Does your Homeowner Insurance cover you in a Natural Disaster?

Does your Homeowner Insurance cover you in a Natural Disaster?

With the recent arrivals of Hurricanes Florence and Michael through our area – although a bit east of Charlottesville – it is understandable for local homeowners to wonder if their home insurance policies are up to date in the event we get a direct hit next time.

A natural disaster is defined by the United Nations as “the consequences of events triggered by natural hazards that overwhelm local response capacity and seriously affect the social and economic development of a region.” In other words, it’s when Mother Nature wreaks havoc on a human-populated area.

In 2014 alone, insured losses due to natural disasters amounted to more than $15 billion. From damage to your home’s structure to destroyed personal belongings, events like tornadoes, hurricanes, wildfires, floods, and more are serious financial concerns for many homeowners across the country.

That said, it’s important to know which natural disasters your homeowners insurance policy may or may not cover. Having the proper coverage to financially protect your investments not only provides you with peace of mind — it also can really save the day if catastrophe strikes.

Do you have a limit?

Many homeowners have limits on their home insurance policies that are too low to cover the full cost of repairing or rebuilding in case of a natural disaster — and the problem is particularly alarming in areas at risk for hurricanes and flooding. 

Catastrophic damage left in the wake of Hurricanes Harvey, Irma, and Maria last year revealed a widespread lack of full insurance coverage for many homeowners in Texas, Florida, Puerto Rico, and elsewhere. 

The problem is that while many homeowners may have home insurance, their policies are too low, or they don’t have flood coverage, which generally must be purchased under a separate policy. 

In Houston, which was ravaged by Hurricane Harvey last September, about 70 percent of flood-related damage was not covered by insurance, according to real estate data firm CoreLogic. Of the 717,000 claims insurers received from Harvey victims by Oct. 31, 2017, about a third were closed with no payment made. 

Similarly, in Florida, where Hurricane Irma hit, insurers received nearly 1 million claims and did not pay out a third of them. Too often, homeowners don’t realize they need to increase their policy limits if they expand or upgrade their homes, according to insurance regulators. 

Also, homeowners may learn that their policy limits are insufficient for rebuilding, as the cost of construction materials and labor continues to rise. (Source: The Wall Street Journal)

Looking over risk data

When Hurricane Florence barreled toward the Southeast Coast in September, homeowners in North Carolina, South Carolina, and Virginia braced for potentially huge damage to their residences.

Although the tallies are not fully in, one company said residents could face as much as $62.4 billion in replacement costs from the storm surge, according to estimates by CoreLogic, which provides risk data to major insurance companies.

Many homeowners, however,  are underinsured for natural disasters, particularly for flooding damage, which isn’t covered under most policies. You can buy a separate flood insurance policy, but few homeowners do. 

Even if you believe you have full coverage, it’s important to review and update your policy regularly, especially the deductible as many underestimate the cost of fully replacing damage to their homes.

Take the time now — before a flood, fire, or some other disaster strikes — to make sure you have the right type and amount of homeowners insurance.

Emergency Preparedness

To help you figure out your home insurance needs, 19,100 Consumer Reports’ members who live in areas hit by Hurricane Harvey, Hurricane Irma, or the California wildfires were surveyed last year. These people are in a unique position to tell you what you need to do to protect your home, family, and belongings before disaster strikes.

Forty-five percent of those in Irma’s wake had property damage, as did 15 percent of those affected by Hurricane Harvey. Although only 2 percent of the people in areas swept by California’s wildfires had property damage, 26 percent of them had their homes completely destroyed.

Here are five lessons CR members learned that could protect you from devastating financial loss if disaster — natural or otherwise — strikes.

Review Your Coverage

Just more than half the people in the survey review their homeowners insurance coverage at least every few years.

Know What’s Covered

While there are exceptions for people who live near the Texas coast, standard homeowners policies typically cover damage from wind, fire, explosions (such as from a propane tank), lightning strikes, hail, and other perils. 

That means that hurricanes, tornadoes, and wildfires should be covered by most policies. Any outbuildings on your property — such as a garage, shed, or fence — are also usually covered. Damage to outbuildings was the most common problem reported by the survey respondents.

If your home is uninhabitable after a storm, your homeowners (or renters) insurance should also reimburse you for living expenses, such as a hotel room or meals out. (Five percent of survey respondents who had property damage said they couldn’t live in their home after a hurricane; 42 percent said they had to stay elsewhere after damages from a wildfire.) This benefit is generally limited to 20 percent of the total coverage on the structure of your home.

In addition to covering the loss or damage of personal property for covered perils, a homeowners (or renters) policy also protects against theft or vandalism, as in the event of looting following a wildfire or hurricane. Personal property coverage on a typical homeowners policy is usually 50 to 75 percent of the dwelling’s insured value.

Policies vary, so check with your insurer to see which specific perils are and aren’t covered by your plan. If you own a condo or live in a co-op, check your bylaws or underlying lease to determine what the association covers and what your personal insurance responsibilities will be.

Know What’s Excluded

Damage from floods, ground movement (such as earthquakes and sinkholes), and water backups isn’t included in homeowners policies. (Get more information on flood insurance.)

Earthquake coverage can be added to some plans for a fee or purchased as a separate policy. 

Don’t forget to factor in the deductible. Most homeowners policies are subject to a deductible of $500 to $1,500. Those for earthquake insurance are higher; the CEA offers plans that range from 5 to 25 percent of the policy limit. (People who live in hurricane-prone areas may have similarly high deductibles for hurricane coverage.) 

That can be a big expense. If your home is insured for $350,000 and your policy has a 5 percent deductible, you’ll have to pay $17,500 out of pocket on a covered claim.

Other exclusions to keep in mind include hail damage to the roof, which may not be covered if the roof is more than 10 years old, and any “sublimits” on personal property such as jewelry, artwork, and furs, which can be as little as $1,000 to $2,500. 

To cover such valuables, you may need to purchase a scheduled personal property endorsement, which could cost about $25 per $1,000 of coverage per year.

Get Credit for Updates

For example, installing impact-resistant windows and doors if you live in a hurricane zone could earn you as much as a 45 percent discount on your premiums.

Opt for Full Replacement

In the survey, 18 percent of CR members who filed claims found that they were underinsured. That can be a serious problem when a home is a total loss.

Rather than insuring your home for its actual cash or market value (the amount it would cost to replace it minus depreciation), insure it for the full replacement cost. 

This option costs 10 to 20 percent more per year than actual cash value coverage, but it will pay to rebuild your home exactly as it was, even if the amount exceeds the estimated value.  It’s a good idea to have a professional appraiser evaluate your home’s replacement cost every two to three years.

Shop Around

When it’s time to renew your policy, compare the same coverage offered by the insurers at the top of our homeowners insurance ratings. Some of the major insurers included in a 2016 survey provided a significantly better experience handling claims. 

Amica Mutual Insurance Company and USAA are among the highest-rated homeowners insurance companies reported by members who filed claims of $10,000 or more between 2013 and 2016. They also received the highest marks in all categories.

You may be able to save hundreds in premiums by shopping around. About 9 percent of respondents in the 2016 survey said they had switched insurers in the previous three years, and of those, more than half did so because they got a better price.

Ease the Claims Process

Taking an inventory of your belongings and keeping it up to date will make it easy to see whether you’re sufficiently insured. It could also speed the insurance claims process by helping to provide proof of losses for tax or disaster-aid purposes, especially if you have photos or a video of your possessions.

Below are some common examples of covered events.


Whether lightning strikes a tree and causes it to fall over, damaging your roof, or a lightning bolt ignites your living room — the dwelling coverage on your homeowners policy might help pay to repair your place. And if your valued belongings are ever damaged by a covered peril like lightning, fire, or explosion, personal property insurance on your policy could help pay to replace them.


Wildfires, accidental blazes, and even fires caused by vandals may be covered by home insurance. On top of dwelling coverage and personal property coverage that helps to repair and replace your home and belongings, policies provide coverage for fire department charges, too.

Hurricanes and tornadoes

If a hurricane or tornado damages or even levels your house, home coverage can often kick in to help restore your place back to its old glory. In the meantime, you might need somewhere else to stay for a bit — which is why some policies provide coverage for additional living expenses like a hotel, food, and even transportation while your house is being repaired after a covered incident.

What natural perils aren’t covered?

In general, damage caused by floods or earth movement (like earthquakes, landslides, mudslides, and sinkholes) isn’t typically covered by your homeowners insurance. There can also be exclusions when it comes to water damage and mold, fungus, vermin, as well as deterioration and wear-and-tear.

If you live in an area where flooding is a relatively common occurrence, it’s always a good idea to get a flood insurance quote — and the same goes for earthquakes and earthquake insurance. 

These relatively unpredictable hazards require coverages and limits that a typical homeowners insurance policy simply won’t offer, but that doesn’t mean it’s not super important to secure protection if you live in a high-risk locale.

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Charles McDonald
Charles McDonald
Charlottesville Solutions
2013 Woodbrook Court, Charlottesville VA 22901
REALTOR® - Licensed to sell Real Estate in Virginia
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