Why homeowners need these special forms of coverage
All insurance policies have coverage limitations, and your homeowners insurance is no different. Two of the most common perils excluded from homeowners insurance coverage are floods and earthquakes. Insurance providers refuse to cover these threats because the damage they cause is too extensive and costly for them to take responsibility for. To secure coverage for these perils, homeowners will need to secure specialty flood and earthquake policies. Here’s what you need to know about these supplemental forms of home insurance.
Most flood insurance policies are administered by the Federal Emergency Management Agency (FEMA). Insurance providers work with FEMA to offer homeowners access to this coverage in flood-prone areas. Flood insurance offers coverage for the physical damages and losses caused by floods and flood-related erosion. This coverage extends to floods caused by heavy rain, dam breaks, clogged storm drains, unusual tide surges, and so on.
The cost of your flood coverage is dependent on several factors. When determining your coverage rates, insurers will look at the following:
- The amount of coverage you have purchased
- The deductibles you set
- The location of your home
- The age, occupancy, and structure of your home
- The elevation of your home’s lowest floor relative to the elevation of the 1% annual chance flood
Earthquake insurance offers coverage for the damages caused by an earthquake. This coverage extends to the structure of your home, as well as the personal belongings that may be damaged or lost in a quake. Typically, earthquake insurance is only necessary for homeowners who reside near a fault time or in an area with seismic activity caused by drilling.
Earthquake insurance rates vary widely depending on where your home is located. Homes in low-risk areas will usually have lower insurance costs. However, if your home is located near a fault line, then your premiums will be significantly higher. Your rates may also be higher if the following is true:
- Your home is older
- Your home is made of brick (brick is less flexible and therefore has a harder time withstanding the stress caused by an earthquake)
- You live in a high-value home
This is what homeowners need to know about specialty flood and earthquake insurance. Do you have additional questions about your home coverage? For assistance with all your coverage needs, contact an insurance professional at Westwood Insurance Agency today.