically Covered By Homeowner’s Insurance
Most homeowner’s policies will have exclusions included for flooding and earthquakes. Depending on where you live, you might also have limited coverage for hail damage to your property. Fortunately, there are other coverage options available if you live in a region that is prone to these types of disasters.
Flooding – Flood damage or mudflows are often excluded by most insurers. To get coverage, you’ll need to purchase a separate flood insurance policy through the National Flood Insurance Program. The NFIP compiles data on flood plains and works with private insurers to provide federally-sponsored flood insurance.
Earthquake and Sinkhole Damage – Most homeowners policies don’t cover damage caused by earthquakes or other ground movements including mudslides, landslides, sinkholes, and earthquakes. If you live in an area prone to earthquakes, you should consider purchasing separate earthquake or sinkhole insurance.
Hail – Your homeowner’s policy guards against hail damage. However, this can be different if you live in a region that experiences frequent hailstorms, like the Great Plains states. Insurers in regions that experience frequent hail storms may require higher deductibles or reduced payments for cosmetic damage caused by hail. This means that if the damage caused by a hailstorm is superficial, not structural, you may not be able to file a claim.
Tornado Damage – In regions not prone to frequent tornadoes, standard homeowner’s insurance covers damage in the unlikely event of a tornado. In regions where tornadoes are more common, like Oklahoma or Texas, insurers can charge a separate deductible for wind-related damage.
Hurricane Damage – Most homeowner’s policies offer at least partial coverage for hurricane damage, but like hail damage, it is conditional. Losses caused by powerful hurricane winds are covered in the standard policy. In addition, if rainwater from a hurricane damages your home you’re probably covered. For example, if a hurricane blows open the front door and rain enters your home and soaks your furniture, you’re standard homeowners policy applies. However, any flooding for example from a storm surge or river breach is not covered. If you live in an area prone to hurricanes like Florida or the Gulf states, you may want to consider getting additional NFIP flood insurance to protect yourself.
Not Sure If You’re Covered? Talk to Your Insurance Professional
It’s smart practice to perform a review of your property insurance every year or two. Your local independent agent or broker can help you determine the natural risks that can impact your home, like hurricanes, wildfires, floods, or earthquakes. Many of these natural disasters are either not covered, or partially covered by standard homeowners insurance. Floods and earthquakes require a separate policy, and coverage for hurricanes or hail damage often comes with policy conditions like a high deductible.
You’ll want to talk to your agent about peril-specific coverage, but you’ll also want to make sure that you have enough coverage to replace your home. Home valuations have soared in the past two years throughout the country. If you were covered for replacement two years ago, you may need to up your coverage to cover appreciation. You may also want to talk to your agent about all-risk coverage, which insures all causes of loss that the policy does not explicitly exclude.
Depending on where you live, and what natural disasters affect your area, you may need several different types of insurance to fully protect your home. For example, if you live in the Great Plains, you might want to consider increased coverage for hail. If you live in California you may want to purchase earthquake coverage. In the Atlantic basin, a good hurricane policy can include flood and wind insurance. Your agent or broker can offer you the best professional advice on the best types of insurance coverage to fully protect your home or new rental property from a natural disaster. The bottom line… before the next disaster strikes, talk to an expert, review your policy for additional coverage needs and then fix your policy before the next storm blows through the neighborhood.