Catastrophe Insurance: Protecting Your Home From Disasters

If you’ve ever seen a disaster movie, you know the destruction caused by catastrophes like volcanic eruptions and earthquakes can be horrible. But the movie industry is dramatizing these disasters, right? While Hollywood certainly does turn things up a notch, you might be surprised to learn that catastrophes cost the U.S. an average of $80.7 billion per year (via NOAA).

From rising floodwaters to shaking foundations from earthquakes, catastrophes are unfortunate occurrences that every homeowner needs to prepare for (especially those who live in higher-risk areas). And even though your home insurance covers a lot, it doesn’t cover every catastrophe known to man. To ease those repair costs, you’ll need specific catastrophic insurance coverage.

Key takeaways:

• Catastrophe insurance is a type of insurance rider that protects you (and your home) from natural disasters such as floods, hurricanes, earthquakes, tornadoes, volcanoes and sinkholes.
• However, some homeowners purchase separate fire insurance policies for extended coverage of their homes and belongings.
• You can get individual riders for different catastrophes, and some may even be a federal requirement depending on your location.

What is catastrophe insurance?

Catastrophe insurance is a type of insurance add-on (also called a rider) that protects you and your home from natural disasters such as floods, hurricanes, earthquakes, tornadoes, volcanoes and sinkholes. It also includes protection from human-made disasters such as rioting, terrorist attacks and explosions. Many of these disasters aren’t included in traditional home insurance policies and require their own insurance rider for adequate protection.

What is personal catastrophe insurance?

Personal catastrophe insurance (also known as personal umbrella insurance) doesn’t have to do with specific catastrophes per se; it provides additional liability coverage from various incidents. This can be added to your homeowners or auto insurance policies and will protect you and your family from having to pay for health care costs in the event they injure someone else.

How does catastrophe insurance work?

There are many catastrophes that you won’t be covered for under your traditional home insurance coverage, meaning you may need to purchase add-ons to ensure you have the protection you need. Catastrophe insurance is an umbrella term for a variety of riders that help fill in the gaps of your home insurance policy, including the types of storms that are covered and the policy limits for all covered events (meaning you get more protection and pay less out of pocket). You can get individual riders for many catastrophes, including:

• Earthquakes
• Floods
• Hurricanes
• Landslides
• Mudslides
• Riots
• Sinkholes
• Terrorism
• Tsunamis
• Vandalism
• Wildfires

Of course, some of the above are much more frequent than others. And suppose you live in an area where the risk is high. In that case, your state government may even require you to purchase a separate catastrophe policy to better prepare you in the event of a natural disaster. Common locations that require extra coverage include anywhere on the coast, tornado alley and earthquake belts.

What’s the difference between catastrophe and hazard insurance?

Though similarly named, catastrophe and hazard insurance are actually quite different. Hazard insurance usually refers to just natural disasters and may already be included in your home insurance policy. Catastrophic coverage, on the other hand, provides both human-made and natural disaster protection and is generally offered as an individual endorsement.

How do I protect my home from catastrophes?

In addition to comprehensive insurance, there are some other steps you can take to make sure your home is protected from major storms. From keeping up with home maintenance to replacing broken shingles on your roof, the following tips are recommended for all homeowners to minimize the damage you can see even during a moderate storm.

• Bring in lawn items or outdoor furniture that could be lifted by a strong wind.
• Check weatherstrips for cracks or leaks and replace them if needed to keep water out.
• Clear out rain gutters each season for proper evacuation of rainwater.
• Keep up with regular home maintenance tasks to prevent wear and tear on your home.
• Lift appliances a few inches off the ground to reduce their risk of flood damage.
• Replace broken or loose roof shingles to give your home a better chance of protecting you against storms.
• Secure all external structures to the ground or foundation, such as carports, porches and sheds.
• Trim overhanging tree limbs once a year so that they don’t fall on your home during a storm.
• Update your garage doors to newer models that can withstand high winds, if needed.

Adding these tasks to your to-do lists is not only important during hurricane and tornado season, but all year long. Since home insurance companies tend to reward those who take proactive steps to mitigate damage, updating your home to better defend against storms can help you save big on your policy over time.

Though you don’t need to worry about a Hollywood-style tsunami heading your way anytime soon, speaking with home insurance experts about a catastrophic plan for your home is always a smart idea. If you’d like to take a deeper dive into everything you should know about total home protection, check out our learn center for the latest industry insights and advice.