Your Homeowners Policy: Weathering A Storm

Basic coverage also protects against natural disasters, but not all perils are covered. Additional insurance may be required. For damage resulting from a covered incident, nearly all insurance companies require a policy be issued for at least 80% of the replacement cost of the home. The following are some natural occurrences that are usually covered by an average homeowners insurance policy:

Lightning, Hail, and Wind. Damage to your home and property caused by lightning, hail or winds associated with thunderstorms, tornadoes and hurricanes is generally covered. You might wonder, “What happens if one of my trees falls down and damages my neighbor’s house?” In some cases, your homeowners policy may pay if your mailman were to fall on your icy walkway and become injured. Your policy generally will pay (within specified limits) for losses to your own property, as well as those for which you might be held liable.

Snow. If part of your roof collapses under the weight of snow, sleet, or ice, your homeowners policy will generally, pay for any necessary repairs. In most cases, you may also be covered for living expenses, should you have to vacate your home and temporarily live in a hotel or apartment.

To determine which weather-related risks or other natural disaster are excluded from coverage, check your “policy exclusions.” Some typical exclusions include the following:

Earthquake, Flood, and Sewer Backup. Most homeowners policies do not cover damages caused by earthquake, flood, or sewer backup, although you may be able to add earthquake or sewer backup coverage to your policy by special endorsement.

Flood Insurance. In particular, it may be required if your home is located within a declared “flood zone”. The only way you can protect your home and belongings from flood damage is with a policy backed by the National Flood Insurance Program (NFIP), a division of the Federal Emergency Management Agency (FEMA). According to FEMA, a preferred risk policy costs a little over $100. The average policy in a designated area costs a little more than $300 a year for about $100,000 of property coverage. In contrast, a disaster home loan for $50,000 can cost you more than $300 a month for 20 years.

Landslides, Mudslides, Tidal Waves and Ocean Storms. Landslides, mudslides, tidal waves, and wave damage in coastal areas are excluded from most homeowners polices. Like earthquakes, these hazards generally affect individuals in only certain geographic areas.

In the event damage to your home prevents you from living there, your homeowners policy may cover your substitute living expenses, such as hotel bills and restaurant meals. A limit, equal to a certain percentage of the coverage n your house, usually applies, but increased coverage may be available at an additional cost. A time-frame for repairs may also apply. To ensure the reimbursement process goes as smoothly as possible, keep expenses reasonable and save all receipts.

-Robert Catalano