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.