Your home insurance doesn’t cover every possible disaster that could hit your home, its contents, or its occupants. For instance, if a nearby creek overflows and sends muddy water through your front door, your insurance won’t cover it. The same goes for a sudden earthquake that cracks your foundation beyond repair, or a sewer clog that ruins your finished basement.
But don’t worry, there’s insurance for these potentially expensive risks and many others. You just need to look for specific types of property insurance that cover natural disasters or catastrophes.
So, what is natural disaster insurance? It’s any type of property insurance policy that covers incidents your standard homeowners insurance doesn’t. Some of these risks are human-caused or not strictly natural, so some insurance companies refer to these policies as "catastrophe insurance." The most common types of natural disaster insurance policies cover floods, earthquakes, and sewer backups.
If you live in an area where certain types of destructive events are common, your standard homeowners insurance policy might not cover those events. For example, insurance companies often exclude windstorm damage in hurricane-prone areas and certain types of fire damage in wildfire-prone places.
Natural disaster insurance isn’t a single, all-inclusive insurance policy covering everything standard homeowners insurance doesn’t. It’s a category of insurance policies that goes beyond standard homeowners insurance coverage, usually with regard to a single type of destructive event.
How does natural disaster insurance coverage work? It has the same features as a standard homeowners insurance policy. It should clearly define the types of events it covers and scenarios excluded from coverage. You must pay a monthly or annual premium to keep the policy active. The insurer won’t pay more than a maximum dollar value on a single claim. You must pay a certain amount out of pocket on a claim before insurance coverage kicks in.
Depending on the policy type and circumstances surrounding the claim, a natural disaster insurance policy pays on claims in one of two ways. For larger claims that require lots of rebuilding or repair, the insurer is likely to pay the contractors directly. If you incur significant upfront costs, such as temporary relocation expenses or emergency repairs to make the home livable, the insurer might pay you for those. If the claim is smaller or less complicated, or you can do the necessary work on your own, the insurer might cut you a check for the total claim value.
What does natural disaster insurance cover? You can get natural disaster insurance for various potentially costly catastrophes. Natural disaster insurance generally covers only one type of catastrophe, so you might need more than one policy if you live in a disaster-prone area. The most common types of natural disaster insurance include floods and mudflows, earthquakes, windstorms and tornadoes, volcanic eruptions, earth movement, and sewer backup.
What disasters does a standard homeowners insurance policy cover? The details of homeowners insurance coverage vary from one policy to the next. One of the most important variables is the policy classification. The most common classifications for policies written on single-family homes are HO-1, HO-2, HO-3, and HO-8. Each of these classifications covers different types of incidents and excludes others.
If your property is damaged in an event not covered by your standard homeowners insurance policy, you need disaster insurance to fall back on.
How to file a natural disaster insurance claim? Filing a natural disaster insurance claim is a lot like filing a standard property insurance claim. You need to figure out which policy to file under, contact your insurance agent or insurance company to begin the process, document the damage, make emergency repairs or find alternative living arrangements, work with your claims adjuster, and hire contractors to repair or rebuild.
Do you need additional coverage for natural disaster insurance? If you want financial protection against property damage or loss due to a type of natural disaster not covered by your standard homeowners insurance policy, then yes. Depending on where you live, you might not have a choice. Homes in federally designated flood zones must have flood insurance, for example. But if you’re not required by law to carry disaster insurance and you’re willing to accept the risk, you don’t absolutely need it.
How much does natural disaster insurance cost? It depends on several different factors: the type of policy, the insurer, the relative risk to the insurer, the policy’s coverage limits, and the policy deductible. The only way to find out exactly how much you’ll pay for natural disaster insurance is to contact an insurer for a quote.
What catastrophes are typically NOT covered by a home insurance policy? It depends on the policy’s classification. HO-1 and HO-8 policies are relatively narrow in scope. They only cover specific named incidents, such as lightning strikes and civil unrest. Events not specifically named in the policy aren’t covered under it. HO-2 and especially HO-3 policies are broader in scope. HO-3 policies cover all perils except those specifically excluded by the policy. Some of those exclusions are low-probability human-created disasters like war and nuclear fallout, but others are natural events like landslides and flooding.
Does car insurance cover a natural disaster? It depends on the type of coverage you have. If your car insurance policy includes comprehensive coverage, it might cover certain types of natural disaster damage, such as a tree limb falling on the car or water damage tied to a flood.
Insurance is all about managing risk. If your home has a high risk of sustaining damage due to a particular type of natural disaster, it’s only natural you’d consider adding disaster insurance coverage to reduce the out-of-pocket cost. It makes more sense if that type of natural disaster is one that’s rarely or never covered by standard homeowners insurance, such as earthquake or flood insurance coverage. It also makes more sense — and may be unavoidable — if you live in an area that’s so high-risk that insurers modify homeowners insurance policies to reduce their exposure.
