Imagine you just bought your first home. You and your family love the location, your new neighbors, the school district, and the nearby amenities. Your first summer living in your house is spent building memories. You and your children created a garden in the backyard and your spouse helped you paint some of the bedrooms. What was once a dream of yours has become a reality. But then, a natural catastrophe occurs.
Unfortunately, your dream did not last long. Heavy autumn rains have saturated the soil. What was once a sleepy community in the hills has turned into a muddy, flooded disaster zone. There is even the potential for a mudslide in your neighborhood. You hope that nothing happens to your new home, but in case it does, you check with your insurance agent to verify the details of your home insurance. What you find out is shocking: you have no flood insurance and do not have the right protection in the even of a mudslide. What should you do now?
Events like floods, hurricanes, wildfires, and earthquakes can be devastating for homeowners. According to United Policyholders, an advocacy group for insurance holders, two-thirds of homeowners are underinsured for a natural catastrophe. The executive director, Amy Bach, states, “When insurance kicks in for a total loss, it’s often like a faulty car: It gets road-tested and things start flying off, the parts don’t hold up, and everything breaks when it gets driven at a fast speed because it wasn’t built right.”
You shouldn’t just assume that a disaster could never strike where you live. It can happen without warning and when you least expect it. So, are you covered with proper ?
The following is a list of common natural disasters and they ways in which you can purchase coverage.
Flooding: Standard homeowners insurance does not include coverage for flood damage or mudflow. In fact, you need to apply through the National Flood Insurance Program (NFIP) for a separate insurance policy. The total cost for coverage is about $600 per year, but when you consider the fact that the average flood claim in the U.S. between 2007 and 2011 was over $30,000, that’s a small price to pay.
If you live in a high-risk area, like in a state that experiences seasonal hurricanes or heavy snow melt upon the arrival of spring, then you are required by Congress to have flood insurance. You can go to FloodSmart.gov to see if you live in a high-risk area. If you do not, you may still want to consider purchasing flood insurance; 20% of all claims to the NFIP are from low- to medium-risk regions.
Keep in mind that there is a 30-day waiting period before your home is covered, so make sure to plan ahead. Trying to buy a policy after you have seen the warnings on the news for potential flooding in your town means it’s probably too late.
Heavy Winds: In general, damages caused by wind are covered in homeowners insurance. Be sure to check with your insurance agent, however, because states that experience higher levels of wind damage, like Texas or Oklahoma, may not include protection from wind. The frequency of tornados and hurricanes is a determining factor. So, you may need to purchase a separate insurance policy specifically for wind damage.
Earthquakes: Like floods, earthquake coverage is not included in a standard homeowners policy. You need to purchase separate insurance. Sometimes this is through a specialized state agency.
Other movements of earth, like a landslide or sinkhole, are also not covered under a basic policy either.
Fires: Whether your home is damaged by a fire caused in the kitchen or because of a wildfire, your homeowners insurance should include some sort of protection. However, the extent of that coverage varies.
If your home is affected by a fire and the local firefighter units are able to extinguish the flames, the damage caused by the water and other chemicals used in the process is also covered.
According to Bankrate.com and the Federal Emergency Management Agency (FEMA), the top ten states most at risk for natural disasters are:
1. Texas: tornadoes, wildfires, floods, hurricanes
2. California: wildfires, landslides, floods, tsunamis, earthquakes
3. Oklahoma: tornadoes
4. New York: blizzards, tropical storms
5. Florida: hurricanes
6. Louisiana: hurricanes
7. Alabama: hurricanes, tornadoes
8. Kentucky: mudslides, floods, tornadoes
9. Arkansas: flooding from snow and tropical storms, tornadoes
10. Missouri: flooding from melting snow, tornadoes
Start to learn about the potential risks in your state, and ways to get protection.
Talk to your Insurance Agent
Speak with your local, independent insurance agent today. They can help you determine the right homeowners policy for you. They will also have information on insurance riders, separate policies for specific natural disasters, and whether or not “all risk” or “named perils” coverage is right for you. As always, make sure you are familiar with the fine print in your insurance policy so you don’t get left out in the cold if a natural disaster should strike your town.
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