Protect Your Home From Nature's Wrath
Kiplinger's Personal Finance|April 2021
Some disasters aren’t covered by standard homeowners policies. Make sure you’re prepared before it’s too late.
RIVAN STINSON

The pandemic and the presidential election dominated the news in 2020, but natural disasters also loomed large across the U.S. There were 22 extreme weather events last year, according to the National Oceanic and Atmospheric Administration, including the wildfires that spread across California, the tropical storms and hurricanes that pummeled the Atlantic coast, and a handful of tornadoes. Those disasters left more than $95 billion in damages in their wake, with homeowners and businesses large and small bearing the brunt of the costs. // Many homeowners have misconceptions about what their home insurance policy will cover, leaving them with unexpected expenses when disaster strikes. For example, when Policygenius.com, an insurance comparison website, surveyed homeowners last year, more than 53% of them said they believed that flood damage is covered by a standard homeowners insurance policy. (It’s not.) The survey also found that more than 80% of homeowners mistakenly thought that earthquake damage was covered, too. If you’re at risk for either of those events—or any natural disaster—here’s what you need to know to make sure you’re covered.

FLOODS AND HURRICANES

Certain kinds of water damage are covered by standard homeowners insurance. For example, if your water heater springs a leak or a water pipe inside your house bursts, your home insurance will probably cover the damages after you meet your deductible. (For tips on how to detect leaks early, see page 52.) But if it’s any other type of water event, such as flooding from heavy rainfall or a hurricane, you’re on the hook for the costs to repair the damages.

Last fall, heavy rainfall led to flooding in the basement of Chynna Keys’s home in Fort Washington, Md. Keys had to deal with water in her basement a couple of years ago, too, but she thought it had been caused by a faulty sump pump, which she replaced. This time, however, the rainfall flooded not only the main part of her basement but also a back room, damaging the carpet. Keys called her insurance agent at Erie Insurance, her home insurance provider, only to learn that she was on her own because she didn’t have a separate flood insurance policy. So far, she has paid $5,700 to fix the damages.

Homeowners can purchase flood insurance from the federal government or a private insurer. The government’s National Flood Insurance Program provides up to $250,000 of dwelling coverage and up to $100,000 of contents coverage. The policy has two separate deductibles (one for dwelling, one for contents) that you must pay before coverage kicks in. Deductibles start at $1,000 but can go as high as $10,000 for single-family homes. If you think this coverage is too low, you can try the private insurance route, which typically has higher coverage limits and will reimburse you for the full replacement cost of your home’s contents. (The NFIP only covers the items’ actual cash value, which includes depreciation.)

The cost of an NFIP policy varies, depending on risk, but averages about $700 a year. A policy from a private insurer averages $1,050 a year, according to Policygenius. Premiums will vary depending on where you live. For example, if you live close to the beach, premiums for a private policy will probably be higher than average.

In some areas, a private policy may cost less than one from the NFIP. A 2017 study from Milliman, a risk management and benefits firm, found that a large number of homeowners in Texas, Florida and Louisiana could buy a policy from a private insurer for less than they’d pay the NFIP. An insurance agent can help you compare options. Search for one near you at www.trustedchoice.com.

If you live in a hurricane-prone area, floodwaters aren’t your only concern. While damages from wind and wind-driven rain are covered by a standard homeowners policy, many charge separate wind deductibles, which means higher out-of-pocket costs for you. The deductibles are usually based on a percentage of your coverage rather than a flat dollar amount.

“It has been a gradual shift to different deductibles being applied to wind damage—particularly in the 19 states that are most prone to having hurricanes,” says Dan Karr, founder and CEO of ValChoice, an insurance industry watchdog. “So you could still have a $1,000 deductible on your home, but your wind deductible might be 5% to 10% of your dwelling coverage.”

Continue reading your story on the app

Continue reading your story in the magazine

MORE STORIES FROM KIPLINGER'S PERSONAL FINANCEView All

How to Surf the Net More Safely

To help you fight identity theft, consider adding a VPN.

3 mins read
Kiplinger's Personal Finance
May 2021

Tap Home Equity for Extra Income

Home is where the heart is, but it’s also a source of regular income for many retirees.

8 mins read
Kiplinger's Personal Finance
May 2021

THE COMPLETE GUIDE TO CAR RENTALS

Get up to speed on how to snag a deal and avoid pesky fees.

10 mins read
Kiplinger's Personal Finance
May 2021

STATES EYE TAX HIKES FOR HIGH EARNERS

The tax revenue could close budget gaps, but the measures could drive away mobile workers.

4 mins read
Kiplinger's Personal Finance
May 2021

THE KIPLINGER 25 FUNDS Unflappable

Our flock of actively managed funds survived a wild year and as a group delivered benchmark-beating gains.

10+ mins read
Kiplinger's Personal Finance
May 2021

Another Front in the COVID Fight

The commander of a National Guard task force says they’re filling gaps in the health care system.

3 mins read
Kiplinger's Personal Finance
May 2021

HOW TO BUILD (OR REBUILD) WEALTH

Our 11-part plan will help you establish a solid financial foundation or take stock of your progress.

10+ mins read
Kiplinger's Personal Finance
May 2021

Did Anyone Hear a Pop?

Investors are worried that stocks are in a bubble— and that it’s going to burst.

10 mins read
Kiplinger's Personal Finance
May 2021

Behind on Debts? Know Your Rights

There are limits on what debt collectors can do to recoup what you owe. If you have medical debts, you have even more rights.

6 mins read
Kiplinger's Personal Finance
May 2021

20 WAYS TO Save on Health Care

From maximizing insurance benefits to shopping for discounts to funding tax-advantaged accounts, these tips will lower your costs no matter how you get your care.

10 mins read
Kiplinger's Personal Finance
May 2021
RELATED STORIES

$1,400 STIMULUS CHECKS HELPED MARCH RETAIL SALES SOAR 9.8%

Newly vaccinated and armed with $1,400 stimulus checks, Americans went on a spending spree last month, buying new clothes and going out to eat again.

2 mins read
Techlife News
Techlife News #494

BIG-BUSINESS PUSHBACK AGAINST VOTING MEASURES GAINS MOMENTUM

Big business has ratcheted up its objections to proposals that would make it harder to vote, with several hundred companies and executives signing a new statement opposing “any discriminatory legislation.”

4 mins read
Techlife News
Techlife News #494

THE DISABLED HOPE THEIR OSCAR MOMENT CAN BECOME A MOVEMENT

Right down to its production design, the Oscars have not always felt like the most welcoming place for the disabled.

5 mins read
Techlife News
Techlife News #494

A $1.2 BILLION LOSS FOR DELTA, BUT RECOVERY IS ON THE RADAR

Delta Air Lines lost $1.2 billion in the first quarter, more than expected, but executives said Thursday that the airline could be profitable by late summer if the budding recovery in air travel continues.

3 mins read
Techlife News
Techlife News #494

USERS COULD SOON HIDE ‘LIKE' COUNTS ON INSTAGRAM, FACEBOOK

The tiny red hearts that appear under Instagram photos of kids, kittens and sandwiches can be a source of stress for many users, an insidious way of measuring self-worth and popularity.

1 min read
Techlife News
Techlife News #494

DRIVERS WANTED: RECORD DEMAND AT UBER AS VACCINATIONS RISE

Uber is offering sign-up bonuses and other incentives for drivers as it faces record demand for rides and meal delivery.

2 mins read
Techlife News
Techlife News #494

US RECOMMENDS ‘PAUSE' FOR J&J SHOTS IN BLOW TO VACCINE DRIVE

The U.S. recommended a “pause” in use of the single-dose Johnson & Johnson COVID-19 vaccine to investigate reports of rare but potentially dangerous blood clots, setting off a chain reaction worldwide and dealing a setback to the global vaccination campaign.

5 mins read
Techlife News
Techlife News #494

COINBASE SOARS IN MARKET DEBUT, VALUED NEAR $86 BILLION

Coinbase made a rousing debut on Wall Street Wednesday, with shares of the digital currency exchange rising as high as $429, briefly giving it a market value over $100 billion.

3 mins read
Techlife News
Techlife News #494

GOOGLE EARTH ADDS TIME LAPSE VIDEO TO DEPICT CLIMATE CHANGE

The Google Earth app is adding a new video feature that draws upon nearly four decades of satellite imagery to vividly illustrate how climate change has affected glaciers, beaches, forests and other places around the world.

2 mins read
Techlife News
Techlife News #494

The Food Fight in Fake Meat

Beyond Meat was an early leader. But rival Impossible Foods and others want to eat its lunch

6 mins read
Bloomberg Businessweek
April 19, 2021