Will Insurance Cover Damages from Natural Disasters?

When people purchase a new home, they purchase a homeowner’s insurance policy as well, to have their home protected from natural disasters. You might ask if your insurance policy covers a total protection of all your assets. The answer is both YES and NO. The terms and conditions of an insurance policy will definitely have a list of what they can cover, and what they can’t.

Let’s take flood as an example. You purchased an insurance policy where it states that you are covered from damages caused by rain. This only means that you are covered from water that is falling from the sky. For instance, water is leaking from your roof because a thunderstorm has damaged your well-maintained roof—this can be covered by your insurance policy. But if this rainstorm caused a flood in your backyard, then you are probably not covered by your insurance policy. Even if the flood in your backyard was caused by the rain, you will not be covered, because from an insurance company’s point of view, rain damage is caused by water falling from the sky. On the other hand, flood occurs on the ground. So flood caused by rain may not be covered by your insurance company.

You might think that this is ridiculous. But most homeowner’s face the same thing when it comes to insurance policies. Check the list of coverage from your insurance company—if it’s not written in their list of coverage, it’s definitely not covered.

This actually happened during the Hurricane Katrina. They only learned of this loophole after the disaster. Rain fell from the sky; winds tore off roofs; and water flooded houses. What made it worse is that most of the homeowner’s in those times only had basic insurance. Basic insurance policies do not cover flood and damages caused by strong winds. After the strike of Hurricane Katrina, most of these people found out that they were basically covered for nothing. They didn’t have a house, mortgages to pay, and no place to stay.

In most cases it’s pretty obvious which coverage to apply for. If you live in a state that is prone to earthquake, then purchase earthquake insurance. If you’re in a state that has Rocky Mountains, then you probably don’t need hurricane insurance. However, if you think there are probable natural disasters that might occur in your place, you can always purchase added coverage.

Insurance companies are too smart for these kinds of situation. If they know that your residence is prone to a specific disaster, then you will be asked to pay a higher premium. Just like any business, insurance companies definitely want to make money.

Always remember that the key to purchasing the right insurance policy is to identify the coverage of your policy. If you know that your area is prone to natural disasters, yet you’re not covered for this, immediately seek for an added coverage. Otherwise, you are just paying for your premium, yet you’re still vulnerable in case a disaster strikes.