In order to properly insure your home against natural disasters, you need to understand what your homeowners policy protects against. Policy forms can vary from company to company and state to state, but they all derive from a common source. There are three forms of home policies based off of the perils they insure against, Basic, Broad and Special. Each successive form covers more possible damages, but in the case of natural disasters, if it is covered under the home policy, they would all fall under the Basic Form policy’s covered peril list.
A quick list of natural disasters would be forest fire, flood, tsunami, earthquake, volcanic eruption, tornado and hurricane. Below is a description of coverage provided or how to obtain it in addition to the home insurance policy.
Forest Fire: Fire is the principal coverage provided by any home insurance product.
Flood & Tsunami: Flood coverage is not a coverage provided under a home policy. With the ability to destroy whole communities, flooding and tidal waves are amongst the worst natural disasters. In the past, individual insurance companies were unable to survive the cost of protecting against flood, and with the loss of life and property, the US Congress passed the National Flood Insurance Act of 1968.
You can usually secure flood insurance from the same agent you purchased your home’s insurance from. All policies are underwritten by the US government.
An important fact to remember, a flood insurance policy does not take effect for thirty days. You need to have the coverage in place before the possibility of a flood. The example of the one hundred year flood comes up in the news, and in recent years, there have been a number of occurrences in parts of the country that are not used to flooding, or flooding to the extent that has been experienced.
Earthquake: Earthquakes are excluded under the home insurance policy, but it does not mean you cannot add that coverage on. Earthquake coverage can be added onto a home insurance policy by endorsement. This option is usually available in areas that have a low to average probability of occurrence. In areas with high earthquake activity, a stand alone policy may be what you need to purchase.
Volcanic Eruption: This coverage is a tricky one. The Basic form of the home policy usually covers “airborne volcanic blast or airborne shock waves” and “lava flow”. This wording was taken from an older AAIS policy form, for coverage under “Volcanic Action”. This means that damage caused by earth movement during a volcanic eruption does not fall under this peril. It instead goes back to the earthquake coverage mentioned above.
Tornado & Hurricane: Each of these events causes their damage through extremely high winds. Wind is a peril covered under a standard home insurance policy. While this may be true, in areas of the country that experience a high occurrence of these types of storms, the wind peril can be and has been excluded from the policy. In these cases, you would need to locate an appropriate stand alone policy.
In the case of hurricanes, you also run into the tidal surge flooding. There have been lawsuits filed over if flood waters were wind driven and therefore should be covered under the wind coverage, or if the flooding would have occurred and should be under the flood coverage. In cases when you are in danger of having a flood and hurricane happen together, protect yourself with both types of insurance policies.
By having an idea of the natural disasters that could affect where you live, will help you in making informed insurance choices.