If you’re a homeowner, you’re likely aware of the risks of earthquakes and floods in your region. These natural disasters can happen at any time in any state, and just because you haven’t experienced one recently doesn’t mean you won’t eventually.

Earthquake and flood insurance aren’t things most of us expect to need, but going without coverage could cause more devastation than a natural disaster by leaving your finances in ruins.

Some homeowners are willing to take their chances when it comes to earthquake and flood insurance, but is going without it worth the gamble? Here are six reasons to reconsider adding this coverage to your homeowners policy:

1. Your homeowners policy doesn’t cover it.

Many homeowners are under the impression that their standard homeowners insurance policy already covers earthquake and flood damage, but that is rarely the case. Damage to your home and the things inside it isn’t covered by a standard policy.

If you own your home outright, these damages could be catastrophic. Make sure you understand your coverage because you could be facing thousands of dollars in repairs in the wake of a disaster.

2. You could live on a fault line or flood zone and not even know it.

Sometimes homes are sold without potential environmental dangers being disclosed to the buyer. Although this is against the law in many states, it’s not unheard of.

Flood zones change. Just because your home wasn’t in a flood zone when you purchased it a decade ago doesn’t mean it isn’t in one now. Fault lines aren’t always known either. Case in point: the 1994 Northridge earthquake, one of the costliest natural disasters in U.S. history. The 6.7 magnitude earthquake’s damages are estimated at more than $20 billion.

Your home, belongings and financial future could be at risk, unbeknownst to you.

3. It isn’t as expensive as you think.

The cost of earthquake and flood insurance is determined by a few factors. For example, earthquake insurance premiums tend to be higher in California, and flood insurance is a bit more expensive in places like Florida.

Earthquake insurance premiums are determined by:

•   Proximity to a fault line.
•   Fault line activity.
•   Construction and building materials.
•   The type and amount of coverage.

If you live in a low- to moderate-risk flood zone, you’ll probably pay less for more comprehensive flood insurance. You may even be eligible for discounts if you’ve made certain upgrades to your home. Flood insurance premiums are determined by:

•   The risk level of your flood zone, as determined by the federal government.
•   Construction and building materials.
•   Elevation.
•   The type and amount of coverage.

Please note that these lists are not exhaustive. Speak with your insurance agent to accurately calculate your premium.

4. Federal and state government aid can only go so far.

If you’re counting on the federal government to help you out after an earthquake or flood, don’t get your hopes up. Government disaster programs like FEMA are designed to take care of urgent needs, like food, medical assistance, temporary shelter and clothing—not to restore your home to its pre-earthquake or pre-flood condition.

Homeowners can apply for additional aid through FEMA, but there is no guarantee that you’ll be eligible. Even if you do qualify, that aid comes in the form of loans that you’ll have to repay.

5. It covers more than you realize.

The typical earthquake insurance policy has a 15-20% deductible, meaning your home will have sustained significant structural damage before insurance kicks in. So, if your home is valued at $400,000 and requires major repairs, your out-of-pocket costs could be between $60,000-$80,000. Yes, it’s a significant amount of money, but not when you compare it to how much you’d pay if you had to fund a brand-new house yourself.

Earthquake damage is defined as any damage caused by land movement. A standard earthquake insurance policy covers things like:

•   Repairs to your home and any attached structures, such as a garage.
•   Your possessions, such as furniture, appliances and clothing.
•   Additional temporary living expenses, including rent or hotel stays, while your home is being rebuilt.

There are a few exclusions from earthquake coverage. It does not cover masonry chimneys or other structures, nor does it cover damages to knickknacks, china or glassware. It’s also important to note that earthquake insurance doesn’t cover flood damages, even if the flood is a result of an earthquake. You’ll need to take out a separate policy for flood insurance, which covers:

•   Repairs to your home and its foundation.
•   Electrical, plumbing and HVAC systems.
•   Kitchen appliances, including refrigerators, stoves and dishwashers.
•   Detached garages.
•   Debris removal.

Flood insurance that includes coverage for personal property will cover items including:

•   Furniture, clothing and electronics.
•   Curtains.
•   Window AC units.
•   Washers/dryers.
•   Freezers and frozen food.

Things that belong in the bank or a safe deposit box usually aren’t covered. This includes:

•   Cash.
•   Stock certificates.
•   Bearer bonds.
•   Precious metals.

6. It’s better to be safe than sorry.

If you own your home outright, you would be especially wise to purchase earthquake and flood insurance. Earthquake damage could cost more than $200,000 to repair, and just one inch of floodwater is enough to cause more than $50,000 worth of damage. These insurance add-ons seem like unnecessary expenses—until you need them.

Don’t wait until after your home has been destroyed by a flood or earthquake to add this coverage to your policy. Most insurance policies have a 30-day waiting period before coverage kicks in, so the sooner you can add this coverage, the better.

Your home is a huge investment. Why wouldn’t you want to protect it? By going without insurance, you’re putting your financial well-being at risk, but it’s ultimately your decision whether or not you add earthquake or flood insurance to your existing policy.

Personal Express offers easy add-on options for both earthquake and flood insurance. Call 1-800-499-3612 to learn more or visit a Homegrown Pro in your neighborhood who can help you understand your options and identify the protection you need.

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*The information provided in this blog is designed to give helpful advice on the topic discussed. It is not intended to provide legal or any other type of advice and is not meant to be a thorough discussion of every issue that a person should consider or may encounter. Personal Express Insurance is a brand utilized by the following insurance underwriting companies: Integon National Insurance Company and National General Premier Insurance Company. All policies will be underwritten by these two underwriting companies.

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