Jeffrey Wade
Natural hazards are environmental phenomena that can negatively impact societies and the human environment. Natural disasters, on the other hand, refer to when these hazards significantly harm communities. While insurance companies offer coverage for a wide range of potential disasters, there are certain natural hazard-induced damages that are typically not insurable. For instance, damage caused by landslides or earth movement is generally excluded from standard homeowners' insurance policies. Similarly, flooding is usually not covered under homeowners' or renters' insurance, and separate flood insurance must be purchased.
| Characteristics | Values |
|---|---|
| Landslides | Not covered under house insurance policies |
| Flood damage | Not covered under standard homeowners and renters insurance policies |
| Sewer backups | Not covered under typical homeowners insurance policies or flood insurance |
| Earthquakes | Available as separate coverage from most insurance companies |
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What You'll Learn
Landslides
However, you can purchase additional coverage for landslides under a separate policy, known as a "'Difference in Conditions' (DIC) policy. These policies are sold by surplus lines insurers and typically offer all-in-one coverage for landslides, mudflows, earthquakes, and floods. The cost of a DIC policy depends on various risk factors, such as the slope of the property, proximity to a bluff, and the history of earth movement in the area. They can range from several hundred to a few thousand dollars per year.
In the US, federal flood insurance is available for homeowners, renters, and business owners. These policies cover overflow from inland or tidal waters and the rapid accumulation or runoff of surface waters from any source. However, mudflow, often associated with landslides, is excluded from standard homeowners' and business insurance policies and must be purchased separately.
It is important to understand what is and is not covered by your insurance policy, especially if you live in a high-risk area. Knowing your coverage can help protect your property before a disaster strikes.
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Floods
Natural hazards are environmental phenomena that have the potential to impact societies and the human environment. Natural disasters, on the other hand, are events that significantly and negatively impact communities.
In Canada, more than 1.5 million households are vulnerable to flooding and lack access to flood insurance. While some insurance companies offer flood coverage as an add-on, they rarely offer affordable policies in high-risk areas. When they do, premiums are high. As a result, some homeowners may not be able to afford the insurance, and insurers may not find it profitable to provide coverage.
In the UK, public-private solutions have been implemented to keep flood insurance insurable in the private market. For example, in Nigeria, a €1.6 flood resilience scheme was launched during COP27, led by AXA Climate and Swiss Re, which provides parametric insurance that pays out based on the magnitude of a flood event.
As climate change intensifies, the frequency and severity of flooding are expected to increase, making it even more challenging to insure properties in high-risk areas.
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Earthquakes
Standard homeowners, renters, or condo insurance policies typically do not cover earthquake damage. Many insurance companies stopped offering earthquake coverage in the 1990s after projections suggested that a major earthquake could potentially bankrupt them. However, if you live in an area at risk for earthquakes or tremors, your home insurer may offer separate earthquake policies or an earthquake endorsement that you can add to your existing policy for an additional premium. Earthquake endorsements typically cover direct damage from the earthquake, including damage from aftershocks that occur within 72 hours of the event. It is important to note that earthquake insurance does not cover additional perils often associated with earthquakes, such as floods, sinkholes, and fires.
Earthquake insurance deductibles vary by insurer and can be a set dollar amount, a percentage of your home's replacement cost, or a percentage of your homeowners dwelling and other structures coverage limits (usually around 5% to 25%). When purchasing earthquake insurance, it is essential to ensure that the dwelling coverage limit is equal to the amount it would take to rebuild your home to its previous standard, not its current market value. Additionally, verify with your earthquake insurer if other structures on your property will be covered.
While earthquake insurance is not mandatory, it is beneficial for those living in earthquake-prone areas. In the event of an earthquake, the financial impact can be devastating if you are uninsured. However, it is important to note that insurance premiums for earthquake coverage have increased, making it challenging to obtain coverage in many areas.
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Sewer backups
Natural hazards are environmental phenomena that can negatively impact societies and the human environment. Natural disasters, on the other hand, are events that significantly harm communities. Natural hazards can also lead to secondary natural hazard events, such as volcanic activity causing ash and lava spread.
In the event of a sewer backup, it is recommended to call your utility department's emergency line and have a professional clean up the sewage immediately to minimize potential damage. Taking "before" and "after" photos, itemizing losses or damage, and saving all receipts related to repairs or cleaning can be helpful when filing an insurance claim.
The cost of sewer backup insurance varies, but it typically ranges from $100 per $10,000 of coverage to $25,000 for $200 per year. It is worth noting that sewer backup insurance may have limitations and may not cover damage related to flooding, including tidal surges, overflowing rivers or lakes, or heavy rain.
Overall, sewer backup insurance can provide valuable protection against the financial costs associated with sewage backups, which can cause extensive damage to homes and property.
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Termite infestations
However, there are a few scenarios in which termite damage may be covered by insurance. Firstly, if the termite infestation is a result of another covered peril, such as a storm that damages your roof and leads to a termite infestation, the termite damage could be covered as part of the storm damage claim. Additionally, if termites chew through electrical wiring and cause a house fire, your home insurance will typically cover the fire-related damage, although the coverage may depend on the determination of the proximate cause of the loss by the insurance adjuster.
In rare cases, if a homeowner is unaware of a termite infestation and the damage causes the home to collapse completely, home insurance may pay for the rebuilding. It is important to note that insurance coverage for termite damage is not common, and policies can vary, so it is always advisable to carefully review your specific policy and consult with your insurance provider to understand your coverage.
To address a termite infestation, it is recommended to hire a licensed contractor who can assess the damage and recommend appropriate repairs. While the cost of these repairs is typically not covered by insurance, taking proactive measures to repair termite damage can help prevent further issues and ensure the safety and integrity of your home.
Overall, while termite infestations are generally not insurable under standard homeowners insurance policies, there are specific circumstances in which insurance coverage may apply. Homeowners should be diligent in preventing infestations, understanding their insurance coverage, and seeking professional assistance for repairs when necessary.
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