Is Your Home Insurance Policy Missing Key Weather Coverage?
When was the last time you reviewed your home insurance policy? Many homeowners and renters are surprised when they read the fine print and discover coverage gaps tied to weather damage and natural disasters. Here is what to check before the next storm, flood, wildfire, hurricane, or winter weather event puts your home at risk.
What Your Home Insurance Usually Covers After a Storm
Most home insurance packages cover the extreme weather events that Americans typically fear. For instance, most policies provide coverage for fire damage, including wildfires. This includes monetary compensation for smoke damage.
Standard policies also usually cover wind damage and some covered water damage. This means that damage incurred by a tornado should be covered. Lightning strikes that result in a fire are also usually part of a barebones policy.
There is a grey area when it comes to damage from hailstorms. While structural damage is generally part of the policy, you may have a harder time getting reimbursed for cosmetic damage. This includes damage to landscaping or dents to gutters that do not compromise the structural integrity.
When it comes to winter storms, you can expect a standard policy to cover damage caused by the weight of heavy snow and ice. This includes roof collapses. As long as the homeowner or renter did not intentionally turn off the heat, damage caused by frozen pipes is also covered under most conventional policies.
Coverage Gaps That Often Need a Separate Policy
While all of the major weather events are covered by most regular policies, there are a few instances in which you will likely need additional coverage. For example, flooding is one of the most notable insurance gaps. Most typical policies cover water damage from rain from above. However, damage is not typically covered if it comes from the ground, such as flooding from rivers or storm surge. If you live in a floodplain, you will need a separate policy through either a private flood insurer or the National Flood Insurance Program.
Related to flooding coverage is the option to add what is known as a "water backup endorsement." This extra coverage covers sewer backups caused by rainstorms, allowing you to claim cleanup costs under your policy coverage.
Californians know all too well about the importance of earthquake coverage. This is because standard policies do not encompass damage blamed on "earth movement." This includes earthquakes, mudslides, sinkholes, and landslides.
Just as Californians pay close attention to earthquake coverage, residents of Florida, the Gulf Coast, and the Southeast need to read the fine print about their hurricane coverage. While most policies may cover wind damage from hurricanes, they typically do not cover destruction from flooding or storm surge unless you have separate flood coverage.
One last thing to keep in mind when adding coverage to an existing general policy is the option of a "loss of use" rider. This extra layer of coverage will pay for lodging and meals should the home become uninhabitable for a temporary period.
Understanding the Details of the Deductible
An important step in understanding the scope of your coverage is determining the deductible. Some deductibles are so high that you may never even meet them if a tragedy strikes. This is most common in areas where the specific type of coverage is needed the most.
For example, coastal states that are prone to tropical weather strikes often come with hurricane deductibles. These deductibles may be a percentage of the home's value rather than a flat monetary amount.
Insurance experts also note that it is important to understand the difference between the Actual Cash Value (ACV) and the Replacement Cost Value (RCV). The ACV simply takes into account the worth of the item damaged, while the RCV provides coverage for the cost to replace an item at today's fair market prices, regardless of how old the damaged item is. Unfortunately, you will have to pay higher monthly premiums to upgrade to an RCV plan over an ACV umbrella of coverage.
It goes without saying that your local risk should shape your coverage. A coastal homeowner, wildfire-prone household, tornado-prone property owner, and renter in a flood-prone apartment may all need different add-ons.
Renters Need Weather Coverage Too
Lastly, do not discount the importance of insurance coverage if you are a renter. While the landlord's insurance will pay for damage to the dwelling, it does not cover your belongings. Many landlords require that their tenants show proof of renters' insurance as part of the rental agreement.
An insurance expert is always the best source of information about the specifics of the type of coverage that you need. Taking the time to understand the fine print and the gray areas can save you big headaches should disaster strike.
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