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Tom Clark

Tom Clark|United States

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Homeowners Insurance Policies Include Disaster Insurance.. or Do They?

May 22, 2019

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Many American homeowners are hopelessly unprepared for natural disasters. For some perspective, let's look at California. The state is America's most earthquake-prone state.

That said, less than 10% of California homeowners have earthquake insurance. Most of the homeowners have the idea that home insurance covers all natural perils. That's simply wrong!

Perils covered by homeowners insurance vary with providers. First things first, what is peril in insurance? Perils, also known as hazards, are events that cause damage and loss.

Typical homeowner insurance covers a very small fraction of the perils you're exposed to. That's why it's important to seek extra cover for perils not covered by your homeowner's policy: That means disaster insurance.

Let's take a closer look at the perils covered in the average homeowner's policy.

Disaster Insurance: More Than Homeowners Insurance

Basic homeowners policies don't cover acts of God. That said, the coverage isn't without its strengths. Below are four disasters covered by the average homeowner's insurance policy.

Homeowners Insurance: Types of Disasters Covered

The peril insurance policy of typical homeowners insurance covers:

  1. Lightning
  2. Fire
  3. Volcanic eruption
  4. Hurricanes and tornadoes

Even though these four perils are probably covered by your insurance policy, you best read the fine print. Determine to what extent the peril is covered and make a decision on whether you need complementary coverage.


Home insurance covers your property from lightning-related damage. The cover usually extends beyond lightning strikes to the property. For example, if lightning should strike a tree and the tree falls on your house, insurance will look into that.

All you have to prove is that lightning was responsible for the damage.

That said, lightning strikes can be fatal. In America, the peril is responsible for 50 deaths annually. Read how to cope with a loved one's death.


Fire is an especially common hazard with well over 1.3 million cases being reported in 2017 alone. Wildfires are covered by basic home insurance. Some policies go as far as covering fire department fees.

Read your homeowner's insurance policy and look for ways to improve fire coverage. That said, the replacement and repair costs for items damaged in fires are typically incurred by the insurer. 

Volcanic Eruption

As strange as it may seem, your home insurance very likely covers volcanic eruptions. However, the cover is a little tricky. If damage arises from the lava and fires caused by an eruption, basic home insurance has you covered. On the other hand, damage caused by earth movements isn't usually covered.

That's regardless of whether the movements were caused by volcanic activity. With 169 active volcanoes in the US, you'll probably need to modify this cover: Especially if you live in a state that harbors volcanic mountains.

Hurricanes and Tornadoes

Hurricanes and tornadoes can level your house in minutes. That's probably why basic home insurance covers damages caused by either peril. The tricky aspect of this cover is that it only covers damages caused by the immediate perils.

That's to say you'll probably have to pay out-of-pocket to fix damages caused by resultant flooding. Speaking of flooding, this happens to be one of the most misunderstood covers. Let's put a figure to that assertion:

One in five property owners in America believes that their home insurance covers flooding. This misconception arises from the water damage policy that almost all homeowners insurance policies come with.

Read on to learn why water damage policy won't cover flooding.

Natural Disaster Insurance: How Water Damage Differs from Flooding

Begin by asking yourself this question, "Do I need flood insurance?" If you live in a flood-risk area, you'll most likely answer affirmatively. It's the people who live in low-risk areas that are usually caught unawares.

Basic home insurance covers some types of water damage. The question is, "What type of water damage is covered by homeowners insurance?" To answer that, let's differentiate water damage from flooding.

Why Flooding Isn't Considered Water Damage

Floods can cause irreversible damage to property. The anxiety that follows the discovery that insurance won't step in is easily worse than the flood waters. Even as you seek appropriate disaster insurance, learn how to alleviate anxiety.

The difference between water damage and flooding lies in the source of water. Any damage that results from water from external sources (not within the house) is considered flood damage. It's usually not part of basic home insurance coverage.

When water damage is caused by plumbing issues, home insurance may step in. That said, even from the insurer's perspective, there's a very thin line between flooding and water damage. Have your insurer explicitly express what type of water damage you're covered for.

Disaster Insurance: Why You Need Flood Insurance

You sleep better when you know you're prepared for every blow disaster may throw your way. That said, read how you can improve your sleep

There are three main reasons why you need disaster insurance:

  1.  Floods can't be predicted: Living in a low-risk zone doesn't guarantee safety from flooding. It's because of this unpredictability 70% of flood damage is uninsured. The victims didn't consider flooding a particularly relevant hazard.
  2. Flooding is almost never covered by home insurance.
  3. You can assess your flood risk: If you want to determine the likelihood of your property being damaged by floods, enter your address into FloodSmart.gov.

In a Nutshell

You need disaster insurance, flood insurance in particular. It's one of the most under-insured perils in the US. If we learned anything from the floods of the last decade, it's that you can never be too safe. Back in 2011, hurricane Irene brought floods to upstate New York.

That was an area considered to be virtually risk-free, as far as flooding is concerned.

After floods devastate uninsured property, recovery is expensive. Most people turn to equity releases for money to start over. Read more about equity release.