Are Natural Disasters Covered on a Homeowners Policy?
I came across this article and felt it makes a couple valid points regarding consumers not knowing what their homeowners insurance policy covers and the ones that do are making the poor choice of going without coverage.
Floods are the most common and most destructive natural disaster in the United States. Traditional insurers became reluctant to cover damage caused by floods following frequent widespread flooding along the Mississippi River in the early 1960s. Consequently, coverage for flood is not usually covered and any property policy. Likewise, earthquake coverage can be difficult to obtain in California and obtaining coverage for wind damage problematic for property owners in gulf states.
“Mary Barnes, a retired prison security officer, knew she was taking a risk in forgoing flood insurance for her house near the Colorado River in Wharton, Texas. But with one son in college and another child at home, her budget was stretched.
‘It was unaffordable to me, unless I chose for us not to eat,’ she says of a roughly $600-a-year policy. She had maintained the coverage in earlier years when she still had a mortgage. ‘I would have loved to keep it. … If you can afford it, by all means do it,’ she says.
The river swamped Ms. Barnes’s house as part of Harvey’s damage. Now, she is working with volunteer groups to stitch together free services for repairs.”
I understand that flood coverage is not affordable for everyone. One way to lower costs is to increase your deductible. The minimum deductible for flood insurance is $1,000, and the maximum deductible is $10,000. You can save up to 40 percent on your premiums by increasing your deductible. The cost of not having flood insurance would be much greater than a $10,000 deductible.
“ ’Insurance documents are so difficult to understand. They’re very convoluted and most people don’t spend their time reading them,’ says Sherri Levin, an accounting professor who lives on the U.S. Virgin Island of St. Thomas. Ms. Levin’s condo was damaged by hurricanes last year, and she says she hasn’t yet been paid by her insurers. ‘Even if you do read the documents and understand the documents, it’s hard to estimate the value of everything in your house,’ Ms. Levin says. ‘People are going to be guessing.’ “
It’s always better to know as much as you can before a claim occurs, and it’s never wise to guess or assume when it comes to insurance. That is why you should seek out the advice and counsel of an independent insurance agent when making an insurance purchase. Our expertise allows us to advise you about appropriate amounts of insurance and insurance coverages for your particular needs.