Does Home Insurance Cover Natural Disasters?
Homeowner’s insurance covers many — but not all — of the perils your home might endure. If you’re wondering if home insurance covers natural disasters, you’re in the right place.
Today, our team of licensed insurance agents is here to explore the perils covered by a traditional home insurance policy, and help you decide if you may need more insurance coverage in an unbiased way.
Does Homeowner’s Insurance Cover Natural Disasters?
The short answer is mostly “No.” Homeowner’s insurance does not cover all natural disasters. But it may cover some, or it may help to pay for certain damages related to a natural disaster.
You may be wondering, “Does home insurance cover hurricane damage?” Or “Does home insurance cover volcanic eruptions?” We’ll answer these questions today.
Let’s begin with a few definitions. From there, this piece explores:
Before we get any further, it’s time to establish some vocabulary. This way, you’ll be able to read and understand your property insurance policies, and this article will make more sense.
Definitions and Phrases to Know When Shopping for Insurance Coverage for Your Home
As you shop for property insurance, the following words and phrases will pop up often. As a consumer, you should understand them.
Perils
Perils are specific events and types of damage your policy covers. Most traditional homeowners policies cover perils such as:
Fire damageWind damageLighting damageSmoke damageHail damageMalicious mischief (vandalism)Civil unrest and riotsAircraft crashes
You’ll notice many major catastrophes are not on that list. A standard home insurance policy will not cover:
FloodsEarthquakesLandslides or mudflow (in some states)War, including nuclear war
Why Aren’t Major Natural Disasters Covered by Home Insurance?
Most insurance companies do not cover these major regional problems, because they are too costly to insure. If an insurer were to cover these events, and your neighborhood was struck by one, the insurance company would be unable to pay the claims. They would become insolvent, and the state government would have to step in.
Ultimately, taxpayers would end up paying a part of the claims, the state would lose a ton of money, and many policyholders would not collect the funds they deserve. The insurance company would probably go out of business, and many other individuals would be left without any insurance.
All Risk Policies
Sometimes, homeowners purchase an “all risk” policy, believing it will cover floods, hurricanes, landslides and so on. But if you read the policy, you will see those perils are excluded. The phrase “all risk” policy is a misnomer, and some states are trying to prevent insurers from using this phrase in their paperwork, because it is misunderstood so often.
Just to be crystal clear here, an “all risk” policy does not automatically cover natural disasters like floods or earthquakes.
Riders / Endorsements / Amendments
The terms “riders,” “endorsements” and “amendments” are interchangeable. These are additional types of insurance that can be added to a policy. For instance, depending on your state, you may be able to add a rider for earthquake coverage to your regular home insurance policy.
This is not a separate policy, but it is extra insurance to protect you in case there’s an earthquake. You will pay a little more for this coverage, but many homeowners feel it’s a worthy investment.
Now that we know what is, and is not, covered by a typical homeowner insurance policy, let’s talk about natural disaster coverage in terms of residential property.
Who Needs Natural Disaster Insurance Coverage?
There is no all-inclusive natural disaster insurance policy for homeowners. Don’t confuse this with natural disaster insurance for crops, that’s a different type of insurance, for farmers.
Rather than a single catastrophe policy, you’ll need to shop for the unique perils that affect your region. Some types of natural disaster insurance coverage are available in some states through some insurers. The availability of these policies or endorsements, and your need for them, really depend on the local weather patterns and risks.
For instance, a homeowner in Utah has little need for financial protection against tropical storms and hurricanes, so this type of policy or rider probably won’t be available in UT, and insurers there don’t bother to exclude these perils on a policy, either. They simply don’t happen.
The golden questions are: “Do I need natural disaster insurance coverage? If so, which kind?”
The answer is this: If you believe you could lose your home to an erupting volcano, a tidal wave or a hurricane, then yes, a more thorough insurance policy will likely appease your anxiety. If you’re losing sleep at night because hurricanes are common in your region, then you should consider shopping for more insurance.
Homeowners in Tornado-Prone Areas May Seek Natural Disaster Insurance Coverage
In the regions of Oklahoma, Kansas and Texas known as “Tornado Alley,” homeowners are rightfully concerned about tornado damage. Wind damage is usually covered on a home policy. And the damage caused by a falling tree limb or flying debris is covered. Homeowners in Tornado Alley are wise to discuss these points with their insurance company and seek extra property insurance for their structure and belongings if they need it.
Homeowners in Coastal Regions May Seek Extra Insurance Because of Hurricanes
Turning our gaze to the coasts, homeowners there are concerned about tropical storms and hurricanes. There are not specific “hurricane” policies on the market yet. But you can still make sure your insurance policy covers wind damage, damage from falling limbs or debris, and water damage that might occur from broken windows.
Floods are often associated with hurricanes, and it’s important to remember that floods are never included in a traditional home policy.
How Flood Insurance is Distinct from Other Types of Disaster Insurance
Flood insurance is another topic, entirely. Flood damage is not a covered peril on a standard insurance policy.
For a long time, the only way to purchase flood insurance was through the Federal Emergency Management Agency (FEMA.) These policies were called National Flood Plan Insurance (NFIP) policies.
Today, we see major insurers offering flood insurance as riders or complete policies. Remember, even your “all risk” policy probably does not cover floods.
100-Year Flood Zones: Another Misnomer in the Insurance Industry
Homeowners, and even licensed insurance agents who do not deal with flood insurance, tend to misunderstand the phrase “100-year flood plain.” This phrase implies that an area that floods once every century.
Know that Mother Nature is not counting down the years until the next flood, 99, 98, 97…. A 100-year flood plain has a 1% chance of flooding during any given year. It’s very possible that a property in a 100-year flood plain could flood two or three years in a row, or twice in the same decade.
Do You Need Flood Insurance?
Legally, there is no law that requires you to carry flood insurance anywhere in the US. However, if your property has flooded in the past, you might be wise to invest in a flood policy.
If your mortgagee — the bank or person to which you make a mortgage payment — requires you to carry a flood policy, then you must obey the terms of the mortgage contract.
Other reasons you should research flood insurance are:
You live near a major body of waterYour property is at or below sea levelYour property is in a valley
Remember, your property doesn’t need to be classified as any kind of flood zone for it to experience a flood. Think of it this way, if it rains there, it can flood there!
Now that we’ve explored types of disaster insurance, let’s talk about costs.
Natural Disaster Insurance Costs
As of 2023, there is no all-inclusive natural disaster insurance policy that covers all catastrophic perils. There is no single policy that will protect you against hurricanes, earthquakes, floods, and so on.
If such a policy did exist, the premium — your insurance bill — would be based on the value of your property, your claims history, and other claims in your neighborhood.
There is no single set price for disaster insurance coverage, because no such policy exists. We’ve illustrated some costs in the table below, and these would be added to your regular homeowner’s insurance costs.
Insurance TypeYearly Cost in CaliforniaYearly Cost in OhioYearly Cost in FloridaEarthquake Insurance$800 – $2,000$800 – $5,000$850Flood Insurance$900 – $2,000$1,225$628Disaster InsuranceNot available as a policyNot available as a policyNot available as a policy
How Can I Protect My Home Against All Perils?
Since you’re concerned about natural disasters destroying your home, your best course of action is to have a frank discussion with a licensed insurance agent about your current policy. Read it carefully, think about the perils which are most likely to affect your home, and ask your insurance company about endorsements or additional policies.
For example, a California homeowner might be most worried about wildfires, earthquakes and landslides. In CA, a typical home policy will cover wildfires for sure, earthquakes are not covered at all, and some insurers supply landslide coverage.
Looking at Ohio, a homeowner there might not need any of those coverages but may be concerned about flood damage, hail damage, and water damage caused by ice dams after freezing rains and snowstorms.
We know this seems repetitive, but read your policy, know which perils you’re insured against, and ask for endorsements if you need them. Insurance is complicated, so there is no such thing as a silly question when speaking to your agent.
To prepare you for that conversation, we’ve answered some of the questions we hear most often about homeowner’s insurance and natural disasters, below.
Does Home Insurance Cover Hurricane Damage?
Not exactly. Many of the perils associated with a hurricane are covered by your standard homeowner’s policy (HOP.) These include:
Wind damageDamage caused by falling tree limbs or other debrisWater damage caused by rain entering through broken windows or a damaged roofWater damage caused by mechanical malfunction (say, your air conditioner is ripped from your roof, and it causes a leak)
But your standard HOP will not cover:
Flood damage caused by heavy rains or tidal waters
If your home is subjected to massive landslides, mudslides or sinkholes, these may or may not be covered. In the future, your policy may or may not cover mold remediation, to remove and repair mold damage after a flooding event.
Does Home Insurance Cover Tornado Damage?
Again, most of the damage caused by a tornado should be covered by a standard HO policy. Wind damage, falling tree limbs, and even a fire started by a tornado will be covered by your homeowner’s policy.
Still, be sure to read your policy closely. Insurance companies can legally exclude some types of damage from it. And regional flooding is never covered.
Does Home Insurance Cover a Lightning Strike?
Yes, lightning is always covered by your homeowner’s insurance. You don’t need to buy any special amendments.
Does Home Insurance Cover Volcanic Eruption?
Most homeowner’s insurance policies will cover the damage caused directly by a volcanic eruption. And that’s good news, because as of 2023, there is no such thing as volcano or lava flow insurance. But this is something to discuss with your favorite insurance agent, too.
For instance, if a volcano were to erupt and cover your yard in lava, start fires in your home, and coat your garage with ash, you will probably be covered, assuming volcanoes aren’t specifically excluded on your policy.
Summing it Up
There is no such thing as “natural disaster insurance.” Your home policy will cover many, but not all, of the perils your home may face in a year. If you have questions about specific perils, you should speak to an agent licensed to do business in your state.
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