Earthquake and Flood Insurance: Do You need It?

Most people would be surprised to know that a typical homeowners insurance policy does NOT cover earthquakes and floods.

This leaves the question…should I get earthquake and flood insurance?

They are two separate things…so let’s break it all down, and hopefully from there you can feel better equipped to make your decision.

Earthquake and Flood Insurance: What does a Flood Insurance policy cover?

A flood insurance policy will cover the structure of your home itself, and your personal property inside the home like electronics, furniture, and other items damaged by flooding. A homeowner can choose to obtain coverage only for their home, for their personal contents only, or for both the home, and personal contents.

There are limits, or exclusions to a flood insurance policy. These include any damage caused by mold, mildew, moisture damage, earth movement, belongings outside of the insured home, such as pools, decks, patios, or plants. Unlike a typical home insurance policy a flood policy will not cover additional living expenses or loss of use to the insured’s property. 

Perhaps you live in a low risk flooding area, you may think you do not need flood insurance at all. Unfortunately, your home could still be at risk even in a low risk area. The good news is you may get a lower premium due to living in a low risk area.

Buying the right amount of flood insurance is entirely up to the homeowner, and what they are needing coverage for. There are coverage options available for those who may want more coverage, and those who may be seeking the minimal amount of coverage. If you live in a high risk area, consider purchasing an excess flood policy to make sure you are protected. 

To purchase flood insurance, first check with your agent who services your home policy to see if that company will cover you. Purchasing multiple policies through one company could save you a few bucks through bundling. If your particular agent does not offer flood insurance, you can always buy flood coverage through the NFIP, thousands of agents will be able to assist you with a quote. 

Homes that have government-backed mortgages are required to carry flood insurance for their home. At times, high risk flood zones will also require flood insurance as well.

Earthquake and Flood Insurance: Do you need earthquake insurance?

Earthquake damage is usually excluded from homeowners insurance policies. To acquire earthquake protection for your home, you will have to purchase a completely separate policy from your standard homeowners policy. If you live in a high risk area prone to earthquakes, it would be a good idea to obtain coverage. If you do not live in a high risk area, and chances of an earthquake are slim, you may decide to opt out purchasing this additional coverage.

Other factors to consider would be your home’s construction type, value of your home, and how much the annual premium would be for earthquake insurance. Like any insurance policy, be sure to make sure you read your policy documents very carefully. There could be several limitations and/or exclusions on your policy that you will not want to be surprised by later.

A typical earthquake insurance policy will provide coverage for your dwelling, personal property and loss of use coverage. For additional coverage, or an optional rider, ask your insurer what the available options are. Just like determining if you need coverage, deciding how much coverage you need also depends on your home’s value, type of construction, and the amount of earthquakes in your area.

Earthquake and Flood Insurance: Tips and Tricks!

Securing your property and financial stability against natural disasters such as earthquakes and floods is crucial. Both types of disasters can cause significant damage, and standard homeowners’ insurance policies typically do not cover them. Here are some tips for acquiring earthquake and flood insurance:

Understanding the Need

1. Assess the Risk: Determine if your home is in a high-risk area for earthquakes or floods by checking maps and resources from government or insurance websites.
2. Risk vs. Cost: Even if you’re not in a high-risk area, consider the potential costs of recovery without insurance. Minor earthquakes and floods can also cause expensive damages.

Earthquake Insurance Tips

1. Coverage Details: Understand what the policy covers. Some policies may not cover external structures, certain personal properties, or may have different deductibles for different types of damage.
2. Deductibles: Earthquake insurance policies often have high deductibles, usually ranging from 10% to 20% of the replacement cost of the structure.
3. Secondary Costs: Check if the policy covers costs such as living expenses if your home is uninhabitable, and the costs to meet current building codes during repairs.
4. Insurer Research: Look for insurers with good financial strength and customer service records, as this indicates their ability to handle claims after a disaster.

Flood Insurance Tips

1. National Flood Insurance Program (NFIP): In the U.S., the federal government offers flood insurance through the NFIP, but it’s sold through private insurers. Check if your community participates in the NFIP.
2. Coverage Limits: Understand the limits of NFIP policies; as of my last update, they offer up to $250,000 for the structure and $100,000 for personal contents. You may need additional coverage from a private insurer if your property value exceeds these limits.
3. Waiting Period: There’s typically a 30-day waiting period from date of purchase before a flood policy goes into effect, so don’t wait until a storm is forecast to buy coverage.
4. Property and Contents: NFIP policies require you to buy building and contents coverage separately. Make sure you have both if you need protection for your belongings as well as your home.

General Tips for Both Types of Insurance

1. Inventory: Keep an up-to-date inventory of your possessions with photos or videos. This will help in filing a claim.
2. Mitigation Measures: Implementing earthquake retrofitting measures or flood-proofing your home can not only reduce potential damage but may also lower insurance premiums.
3. Annual Review: Review your insurance coverage annually to ensure it keeps pace with changes in your home’s value and your personal possessions.
4. Document and Report: In the event of a disaster, document the damage with photos or videos before cleanup or repairs and report your claim as soon as possible.

By following these tips, you can make a more informed decision about earthquake and flood insurance, providing you with peace of mind knowing you are better prepared for these unpredictable natural disasters.

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Last Updated on January 7, 2025 by Marlon Moss