Disaster insurance is not real insurance that you can sign up for. But homeowners insurance already protects your property from wind and storms, snow accumulation and fires. Your homeowners insurance covers extreme natural disasters such as tornadoes, wildfires, volcanic eruptions, meteorite falls, snow storms and more.
It’s important to note that despite the broad coverage you can get from a typical homeowner’s policy, your policy is not comprehensive. In fact, common natural disasters, such as floods or earthquakes, are often not covered by a general policy.
What is disaster insurance?
Disaster insurance refers to any type of property insurance that covers accidents that standard homeowners insurance does not cover. Because some of these risks are caused by human activity or are not entirely natural, some insurers and insurance agents call these types of policies “catastrophe insurance.”
The most common types of catastrophe insurance are covered by flood, earthquake and sewer backups.
If you live in an area where a certain type of damage is common, you can exclude coverage for that event from standard homeowners insurance. For example, insurance companies often exclude storm damage in areas prone to hurricanes and certain types of fire damage in areas prone to wildfires.
Disaster insurance is not a single comprehensive coverage that does not include regular homeowner’s insurance. It is a category of insurance that goes beyond standard homeowner’s insurance coverage, usually in connection with a single type of destruction incident.
How is natural disaster insurance covered?
A typical disaster insurance policy serves the same function as standard homeowner’s insurance.
- Coverage. The policy should clearly define the types of events that apply and the scenarios that are excluded from coverage.
- Top Grade. To enforce the policy, you must make a monthly or annual payment. This depends on a variety of factors, including eligibility, the amount covered, and the deductible.
- Coverage limit. Insurers will not pay more than the maximum amount per claim.
- Deductible. You must pay a certain amount in your Australian money for the amount you claim before you start applying for insurance.
Disaster insurance pays the claim in one of two ways, depending on the type of policy and the circumstances surrounding the claim.
Larger bill. If a lot of reconstruction or repair work is required, the insurer will probably pay the contractor directly. If you incur significant initial expenses, such as the cost of a temporary move or urgent repairs so you can buy a home, your insurer may pay for them.
If your insurance claim is smaller, less complicated, or you can do the necessary work yourself, your insurer can reduce the check by the total amount of your coverage.
What does natural disaster insurance cover?
You can take out disaster insurance for a variety of disasters that can be costly.
Disaster insurance usually covers only one type of disaster, so if you live in an area prone to natural disasters, you may need several different insurance policies. The most common types of disaster insurance are:
- Floods and mudslides. Standard homeowner’s insurance will never compensate for damage caused by floods or mudslides. Unlike most other natural disasters, the federal government protects homeowners through the National Flood Insurance Program, which compensates for damage from both inland floods and tsunamis. However, in areas with high flood risk, flood insurance premiums can be expensive.
- Earthquake. Earthquake insurance compensates residential and personal property damage caused by an earthquake, either as a direct result of an earthquake or as a secondary effect, such as a tree branch falling on a house. Some private insurers offer earthquake insurance. In California, the California Earthquake Authority provides state-guaranteed services. Like flood insurance, earthquake insurance can be expensive near active faults.
- Storms and tornadoes. Standard homeowner’s insurance usually compensates for “ordinary” wind damage. However, damage caused by hurricanes or tornadoes, especially in geographic areas where such events are common, is not always covered.
- Volcanic eruption. Believe it or not, standard homeowners insurance often includes volcanic eruptions as well, but usually does not cover those who need it most. If you live in the shadow of an active volcano, you’ll need additional insurance.
- Earth Movements. Earthquake insurance does not cover all types of debris, such as landslides and debris that are not related to earthquakes or volcanic eruptions. A change in policy terms may be required to include a less common range of risks.
- Sewer backups. Sewer backups often result from local conditions, such as tree roots blocking the spillway.
How can I get disaster insurance?
Filing for disaster insurance is very similar to filing a standard property insurance claim. Follow these steps:
- Decide which policies to apply. First, find out if standard homeowner’s insurance compensates for damage or if you need disaster insurance. If you’re not sure, check the coverage policy section.
- Contact your insurance agent or insurance company to begin the procedure. If you have an insurance agent, the insurance agent will be able to file a claim on your behalf. Otherwise, your insurance provider should have an online claims portal where you can initiate claims, upload documents and communicate with your claims adjuster.
- Document the damage. Take lots of pictures of the damage and look at your belongings that were lost or damaged during the disaster. You need them to support your claim.
- Make emergency repairs or find other living quarters. Make the repairs necessary to make your home safe as soon as possible (and only those repairs). If this is not possible, look for another lifestyle. Keep a receipt for all costs associated with these activities, as insurance should include additional living expenses.
- Work with a billing adjuster. Depending on the situation, the insurance company may send a claims adjuster to visit your property or use information you provide, such as photos or video from a satellite or drone, to view the damage remotely. Respond quickly to customer questions and provide additional information requested by the customer.
- Review and hire contractors for repairs or remodeling. Find an authorized contractor who can return the asset to its previous condition. Depending on the situation, the insurer will pay directly or reimburse the cost of the cash payments.
You need to know about disaster insurance requirements.
Since insurers often send special forces to respond to major disasters, ask them if they have a disaster claim number for your area. Inclusion in all communications can help you make payments quickly. It is also best to provide policy information electronically so that you can review relevant information when needed.
Police often lock down certain areas during and after disasters. Flooding, downed power lines, or forced evacuations can prevent an insured person from returning home as soon as he or she wants. Depending on where you live and the severity of the disaster, a claim evaluation can take days or weeks.
Here, the replacement cost policy can be extended to increase the policy by a certain percentage (usually an increase of 25% or 50%).
This means that if the cost is higher than originally expected, the customer can rebuild. Most major vendors do not include this product as a standard offer, but you should check the policy details to see if this is available.
It’s also important to note that if you’re not satisfied, you can appeal your insurer’s first offer. You can start this on your own with the help of a company or government agency. Be careful, as using your insurer’s funds may avoid additional liability.
The insurer will send the contractor a brief list and do all the tasks they deal with. It is often wise to work with the professionals they offer, but you have the option of shopping around and hiring your own staff.
Once the insurance that can cover the cost of living is canceled, the additional cost of living can vary whether you live in a personal vehicle or feel comfortable.