If you are a homeowner you are probably used to hearing that most home insurance policies do not include flood or earthquake coverage. Depending on where your home is located, either one or both of these types of insurance policies could be essential for you to properly protect your home. So even if you think it might never happen to you, it’s always better to be safe than sorry and get the right policy to protect your home. Mother Nature is not a force that should be underestimated!
Earthquake insurance can cover the costs of damage done to your home as well as the personal belongings inside your home in the wake of an earthquake. You might think, “But is it really worth it to pay for insurance for something as uncommon as an earthquake?” If you live in an area that is at high risk for earthquakes then it is definitely worth it. Depending on the severity of an earthquake, the damage that can be done to a home varies from minor damage to total loss. Because of this uncertainty, having an earthquake insurance policy for your home is absolutely necessary to give you the peace of mind that you’re protected, just in case. When it comes the price of an earthquake insurance policy, it can vary significantly based on many different criteria. Here are some examples of factors that would affect the price of your policy:
- Level of risk of an earthquake in the geographic area where your home is located – the higher the risk, the higher the price.
- Distance to a fault – the closer your home is to a fault, the more expensive your earthquake insurance policy will be.
- Age of your home – newer homes tend to be built to better withstand earthquakes, so newer homes are usually less expensive to insure for earthquakes.
- The number of floors in your home – a taller home is more likely to fall over in the event of an earthquake, making it a greater risk and more expensive to insure.
- The materials your home is made of – if your home is made of more elastic materials such as a wooden frame or a raised base, then it is less expensive to insure because it is more likely to withstand an earthquake due to its flexibility.
- Earthquake-proofing – you can save money on your policy by bolting down your home to the foundation, bolting down your water heater or chimney, or any other stabilizing projects to create a greater chance of earthquake survival.
Earthquakes can cause some serious damage on their own, but they can also provoke other unfortunate events and side effects. Be sure to know what your earthquake insurance policy covers you for, because these are some examples of things that are not typically covered by earthquake insurance:
- Fire damage as a result of an earthquake (would be covered by a regular homeowners insurance policy)
- Damage to cars, fencing, pools, landscaping
- External water damage from flooding or tsunami (would be covered by flood insurance)
Similar to with earthquake insurance, when it comes to flood insurance, the question of “Is it worth it?” often is asked by homeowners. Once again, it all depends on where your house is located and your level of risk. If you live in a geographical region that is below sea level, you live on the coast or near a large body of water, or your house is located in a low-lying area, flood insurance is a must. Just like with earthquake insurance, the higher the risk of your home suffering flood damage, the more expensive your flood insurance policy will be.
So now that you’ve decided you need flood insurance, where do you start looking? The most common option is through the federal government run National Flood Insurance Program (NFIP). This government program makes affordable federally-backed flood insurance available to homeowners, building owners, and renters in participating communities. These insurance policies are available in not only high risk flood areas, but also in medium or low risk areas, and you can choose between policies that just protect your home or that protect your home and your personal belongings inside as well. In addition, you can choose between a policy that pays the actual value of your home in the event of a claim or a policy that pays the cost to rebuild your home. There is also the option of private flood insurance or extra flood insurance if the NFIP policies do not fit your flood insurance needs.
What can flood insurance cover?
- House and foundation
- Air conditioners, water heaters, and furnaces
- Windows and blinds
- Detached garages
- Personal belongings
- Debris removal
What will flood insurance most likely not cover?
- Precious metals
- Stock certificates and bonds
- Trees and plants
- Walkways, patios, and decks
- Pools and hot tubs
- Sewer backups
- After flood mold damage
- Temporary living expenses
In addition, if you have a basement or a crawlspace that is below earth level, your home is at greater risk for flood. Most flood insurance policies have strict exclusions for basement coverage because of the increased risk. If the following items are in your basement and they are damaged in a flood, they will likely not be covered by your flood insurance policy:
- Walls and ceilings that are not made of drywall
- Carpeting, tile, and other flooring
- Clothing, furniture, electronics, and other personal belongings
Last, but not least, it is important to understand what exactly is considered a flood when it comes to insurance, so you know what you are covered for. To be deemed a flood, water must be covering a minimum of 2 acres of normally dry land, and at least two structures need to have been water damaged. Also, the water must come from rising tidal waters or an overflowing inland, unusual or fast rising runoff water, or a mudflow caused by a flow of water.
And a final parting tip: make sure to purchase your flood insurance policy as soon as possible if you are in an area at risk of flooding, because most policies take about 30 days to take effect. You don’t want to wait until right before a coming storm to buy your policy, because you most likely won’t be covered in time.