Natural Disaster Insurance: What Your Standard Policy Might Be Missing

When you take out a mortgage, your lender will require you to have homeowner’s insurance. It makes sense, of course, that they would want to cover their investment. However, many homeowners take for granted that their insurance policy will cover any and all damage to the home. Unfortunately, this assumption proves false on many occasions and can lead to damage and loss that is not covered. So, what might your standard policy be missing?

Natural Disaster Coverage

As the United States has seen a rise in natural disasters in recent years, more people are realizing the need to add this coverage to their policies. A typical homeowner’s insurance policy likely will not cover natural disasters. This is probably the case because the majority of homes in the U.S. are not at risk of being damaged by hurricanes, tornadoes, or wildfires. Still, many are, and without natural disaster coverage, you could lose everything and never get reimbursed.

If you’re buying a home, ask your agent about what kind of coverage you might need for your area. If you already have a home, and insurance, review your policy to be sure you’re covered. Get familiar with what disasters happen in your area, and look into specific coverage. For example, if you’re in Florida, you’ll want hurricane insurance, and many homeowners in California should have wildfire insurance. You’ll feel better with the extra protection.

Wear and Tear

A common misconception of many homeowners is that you can have an appliance replaced or part of your home repaired if a mechanical breakdown causes damage. Sadly, many insurance policies don’t cover what they consider wear and tear. The thinking goes that a responsible homeowner should be aware of problems like a leaking toilet or sink that causes damage to your floorboards. As a result, they won’t cover damage if it occurs due to lack of maintenance.

While it’s true that homeowners should schedule maintenance checks on appliances, HVAC systems, and the roof, among other things, regularly, still, things happen. A quietly leaking refrigerator may cause tremendous damage you could not have known about. For this reason, it may be a good idea to get equipment breakdown coverage. This addition to your policy will cover broken appliances and the damage they’ve wrought on your home.

Business Related Risks

If you run a business out of your home, you might not have considered the damage your business could cause. Even if you have, you may not realize that your standard policy probably won’t cover it. For example, say you’ve built a structure on your property where you can mix chemicals to provide a product like water treatment, paint, or even agricultural compounds to clients. An accident in this structure that destroys or harms your property likely isn’t covered.

For an in-home business, you should at least have professional liability insurance, which will cover any kind of bodily injury or property damage. You may also want to opt for business property insurance, just to be safe. This policy will cover damage to the structure where you run your business and any equipment you use as well. It can also cover your inventory and any income you lose because you can’t run your business.

Valuables

Most homeowner’s insurance policies will cover many of the items in your home in the event of major, sudden damage or loss. This can include anything from a tree falling on your house and a house fire to theft. But if you have items that are worth a significant amount of money, like, for example, a million-dollar diamond, your standard policy probably taps out at a certain limit, well under that million dollar mark.

For particularly valuable, or even invaluable, items, you’ll want a special policy that covers those specific items. You’ll need to see an appraiser and get a certificate of appraisal. Then, you can usually contact your insurance agent and add a “scheduled personal property” endorsement to your policy, which will insure those items in the event of loss or damage. Make sure to regularly update the coverage of your valuables to reflect any appreciation.

Food

Most Americans keep less than a week’s worth of food on hand at any given time. In this case, you won’t have to worry about major losses in the event of a natural disaster. However, in light of the global pandemic and the rise of natural disasters causing people to shelter in place, more and more people are stocking up. Indeed, some people now invest in an entire side of beef, several chickens, half a hog, and more bulk items, which they store on their property.

A loss of this much food during a natural disaster could mean a loss of thousands of dollars. In this case, you’ll want to have food coverage on your insurance policy. Many standard policies will cover up to $500 in spoilage if you have a power outage. Check with your agent to see what yours covers, and decide if you need to add more. Typically, you can get up to $2,500 in additional food spoilage coverage.

Ultimately, it’s important to know what exactly your homeowner’s insurance policy covers. That way, in the event of a natural disaster, or any other issue with your property, you don’t get caught by surprise. Insurance can be expensive, and in many cases, it’s worth it. Just make sure you’re not paying high premiums without at least having all your bases covered.