5 ways Mother Nature undermines your home insurance

By Michele Lerner Posted : 03/11/2011

Home insurance floodWhen winter winds are whipping or summer storms pound rain against your rooftop, you may feel safe and secure knowing that your insurance policy will cover any damage.

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But that's not always true. A standard home insurance policy may not cover all that Mother Nature throws at you. Here are five types of storm damage that could hit you where it hurts most –your wallet.

1. Wind damage from a hurricane

Don Griffin, vice president of personal lines for the Property Casualty Insurers Association of America in Des Plaines, Ill., says that while wind damage is covered under many home insurance policies, others exclude it.

"In some coastal states that are prone to hurricanes, basically the states that border the Gulf of Mexico and along the East Coast up to the Carolinas, wind damage from a hurricane is covered under a separate policy," says Griffin.

Sean Welch, a senior assistant vice president with Amica Mutual Insurance in Lincoln, R.I., says that such policies kick in when wind damage is related to a named tropical storm or hurricane.

2. Flood damage from heavy rain

Flood damage caused by a storm is not covered under a standard home insurance policy "unless the homeowners have purchased a sump pump endorsement and their sump pump fails," says Bryan Cook, a senior assistant vice president with Amica Mutual Insurance Co. in Lincoln, R.I.

Griffin says that if you live in an area designated as a high-hazard flood zone, your mortgage lender will require you to purchase flood insurance. But even if you don't live in such a risky area, you should consider purchasing this coverage, he says.

According to the Federal Emergency Management Agency (FEMA), about 25 percent of all flood insurance claims come from areas designated as having a low to moderate risk for flooding.

"Homeowners who buy flood insurance who live in a low-risk area will pay substantially less for the policy," says Cook.

Flood insurance is limited to a maximum of $250,000 for the structure and $100,000 for the contents, if the owners choose to buy both types of coverage. A separate deductible applies for the structure and for the contents.

3. Frozen pipes

Frozen pipes are a hazard you may face during snow and ice storms or just an extended period of below-freezing weather. A burst pipe can cause significant damage.  

Under most circumstances, homeowners insurance covers damage created by a frozen pipe. But some homeowners may be unpleasantly surprised that their insurance company will hold them responsible if they do not keep their home warm enough.

"Most insurance companies won't pay for frozen pipe damage if the homeowners have turned off the heat for an extended period of time or even if they just turn it down extremely low while they are away for a weekend," says Welch.

Welch says this tends to be a bigger problem in vacation homes, but adds that turning the heat off for a few days in the middle of cold snap in any home can result in frozen pipes "caused by the homeowners' neglect."

4. Landslides and mudslides

Neither landslides nor mudslides are covered by a standard home insurance policy. But damage created by mudflows will be covered by a flood insurance policy.

If you live at the top of a hill or at the bottom of a hill in an area prone to mudslides, "you might want to consider purchasing flood insurance to get some protection," says Welch.

On the other hand, if an earthquake causes the slide, you must have a separate earthquake policy to cover repairs or replacement of your home.

5. Earthquakes

Speaking of earthquakes, property damage caused by earthquakes typically is not covered by home insurance policies. However, insurance companies offer separate earthquake insurance policies. An earthquake damage endorsement to a homeowners insurance policy also may be available.  

According to the Insurance Information Institute (III), earthquake insurance covers damage due to the shaking and cracking of the earth. Subsequent damage such as fire or water damage due to cracked or burst gas and water pipes is covered under the standard homeowners insurance policy.

“Earthquake insurance policies vary a lot in cost depending on where the home is located and especially how it is constructed, since that will have a big influence on how well the structure withstands an earthquake,” says Griffin.

III says that, like flood insurance, earthquake policies or endorsements typically have a deductible based on the percentage of the home’s replacement value, ranging from 2 percent to 20 percent.

California homeowners can purchase earthquake insurance from private insurance companies or the California Earthquake Authority (CEA), a publicly run but privately funded organization. Elsewhere, earthquake coverage is offered by private companies.

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