Homeowners Insurance Doesn’t Cover Many Natural Disasters. Here’s the Lowdown.

No matter where you live, you will likely experience at least one natural disaster in your life. Whether it’s a hurricane, tornado, flood, earthquake or something else, you can be pretty certain Mother Nature will affect your life, home and property.

You can’t prevent it, but you can be prepared when it happens. That’s where natural disaster insurance comes into the picture.

Homeowners Insurance vs. Natural Disaster Insurance

Generally speaking, homeowners insurance helps protect your property and belongings against loss and damage, as well as providing some liability protection for accidents in or around the home.

That said, there is no one-size-fits-all version of a homeowners policy. Based on where you live, you could have different needs and experience different hazards or catastrophes than someone else.

“Standard homeowners insurance typically provides coverage for damages caused by specific ‘perils’ like fire, theft, vandalism and certain natural disasters such as windstorms. However, it does not include coverage for flooding or earthquakes,” said Gregg Barrett, CEO of WaterStreet Company — a property and casualty tech insurance company based out of Kalispell, Montana. “Disaster insurance, such as flood insurance, offers coverage for ‘perils’ that are not typically covered by standard homeowners insurance.”

With that, the cost of the policy can vary widely. For example, properties that are susceptible to natural disasters — like hurricanes in Florida or earthquakes in California — tend to have more expensive insurance coverage.

How to Know if You Need Natural Disaster Insurance

So how do you know how likely you are to experience any given natural disaster in your area? We’re so glad you asked.

The Federal Emergency Management Agency (FEMA) has an excellent online tool called the National Risk Index — a dataset and online tool that shows the United States communities most at risk for 18 natural hazards.

You can search or click on the area of the country in which you live, and the NRI tool will tell you how likely — from not applicable to very low to very high — a specific natural disaster may be.

For example, Pensacola, Florida, has a “Not Applicable” ranking for avalanche risk. Then it ranks “Very Low” on ice storms, “Relatively Moderate” on heat waves, “Relatively High” on hurricanes and “Very High” for lightning — with rankings in between all of those for 13 other potential disasters.

Once you’ve got an understanding of what types of catastrophes could potentially visit your area, you can begin the process of researching what type of natural disaster insurance you need. Some disasters are covered by a regular homeowners policy, and others are not.

What Does Natural Disaster Insurance Cover?

Technically, there’s no overarching “natural disaster insurance.” If a particular disaster isn’t covered under your normal homeowners policy, you’ll have to add a rider, which is additional coverage related to that disaster. Flooding is one common example of this.

Let’s take a look at the most often used types of natural disaster insurance and how they protect you.

Tornadoes

Around 1,163 tornadoes occur on average every year, according to the National Weather Service. Those events account for an average of 64 deaths and 1,500 injuries.

And those tragedies don’t even take into account property damage.

Generally speaking, tornadoes are covered by standard homeowners insurance under the windstorm peril. It’s a term companies use for an event that results in property damage.

If you live in an area more prone to destructive tornadoes — maybe the south-central part of the country, like Oklahoma — then your insurance company may require a separate deductible.

Hurricanes

Similar to tornadoes, damage caused by powerful hurricane winds is typically covered under a standard homeowners policy. Damage from rainwater that might blow through a cracked window or door is also usually covered.

But here’s where the insurance companies get tricky in regards to hurricanes.

“In regions prone to hurricanes, a standard homeowners insurance policy usually covers wind and rain damage caused by the hurricane itself,” Barrett said. “However, it typically does not provide coverage for flood damage resulting from excessive rainfall or storm surges associated with hurricanes.”

So in the case of a hurricane damaging or destroying your house, the insurer would investigate to determine whether the damage was caused by wind and rain or a storm surge that caused flooding.

“Flood surging refers to the rising and overflowing of bodies of water, such as rivers, lakes or oceans, due to heavy rainfall or storm surges. This water can enter homes and cause significant damage,” Barrett added.

If you live in a hurricane-prone area like Florida and the Gulf Coast, you’ll definitely want to consider adding flood protection for your property. According to FEMA, just one inch of flood water can cause $25,000 of damage.

You can reach out to the National Flood Insurance Program (NFIP) to find out which insurers are available in your area.

Floods

Whether it’s a hurricane, tornado or a sustained torrential downpour that overwhelms a nearby creek or river, flooding is typically not covered under a standard homeowner’s policy.

FEMA’s Flood Map Service Center is an excellent online tool to help you determine whether or not you are in a flood zone and your annual flood risk.

If you live in a flood zone, you’ll want to seriously think about flood insurance offered by the NFIP. This separate policy covers your home and your belongings.

Though this type of insurance might ease your mind, it’s not cheap. Average annual flood coverage ranges from $539 annually in Maryland to nearly $1,412 in Vermont.

Over the last decade, the cost of flood insurance has risen significantly in some areas. Those price hikes are because of the frequency and severity of floods in specific areas, changes in flood maps and the overall cost of flood damage claims, Barrett said.

“In locations like Louisiana, flood insurance premiums have risen due to higher risk assessments, updated flood zone designations and increased awareness of flood-related risks,” he added.

In these areas, you may be required to get flood insurance if you want a federally backed loan insured by the Federal Housing Administration (FHA).

“This requirement ensures that property owners have adequate coverage to protect against flood-related losses, reducing risks for both homeowners and lenders,” Barrett said.

Earthquakes

Bad news, California. You’ll rarely find a homeowners insurance policy that covers earthquakes — or any type of earth movement, like sinkholes, for that matter.

According to the United States Geological Survey (USGS), the most risky areas to live in for earthquakes are California, the coastal Pacific Northwest, Missouri, South Carolina (Charleston to be exact), Hawaii’s Big Island, Anchorage, Alaska, and the southern Alaska shore.

If you live in one of those areas, you’ll definitely want to investigate earthquake insurance. Your options would usually include:

• Dwelling coverage: Pays for you to rebuild or repair the house itself.
• Loss-of-use coverage: Pays for you to live somewhere else during home repairs.
• Personal property coverage: Pays to replace damaged and lost contents inside your house.

Like flood insurance, earthquake insurance is pricey. Policy Genius says every $100,000 of earthquake coverage will cost you $500 to $1,000 in annual premiums.

Hail

Here’s some good news. Most homeowners policies do cover hail damage through the dwelling coverage of your insurance.

The caveat here is you might have to pay higher deductibles if you live somewhere prone to hail storms.

Also, like any insurance policy, pay close attention to your deductible amount. If the deductible is more than the cost of repairs, you’ll want to pay out-of-pocket.

Wildfires

Wildfires are a growing cause of concern, especially in the western part of the country, over the last few decades.  More than 7.5 million acres burned due to wildfires in 2022 and 2.6 million acres in 2023, according to the National Interagency Fire Center.

Wildfire, like human-made fire damage, is typically covered under a standard homeowners policy. Barrett says homeowners in wildfire-prone areas may have a difficult time getting a policy. However, you still have options.

One option is the FAIR (Fair Access to Insurance Requirement) plan, available in select states.

“The FAIR plan is an insurance program that offers coverage for properties unable to secure traditional insurance due to high-risk factors, such as wildfire-prone locations,” Barrett said. “It provides basic coverage for ‘perils’ like fire and sometimes extended coverage for other hazards.

“Additionally, homeowners in wildfire-prone areas can explore specialized insurance providers that focus on high-risk areas or seek coverage from surplus lines insurers who offer coverage for unique risks not typically covered by standard insurers.”

Other Circumstances

Your insurance company probably has a long list of other disastrous situations its homeowners policy won’t cover. Some of those might include:

• Sewage and drain backups
• Infestations (think mold, rodents, termites)
• Neglect
• Human-made disasters like damage from war
• Liability related to diving boards, trampolines and certain dog breeds.

Bottom line: Make sure you know your homeowners policy and exactly what it does and doesn’t cover. If you’re not sure, schedule a meeting with your insurance agent to find out.

If a natural disaster ever strikes your area, you’ll need that peace of mind knowing that your property will be taken care of.

Robert Bruce is a senior staff writer at The Penny Hoarder covering earning, saving and managing money. He has written about personal finance for more than a decade.