You probably remember Hurricane Katrina, but if you lived outside its path, you may not remember the insurance battles that followed. When Gulf Coast residents filed claims against their homeowners insurance after the storm and resulting floods swept their homes away, many of them were shocked when insurance companies denied their claims. The reason? Their policies didn't cover flooding — only damage from high winds.
Misconceptions like this are common, according to Kiplinger Personal Finance, and as extreme weather events become more common, it's important for homeowners to know exactly what their policies cover and obtain additional coverage if necessary.
Water
Standard homeowners insurance covers some kinds of water damage — damage from burst pipes and leaky water heaters, for example. But most other water-related events, like flooding from heavy rains or hurricanes, will require separate flood insurance from the federal National Flood Insurance Program (NFIP) or a private insurer. Keep in mind that while NFIP policies are often cheaper, private insurance policies often include higher coverage limits and reimbursement rates.
Wind
Standard insurance covers damage from wind and wind-driven rain, but homeowners in hurricane-prone regions may also be on the hook for a separate wind deductible. If your home sustains wind damage, your out-of-pocket costs may increase substantially. Check your coverage now to make sure you know what to expect, and adjust your policy if necessary.
Fire
Standard insurance covers wildfires, but costs are skyrocketing for homeowners in wildfire-prone areas. If your home is vulnerable to wildfires, you'll need to budget for expensive insurance — or take a huge risk and go without.
Earthquake
Standard policies do not include earthquake damage. Homeowners in earthquake zones need to purchase a separate policy or an endorsement on their existing policies to protect their homes and belongings.
