Does Homeowners Insurance Cover Natural Disasters?

Your homeowner’s or renter’s insurance policy covers you for a lot of things. But what about natural disasters? If your property is hit by earthquakes, floods, or hurricanes, will you be covered?

In this article, we will look at what is covered by basic policies, what isn’t, and what additional coverage you can purchase to get the protection you need.

What Is (Usually) Covered

As with all insurance, you need to read your policy to find out exactly what is covered. Consult the section of the policy called “named perils,” which will inform you of what your insurance covers. Chances are, it will include damage caused by the following:

• Fire or lightning
• Windstorm or hail
• Explosion
• Riot
• Airplane
• Vehicle
• Smoke
• Vandalism and malicious mischief
• Theft
• Falling object
• Weight of ice, snow, or sleet
• Accidental overflow of water or steam or bulging, cracking, or tearing from an automatic fire sprinkler system, air conditioning system, heating system, or appliance.
• Freezing of air conditioning, heating, plumbing, appliance, or automatic fire sprinkler system
• Accidental damage from artificially generated power surge

With respect to these perils, there is essentially no difference between a renter’s and homeowner’s policy. The only difference is that with the renter’s policy only your personal property is covered, not the structure you’re living in.

Some policies are called “all risk” rather than “named perils,” but both will have exclusions that identify what is not covered.

What Is (Usually) Excluded?

Damage caused by the following is usually not covered by your home insurance policy:

• Earthquakes
• Other earth movement, including sink holes and landslides
• Floods, including mudflow
• Other water damage
• Hurricanes
• Nuclear war or nuclear accident

Policies vary from company to company and from state to state, so make sure you know exactly how they interpret each of these items. For instance, if you live in a high-risk coastal area such as Atlantic City, NJ, you might need to buy separate hurricane, windstorm, or similar insurance, whereas in low-risk coastal states, standard homeowners policies cover damages caused by wind, including hurricanes.

Compare the water damage exclusion with the list of what is covered under named perils carefully. Typically, you won’t be covered if you have back-ups or overflow from your septic system or sump-pump.

Policies also vary when it comes to hurricanes. If you live in a hurricane-prone area, make sure you understand whether you will be covered in the event that one strikes.

Extending Basic Coverage

If you want coverage for the excluded perils, can you get it? In many cases the answer is yes. But let’s look at some of the details.

Earthquakes

If you live in an area that is not earthquake prone, you can easily and inexpensively buy coverage, but do you really need it?

Curiously, in Missouri and some of the other states along the earthquake-prone New Madrid Fault line, earthquake insurance is not so expensive, and is therefore highly recommended.

In California, Oregon, Washington, Alaska, and Hawaii, earthquake insurance tends to be pricier and often comes with a high deductible. In California, insurers must offer coverage, but getting it will require some effort on your part: you might be required to prove, through an inspection, that your structure is bolted to its foundation and that certain fixtures, like hot-water heaters, are strapped to walls.

Whether you want coverage in these five states will depend to a significant extent on your budget and how much you have to lose.

Sinkholes

Sinkholes are most common in Alabama, Florida, Missouri, and Tennessee. In Florida, coverage for damage caused by sinkholes is often included in policies, but double check to be sure.

In Tennessee, coverage must be offered, but you pay extra. In addition to weighing the price, read up on the issue to find out how common sinkholes are in the area where you live before making any decision.

Mudslides and Landslides

Coverage for this can be expensive and in some cases impossible to buy, especially if you live in an area that is prone to such slides.

Floods

If you reside in a high-risk area, Florida and you obtain your mortgage from a federally regulated or insured lender, you are required to buy flood insurance through the National Flood Insurance Program (NFIP). If you live in a moderate- or low-risk area, the government won’t force you to buy it, but you can if your community participates in the NFIP.

Note that flooding is the most common natural disaster in America, so if you live anywhere other than the top of a mountain.

Other Water Damage

Coverage is generally available at reasonable cost. It’s at least worth pricing and considering.

Hurricanes

Coverage is generally available but often subject to significant deductibles.

Be aware that if you suffer flood damage that results from a hurricane, your hurricane coverage will not cover the flood damage. For that reason, separate flood coverage is highly recommended in hurricane-prone areas.

Tornadoes

Coverage for damage caused by tornadoes is usually covered in a basic policy under the “windstorm” peril. However, if you live in tornado alley, or close to it, don’t take it for granted: make sure that your policy doesn’t exclude it.

Speak With Your Agent

In addition to reading the policy yourself, always talk to your agent about what is covered, what isn’t, and how you might want to extend coverage. Your agent is your local expert.