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Chapter 4: Disaster Insurance

If you’re a homeowner, it’s likely you may already have homeowners insurance. Typical insurance policies cover damage caused by fires, lightning, storms, wind, and hail. However, natural disasters are not usually covered under this type of insurance. In fact, if you live in a high-risk area, it’s likely that hazards specific to your region will not be covered. You’ll likely have to purchase a supplemental policy, so it’s important to ask your insurance agent what policies and coverage are available in your area, based on regional hazards.

Disaster insurance, sometimes referred to as hazard or catastrophe insurance, is for the unpredictable natural disasters that can damage or destroy your home. You’ll likely need to purchase individual insurance plans specific to disasters common to your region.

Different types of disaster insurance include:

Flooding

Plumbing-related flooding is typically covered by homeowners insurance; flooding from natural causes is not.

Storm Coverage (Hurricanes or tornadoes)

Wind-related damage is typically covered by homeowners insurance, while the flooding is not.

Earthquakes

Costs are determined by proximity to fault lines, type of construction materials, foundation integrity, soil type, and policy features.

Volcanoe

Most homeowners are already covered by homeowners insurance, no matter where you live.

Fires

Most homeowners are already covered by homeowners insurance, but double check your coverage.

Landslide

Landslides and mudslides typically aren’t covered - they are considered a type of “earth movement”, which is almost always excluded from homeowners insurance.

Other things to look out for:

  • There is usually a 30-day waiting period prior to coverage starting
  • Some policies, like flood insurance, require you to pay in full or put down a percentage out-of-pocket
  • Disaster policies aren’t always comprehensive; some cover only structural damage
  • Flood insurance premiums are the same price everywhere, because coverage is actually provided by the federal government

Generally, you’ll need to initiate these coverages with your insurance agent. Without disaster insurance, you may be personally responsible for costs of restoration and repairs.

To put it in perspective, there was more than $20 billion in combined residential and commercial damage after Hurricane Florence. Yet, approximately 85% of residential loss was uninsured. What we’re saying is: if you’re a homeowner, disaster insurance is a major and fundamental step to emergency preparation.

Insurance Preparation

  • Make an inventory sheet of your home belongings
  • Have your art and jewelry appraised
  • Store a copy of your insurance policy information with your emergency kit
  • Read the fine print carefully for caveats - for example, homeowners in high-risk areas may find it hard to file claims after a hurricane due to how the terms “wind damage” and “water damage” are defined in their policy

Insurance can be complex, especially when considering supplementary insurance policies that cover disasters. However, the process is worth it if you live in an area prone to natural disasters.