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Does Your Homeowners Insurance Cover Natural Disasters?


Most people buy a new home, get homeowner's insurance, and sit back thinking they are protected in the event of a natural disaster. That is what insurance is for, right? Well, yes, and no. The fine print of your homeowner's insurance is likely to have a list of what is covered, and not a whole lot about what is not covered.

Take flooding, for example. Your policy may state that you are covered from damage by rain. What this means is that you are covered from water falling from the sky. If your roof springs a leak, and you've kept up with proper maintenance, then in theory your roof will be covered when it collapses under the pressure of a big thunderstorm. But if that same storm causes the stream that runs through your back yard to overflow and run into your basement, you are most likely not covered for that damage. But wait, the rain from the sky caused the creek to flood, so it is all rain damage, right? Um. No. Rain, by the insurers standpoint, comes from the sky. Flooding comes from the ground. So you are not covered.

This may seem a bit ridiculous, and maybe it is. But it is the reality we as homeowner's must face. If you do not see it plainly listed on your policy, in writing, then you have to assume it is not covered by your insurance company.

Many people learned the horrible truth of this during Hurricane Katrina. While rain fell from the sky, winds tore off roofs and water flooded houses. Unfortunately, many of the victims had only basic homeowner's insurance, which does not cover flooding or damage caused by high winds. So what these people found was that they had a house that was useless, mortgages to be paid, and no where to go.

In most cases what you will not need will seem obvious. If you live in Kansas, it is probably a safe bet that you can pass on earthquake insurance. If you live on the side of the Rocky Mountains, you can probably safely turn down hurricane insurance. But if there is any questionable situation, you might want to look into added coverage. For example, in California it is probably wise to invest in earthquake insurance. If you live along the southern states you probably should consider hurricane insurance. If your house is in a flood plain, most would suggest you get flood insurance.

The problem with this plan is that insurance companies are all about lessening their risks. If your house is on the beach in the Florida Keys, the insurance company knows it is very likely at some point you will have damage from a hurricane. Unfortunately for you this means your premiums will be very high, as the insurance company, like any business, wants to make money.

The key is to make sure you understand what is and is not covered on your current policy. From there you need to weigh the risks versus the cost and see what added coverage you need to have before a natural disaster strikes.

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