Why does standard home insurance cover some disasters and not others?

Answered by Home Insurance, Car Insurance Expert Shannon on December 29, 2020

It seems very arbitrary to me, the kinds of things home insurance does and doesn't cover. Why don't some disasters qualify for coverage?

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Shannon

Home Insurance, Car Insurance Expert

It can be shocking to purchase homeowners insurance and see a list of exclusions, things from which your home is not protected. The two most common perils excluded from homeowners policies are earthquake and flood, and they both have several things in common. They are widespread, beyond human control, hard to predict, and financially devastating to customers and insurance companies. If large portions of one geographic area are affected by one of these disasters, there is a chance that the financial costs of all these claims could bankrupt insurance carriers.

But if you require this type of coverage, don’t worry — you can still be protected. Your insurance policy will provide earthquake coverage if you choose to purchase an additional earthquake endorsement. Instead of a standard $500 or $1,000 deductible, there will be a separate deductible that is a percentage of “Coverage A,” the policy’s dwelling coverage. The standard deductible is 10% or 20%.

If you are in a flood zone and require flood insurance, this coverage can be purchased as a separate policy through your carrier or the federal government’s National Flood Insurance Program (NFIP).

Both types of coverage have additional exclusions and limitations. If you have any questions, it is important to have an open and honest discussion with your agent about your needs to ensure that you are adequately covered.

To learn more about earthquake and flood insurance, check out these articles:


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