Flood and Earthquake Insurance and Special Riders

Written by Ethan Hawke

The insurance coverage on most homeowner’s policies won’t cover personal property like furs, jewelry over a certain limit. Neither will they cover replacing your house nor your personal affects if there is a flood or earthquake.

You will need a rider or separate policy coverage if you live in a flood or earthquake zone. If you are comparing coverage, don’t forget to get comparative prices on the riders.

Home insurance is also called hazard insurance or homeowners insurance, and one of the biggest hazards facing homeowners is natural disasters. Flood and earthquake damage can be especially heartbreaking, because if your home is hit, you rarely have anything left. Not only will your house be annihilated, but you probably won’t have much left in personal effects.

What isn’t covered in my regular home insurance policy?

Normal property insurance covers your home and includes several different types of coverage, including structural, liability and personal property replacement. But your regular home insurance policy doesn’t cover your home and personal property if there is a natural disaster like a flood, mudslide, earthquake, etc. Each policy is different and each area is different. So make sure you know what is available to you.

You may think you have flood insurance because if a pipe breaks and floods the basement, you are covered. But you aren’t covered if the river overflows its banks. Or the dam breaks, or the hurricane floods your home. You may not even be covered if the water from outside the house from say, a neighbor’s pipes flood your basement. Some policies won’t cover you if the sewer overflows into your basement.

Know what you have, and what isn’t covered so you can purchase the extra coverage if you need it. And don’t forget to think about extra coverage for art, jewelry, antiques or technology like computers. Most policies have a maximum value for these things and if your personal property exceeds these maximums, you may want to get a rider.

Let’s take a look at the options:

Flood

Statistics say that over 75% of the Americans, who are at risk of having their homes flood, don’t have flood insurance. If you lose your home in a flood and don’t have insurance, you still have to pay the mortgage on a house that isn’t there, and no one will be helping you rebuild. You can hope for disaster relief in the form of low interest loans to rebuild, but you still have to pay for the house that used to be there. Ouch.

It is sometimes surprising how affordable a policy is for this. The rates are definitely area specific, but call and check it out. You have to have the policy for a period of thirty days before it takes affect.

Earthquake

Read the above paragraph and everywhere I said flood, insert earthquake. Earthquakes are not covered on standard home insurance policies and if you live in an earthquake zone, even if the last earthquake was several hundred years ago…get insurance. Earthquake insurance can be really inexpensive. Do you want to be paying for a house that is no longer there, and have to figure out where you are going to live? At least get pricing. You may need to get flood and earthquake insurance from the same provider as your homeowner’s policy. Ask. Earthquake insurance may be required by your mortgage company if you live on major fault lines.

Riders – Going above and beyond

Everything has its price, and that is very true with home owners insurance. The price for an Oriental rug is $5000. If you have an oriental rug, or are thinking about purchasing one, look at your policy. The standard for home insurance policies is to limit reimbursement to $5000 per rug and $10,000 total. Oriental rug riders are about $1 per $100 of coverage annually.

What else might I need a rider on?

Check your standard policy for the limits on jewelry, art, fur, antiques, silverware, and if you have a home office.

Home Office

Something I didn’t know, if you work from home even part time, I’ll bet you have a printer, a scanner, at least one computer and maybe two if you need a laptop for travel. Let’s add in the desk, filing cabinets, paper shredder, bookcase, backup drives and oh, yeah…a chair. Take a minute and jot down on a piece of paper the replacement costs of what you have in your office.

Here is mine:

Laptop and software: $750
Desktop and software: $600
Printer, scanner, fax: $300
Desk: $600
Chair: $150
File cabinet: $150
Bookcases: $300 (I’m a writer, the book cases are packed with research books of all kinds. To replace all those books would cost me at least $5000.)

Anyway, there is more, point being…the amount is over $1000. Way over. Some home owner’s standard policies won’t cover more than $1000 for office equipment and furniture. They also restrict the amount for technology. Did I mention my supply closet? I have a box of paper, at least two ink cartridges for black and the three colors for the printer; those things alone are another $500.

I’m calling my agent.