The seventh largest quake ever occurred March 11th. The eighth largest quake occurred last year. The third largest quake occurred in 2004. Add to this hurricanes and floods, and it seems like natural disasters are on the rise.
Everyone should be well aware by now, earthquakes and tsunami’s like Japan recently suffered are not normally things insurance covers. No one wants to find out AFTER THE FACT that their homeowner’s insurance doesn’t cover them for a disaster. Let’s look at what your homeowner’s insurance doesn’t (or may not) cover.
Flood
Flooding is not covered by homeowner’s insurance, PERIOD. No gray area, no loopholes.
Let’s be specific about what a flood is so you can decide if you need a separate flood policy through the National Flood Insurance Program (NFIP). That flood insurance policy can still be purchased through your local agent.
FEMA defines a flood as “excess of water on land that is normally dry.” The NFIP considers a flood “a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) from:
- Overflow of inland or tidal waters;
- Unusual and rapid accumulation or runoff of surface waters from any source;
- Mudflow; or
- Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above.”
On the bright side, a burst pipe is considered a covered claim by most policies, however, there may be fine print that allows your insurance company an out even in this case, so be sure to read your policy carefully!
Earthquake
Depending on where you live, this could be a critical exclusion. The western United States receives the most earthquakes, but according to the United States Geological Survey, they can still occur throughout the rest of the country.
Earthquake insurance (not part of your regular homeowner’s insurance) should cover the cost of replacing your property or repairing damage to it. When reviewing this insurance, consider the following:
- Will only your dwelling be covered?
- Will detached structures be covered?
- Will your contents be covered as well as loss of use for expenses incurred if you have to live elsewhere during repairs?
- What isn’t covered?
- What is your deductible?
That last one is usually pretty high with earthquake coverage, so be sure you know what your deductible is.
Loss Assessment
If your condominium, co-op apartment, or townhome is part of a homeowner’s association, your homeowner’s policy should include loss assessment insurance. Loss assessment provides coverage for damage to the common areas owned by all residents. If the association charges all residents to pay for damages, this coverage will provide for that.
Homeowner’s Insurance exists to protect you, your family, and your assets in case of an emergency. Make sure you’re adequately covered BEFORE a disaster strikes.