Natural Disasters and Insurance Coverage Overview
Natural disasters have been all over the news uh this year with fires in the west. We have hurricanes in Florida, hail storms in Texas, all kinds of natural disasters. And one of the first things that comes up when these disasters happen is what happens with insurance. Are you insured for your damages if your house is destroyed? If there’s a tornado, if there’s an earthquake, you want to make sure you understand your coverages, because many times insurance cover is different for natural disasters than it is for standard losses.
Differences in Insurance for Natural Disasters
If your house catches on fire, God forbid, you normally have fire insurance that covers your house uh in a certain manner with certain deductibles. If it’s a natural disaster like a hurricane, a tornado, fire, flood, or sinkhole, there may be different coverages that aren’t the same as what you expect. So you want to make sure you understand what you’re covered for and what you aren’t. In some cases, for example, in the west, earthquakes don’t cover to replace your whole house. It’s just a percentage, and you have to eat the difference. So if your finances would put you in a bad spot if your insurance doesn’t just rebuild your house, you want to know about that in advance so you know what your risk is, what your potential losses are.
Understanding Home Replacement Values and Inflation
You also want to know what value it’s insured for. Many placement values of homes wouldn’t cover what it would cost to rebuild the house in today’s market with inflation on materials, lumber, and also labor cost. So you want to look at that value to make sure it’s in the ballpark of what it would take to actually rebuild the house.
Building Codes and Insurance Policy Coverage
The other part of the coverage which sometimes is difficult to understand is it rebuilds it to the standards it was previously built at. Well, current building codes might be different. It might require upgraded materials, upgraded construction uh techniques, and if the amount doesn’t cover that, you could also be deficient. So make sure you check your policy.
Additional Resources for Insurance Coverage Assistance
We also have information on our website risk coverage.com, which will help walk you through it. We have consultation available with licensed insurance agents if you want to get a second opinion on your coverages or get some straight answers about what’s covered and what’s not. We’re glad to help with that.
Importance of Reviewing Deductibles and Out-of-Pocket Costs
If you have any kind of homeowners insurance or personal lines, you want to make sure you totally understand the coverage, what is going to kick in, what’s not going to kick in, and what you have to come out of pocket for. Because many times the deductible for a natural disaster is much higher. It’s not $1,000 or $2,000; it might be 20 or 30% of the loss, which could be pretty expensive.
