Assessing Your Need for Natural Disaster Insurance
Most natural disasters happen when they are least expected. Technology has improved our ability to predict severe weather, but it sometimes occurs so suddenly that homeowners don't have time to react. Unfortunately, some learn in the aftermath that homeowner's insurance won't cover all of their damages. For some disasters, such as flooding, earthquakes, and hurricanes, a typical insurance policy may not offer any coverage at all.
If a natural disaster strikes your home, would you be prepared? If not, you may want to know what kind of insurance would help and how much you should purchase. We've provided a few guidelines below to give you a better idea of the types of natural disaster insurance that you may want to consider.
Determine Your Homeowner's Insurance Present Coverage
Review your homeowner's insurance policy and consult with your agent if you need more explanation. He or she will be able to tell you how much your current policy is worth and what kind of natural disasters your coverage includes. Make sure your policy is up to date with the current value of your home, including your personal belongings. You can even take your understanding a step further by learning the different kinds of damage included with natural disaster plans. For example, most hurricane coverage will provide for damages caused by high winds, but not water.
For the most thorough coverage possible, you may need to add additional policies. Ask your agent about expanding your current coverage to include other possible causes of damage, especially if you are living in an area of high risk.
Evaluate Your Insurance Risk
Different weather patterns and specific geographical concerns can create different levels of risk for homeowners. Even small details, such as living next to a creek or on a hill, can greatly increase or decrease your risk for natural disaster damage. Developing an accurate risk assessment can help you decide on the type of natural disaster insurance that best suits your needs.
Tools and resources to evaluate your risk may be available through your insurance provider. If not, the Federal Emergency Management Agency (FEMA) offers a program called HAZUS-MH to determine your likelihood of experiencing flood, hurricane or earthquake damage. Risk-assessment software and resources are also available from other online providers as well. Keep in mind that insurance is a large investment, so it's important to be sure that your resources come from a trusted source. Check the validity of any assessment tools or websites before considering a large insurance purchase.
Think about the risk a natural disaster may pose to your home and your safety. You may be comfortable with the level of insurance that you already have, but if you're not, it may be time to consider expanding your coverage. Learn more about natural disaster coverage and ways to reduce your risk in our Taking Action Against Natural Disasters page.