Budget Concerns: How Much Insurance is Enough?

In The Wake Of The Texas Flooding, Does Home Insurance Cover Natural Disasters?

5 June 2015

Dustin Duncan

In the wake of the recent flash flooding in the state of Texas, many people are starting to take a closer look at their home insurance coverage. Even if you were not impacted by this particular natural disaster, you undoubtedly want to be prepared in case a similar situation happens to you in the future. Although many people assume that a home insurance policy will cover all natural disasters, this isn't always the case. Read on to learn how natural disasters are handled in a standard home insurance policy.

The Named Perils

A standard home insurance policy covers damage caused by the specific natural disasters that are named within the policy. These natural disasters are known as named perils, and normally including the following.

• Fires
• Lightning storms
• Windstorms
• Tornadoes
• Hail
• Explosions
• Power line malfunctions

There are also other types of named perils in your home insurance policy. A typical home insurance policy does not separate the natural disaster named perils from the other named perils, so it is important that you review the list carefully. For example, theft and vandalism is included in the same named perils list as all of the natural disasters listed above.

The Exclusions

A home insurance policy typically excludes certain natural disasters from coverage. The three main types of natural disasters that are typically excluded from a home insurance policy include:

• Floods
• Earthquakes
• Hurricanes

While your home insurance will rarely cover the natural disasters listed above, that doesn't mean you have to be left without coverage. You can purchase an addition to your home insurance policy called a rider. Typically, you must purchase an additional rider for each type of natural disaster, rather than one rider for all three disaster types.

The rider will provide coverage in the event of the named disaster, up to the specific limit set forth in the rider. You may be given the option to adjust the amount of the rider based on your home value, but in some cases the insurance company will offer only a set amount of coverage in a natural disaster rider, regardless of home value.

If you live in an area where earthquakes, floods, or hurricanes occur, even if it's only a rare occurrence, purchasing these home insurance riders is a very wise investment. Talk to you home insurance agent (like those at Kerr Agency) about how you can adjust your policy to get full protection from natural disasters like the Texas floods today!

Share