Few regions of the country are immune to natural disasters such as hurricanes, tornadoes, fires, and floods. In addition, the World Meteorological Organization (WMO) found that climate change has contributed to a five-fold increase in the number of weather-related catastrophes over the past 50 years.
Despite this threat, a large proportion of homeowners do not have insurance coverage to protect their property and possessions from such calamities. Approximately 64% of homeowners are underinsured, according to a 2020 report from CoreLogic, the nation’s largest source of property and housing data. The big culprit is the mistaken belief that homeowners insurance offers protection from natural catastrophes. The truth is that this is not the case most of the time. To fully protect your home and other assets, it is often necessary to purchase a separate policy or endorsement covering specific types of natural disasters. This article shows you what different types of insurance are available and what coverage they provide.
Earthquakes
To protect your home against earthquakes, you’ll need a separate earthquake insurance policy. And, contrary to popular belief, Californians aren’t the only ones who should have such coverage.
Most of the United States is at some risk for earthquakes. In fact, the U.S. Geological Survey found that between 1975 and 1995, earthquakes occurred in every state except Florida, Iowa, North Dakota, and Wisconsin. Want to know your region’s risk? Check out the Federal Emergency Management Agency’s (FEMA) earthquake hazard maps.
Although earthquake insurance is available almost everywhere, policies in high-risk areas often have high deductibles, ranging from 10% to 15% of the home’s total value. In addition, while earthquake insurance covers damage caused directly by the earthquake, some related damage, such as flooding, will probably not be covered. Check your policy carefully to see what is included and what is not.
Forest Fires
Although homeowners insurance rarely covers damage caused by natural catastrophes, most policies cover damage caused by fire, including wildfires. In general, the only fires not covered by insurance are arson or when a fire destroys a home that has been unoccupied for at least 30 days before the fire.
Keep in mind that not all homeowner’s policies are the same, so it is best to check your policy to make sure it covers three essential things:
- Replacing the structure of your home.
- Replacing your belongings.
- Cover your living expenses while your home is being repaired (“loss of use” coverage).
Also, in some high fire risk areas, it can be very difficult to find a private company to insure your home. You should look for state-sponsored fire insurance in these cases, such as California’s FAIR Plan.
Flooding
Floods caused by natural phenomena are another case where, in order to protect your property and possessions, you will need separate flood insurance, as home insurance only covers flood damage caused by faulty infrastructures, such as broken or leaking pipes.
The threat of flooding is so widespread that Congress created the National Flood Insurance Program (NFIP) in 1968, allowing homeowners in flood-prone areas to purchase federally backed flood insurance. In some coastal regions, especially where hurricanes are frequent, you may be required by law to purchase flood insurance for your home. To determine the risk to your property, consult FEMA flood maps.
Ninety percent of natural disasters involve some flooding, and more than 20 percent of flood damage claims come from properties located outside high-risk flood zones. That’s why, even if you live in a place where flood insurance is not mandatory, you may want to consider taking out flood insurance anyway.
Hurricanes & Tornadoes
Most homeowners insurance policies cover wind-related damage. However, the type of storm that caused the damage usually determines whether or not a policy covers this type of loss. Tornadoes and even some tropical storms, for example, are typically covered, while hurricane damage usually requires a separate wind policy or, in some cases, a hurricane clause.
Because hurricane damage is often estimated in the billions of dollars, windstorm insurance typically carries high costs. It is usually calculated on a percentage of the home’s value rather than a fixed monetary amount.
Hurricanes, of course, represent more than just a threat of high winds. These tropical systems often cause significant flooding, which is often the most damaging feature of the storm. Therefore, you will need to purchase a separate flood insurance policy through the National Flood Insurance Program (NFIP) to protect yourself from flooding.
Prepare to Leave: Pack a Travel Bag
In addition to having adequate insurance, if your family is forced to leave your home due to a natural disaster, you will need to have crucial documents and supplies on hand to recover. We urge you to follow the example of the U.S. military, which requires its personnel to have a “go bag” prepared with the necessities of life for at least three days following a disaster or other emergency.
A good travel bag should contain:
-clothes
-toiletries
-medicines
-food
-copies of your passport
-birth certificate
-driver’s license
State identification card and/or other essential identification -State identification card and/or other essential identification -State identification card and/or other essential identification
Other documents you should pack are:
-the deed to your house, if you have it on hand
-copies of your insurance policies
the original copy of your will (if your attorney doesn’t already keep it in a fireproof safe) -property deeds/registration, if you have them on hand
-property deeds/vehicle registrations
-a recent family photo with faces visible for easy identification.
While all estate planning documents should be included in your travel bag, having your Medical Power of Attorney and Living Will easily accessible is essential for medical emergencies. Without these documents, doctors and other medical professionals will not know your treatment wishes or who among your loved ones should help them make decisions should you become incapacitated by illness or injury, which is even more likely during a catastrophe.
To make everything as portable as possible, download your plan and other vital documents to a flash drive that you can carry in your travel bag and upload additional copies to the cloud.
Finally, make sure your family knows about your travel bag and estate planning documents, as well as how to find them. Even if you have all the necessary legal documents, they won’t do you any good if your loved ones don’t know about them or can’t locate them quickly during an emergency. You may even want to keep your travel bag near the main exit of your home so that you or someone else can carry it on your way out the door.
Preserve your most precious memories
There are additional precautions you can take to safeguard your most precious sentimental items: photo albums, old letters, cards, and other treasures from the past. Since you won’t have time or space to pack these items in your suitcase, we recommend that you make digital copies of these mementos and store them in the cloud.
We are very aware of the priceless value these items represent. We believe that safely storing your sentimental items online is vital. That is why we offer all our clients this service. See how we can help you preserve your family’s most precious memories.
Protect your home and family
If you need help with these issues, don’t hesitate to contact us. We’ll help you assess the risks specific to your area, evaluate the value of your home and other assets, and support you in obtaining the proper insurance and estate planning documents to safeguard you and your loved ones. Call us today to get started.
