Natural Disasters

The Third Horseman of the Apocalypse for Homeowners

Natural disasters remind us that nature hates us and it is personal.

Your home owner’s insurance policy will cover damage from natural disaster but subject to certain limitations that may not seem especially fair to you should you attempt to collect. It may be possible to cover yourself with additional policies for the gaps in their coverage.

Let us look at what your policy probably doesn’t cover

Earthquakes - Shaky Natural Disasters

Earthquake coverage almost always requires a separate policy or at least a special rider to a standard policy. The closer you are to real danger of being in an earthquake the less likely your insurance will cover it.

It is fair to say that the only thing an insurance company hates worse than a natural disaster is paying the claims that follow a natural disaster. Earthquakes are no exception.

You can buy separate earthquake insurance, but if you are in a danger zone the deductible will be high and the policy expensive. Sometimes the deductible will be 10 to 15% of the value of the home. Most people do the math, and decide that the better deal is to hope that the earthquake crushes them so that they will not have to worry about paying off the mortgage on a mound of rubble.

However, there is hope. If your house catches fire the insurance policy may cover all the damage. While this sounds promising you may end up in the position of many of the survivors of Hurricane Katrina, who had to argue with their insurance company whether the house was destroyed by the flood (not covered) or by the high winds (covered).

Which conveniently leads in to the subject of floods.

Floods - Wet Natural Disasters

The Mississippi overflowing its banks is not covered by a normal homeowners insurance policy. Nor is a Hurricane-compelled storm surge. While this is certainly a peril that could be covered floods like these often cover millions of acres and affect hundreds of thousands of homes and such a large swath of damage could bankrupt insurance companies.

What is available in the United States is insurance through the National Flood Insurance Program. This is a government-backed program. You get insurance through a private insurer, but they have some protection from the federal government. This used to be quite a deal for people building along the coast and in known flood zones. However, reforms in 2012 resulted in a change in rate structure that will make it more costly if you live in these areas.

The key to flood insurance are flood zone maps. These are maps that purport to show the relative danger of a flood.

I used to live in a city that was prone to flash-flooding. Based on where my house was located I was required to flood insurance. The same flood zone maps that placed me in a flood zone also told the insurance company that I wasn’t at great risk, so my insurance costs were reasonable.

The flood zones are identified based on whether you have a 1% chance or greater of being flooded in any one year. They are further defined by what type of flooding you will experience (storm surge, sheet flooding) and the depth of the water you are likely to experience.

They are updated periodically, but since construction can alter the flow of storm water runoff they may become out-of-date.

The main thing to take away from this article is that you can’t expect flood relief from your normal home owner’s insurance policy.

However, if you can conveniently get the wind to knock your house over or a fire to engulf it you may survive your lack of flood insurance.

Wind - Natural Disasters from Afar

Most home owner’s policies will cover wind-related damage, but some people in hurricane-prone areas have discovered that this isn’t always the case. In some cases tthe insurers require a windstorm insurance certificate, which is simply a certificate issued by an engineer who affirms that your house was built to certain standards that protect it from wind-damage.

It makes a lot of sense to have your built to withstand high winds, especially if you live in Florida. Getting such a certificate is probably a good idea, but it will not come cheap, especially if you have to make alterations to qualify for the certificate. As for me, my house has withstood high winds, shear winds and a tornado passing directly overhead without the loss of a shingle. I will take my chances without an inspection so long as I can get by with it.

What won’t be covered is the loss of trees in your yard. That same tree landing on your house or a car will result in damage that is covered, and since your tree is now on your house the insurance company will pay to remove it, but otherwise you are on your own.

In 1987 my wife and I were visiting my parents. We were having a pleasant conversation, which had just turned to the subject of the wind we were observing through the picture window. Stuff was starting to swirl around when something caught my eye and I yelled “get out” or something to that effect. We all fled to the far side of the house just as a hundred-foot-high Yellow Poplar came crashing down on the house. It landed right on the spot we had been standing, although we had lucked out.

The tree did not topple over from the roots. Had it the solid trunk of the tree would have crushed the roof. Instead it had snapped about a third-of-the-way up. This shortened its reach so that only the light, flimsy branches struck the house and no damage was done.

I remember afterwards the payment of the claim depended on whether the damage was caused by wind or lightning. As I recall my dad was able to show how a lightning scar was visible on what was left of the trunk, so the insurance company gave in and paid for the cleanup and removal.

Hail - Natural Disasters on Ice

When wind comes hail often follows. Hail doesn’t always damage houses but it can. It can do a nasty number on siding and on shingles. When it does come it often strikes a wide area, so that the roofing repair companies stay busy for weeks.

I have never been the victim of hail-damage, but I have three times lived in cities where nearby areas where heavily damaged.  In each case one of the lead-in stories in the news in the days that followed was the millions of dollars in insurance claims that were pouring in as a result of the natural disaster.

Your average roof shingle will not survive a serious hail storm. It may be mostly intact, but the part that isn’t will leak, and the whole thing will need to be replaced. What insurance companies prefer is that you install Class 4 shingles and avoid the hail damage. Class 4 shingles are impact resistant shingles.

Even composite shingles can be made to Class 4 standards. Of course these are more expensive than your standard shingles. You should get a premium reduction if you build with them, but that alone may not justify the extra cost. However, if you can also get a roof that lasts decades longer you might be able to afford the added expense, knowing that you will recoup the cost when it comes time to sell your house.

I don’t know if there are similar ratings for impact-resistant sidings. I haven’t heard of any, but some siding is particularly prone to hail damage. Vinyl siding can be splintered and cracked by hail. Getting insulated vinyl siding helps reduce this risk, but you can do even better with other types of siding.

Insects - Tiny Natural Disasters

Insects can cost you as much the big name natural disasters, but, whereas you can't avoid a hurricane, you can avoid most insect problems.

Your chance of successfully receiving compensation for insect damage is pretty low. Insect infestations are considered preventable and a maintenance issue. However, if the damage from the insects causes a main support to fail and your roof caves in then you are covered.

The usual culprit for this type of damage is the termite. Replacing termite damaged wood can get very costly.

My parents had to replace a bay window. The house had been protected against termites, but this window had been a later addition, and when they built the supporting foundation they did not properly protect against termites.

Since you are unlikely to collect for any damages your best bet is to have a pest control company inspect periodically. If you want you can even buy a special policy from them indemnifying you against future termite damage. It is not many insurance companies that will actively work to prevent your house from being a victim of natural disasters, so it is really a pretty good deal (if the price is right).

Bee infestations have been in the news lately. It seems that in more than one house they have decided to colonize inside the walls. The good news is you get a lifetime supply of honey. The bad news is your insurance company won’t pay to get rid of the bees.

Bed bugs are also in the news. As with bees don’t expect your insurance company to help. Unless you have a guest who gets severely bitten and sues. Then they will cover the liability of the bites.

Mold - Really Tiny Natural Disasters

Mold is certainly natural, and it can be a disaster, so it fully deserves to be classified with the other natural disasters.  While it lacks the punch of a hurricane, it will stick around a lot longer.

Mold is a tricky one. Lots of insurance companies have discovered that they are liable for mold, so you may be covered. However, many are adding mold-exclusion clauses so they won’t have to pay.

There are many kinds of mold and some is harmless. Some is not. The mold can actually release mycotoxins into the air. This can make you sick. It can make your children sick.

Actually the medical studies are not all black and white as to the damage that can come from mold, but enough studies have shown that mold can cause problems that the trial lawyers have a lot of ammunition when they are claiming damages coming from mold infestations. As a result mold insurance claims have skyrocketed in recent years.

The trick with mold is to avoid the problem by keeping your house dry. That isn’t always so easy, especially if any of the other natural disasters has filled your basement with water.

I run a dehumidifier in my basement in the summer. Otherwise it would be mildew city. Occasionally we forget and discover later that some of our things have to be thrown away.

Leaky basements are probably the biggest source of mold problems, but sometimes people discover that they have a very slow leak in a pipe and it keeps the space behind the drywall perpetually damp. Mold in such places may not be visible, but may be creating respiratory problems in your family.

If you find out you have a mold problem, the type that cost big bucks to fix, investigate the source, then check with your insurance company. If their answer isn’t to your liking you may want to check with a lawyer.

However, the best bet is to do your part to keep your house dry so you don’t have to deal with either insurance companies or lawyers. Many homeowners find they would rather deal with the mold themselves than deal with either of the aforementioned parties.

The Fourth Horseman

Having dealt with natural disasters it is now time to visit the Fourth Horseman: Man

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