Does Insurance Cover Natural Disasters?

Do car and home insurances cover floods, fire, and wind damage?

A family watches a ceiling leak.
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In 2021, the world experienced several severe weather events. In all, these natural disasters caused more than $343 billion in damages globally. Of this damage, only $130 billion (86%) was covered by insurance. That left a whopping $213 billion in damages uncovered.

If a disaster were to strike tomorrow, would you be covered? To make sure you are financially protected, take time to evaluate your insurance policies, understand what natural disasters are and aren’t covered, and speak to your insurance agent about adding any additional coverage. This way, you can be confident you have coverage in place if you need it.

Key Takeaways

  • Some natural disasters are excluded by most standard home insurance policies. These often include floods and earthquakes.
  • Depending on where you live, you may want to purchase additional types of natural disaster coverage.
  • Comprehensive car insurance usually covers damage to your vehicle from weather events and other catastrophes.
  • It’s important to know what insurance coverage you currently have so you can identify any gaps that may leave you vulnerable should a disaster occur.

Insurance Has Its Limits

Standard home insurance policies protect your home from many natural disasters. However, there are a few perils that typically are excluded. If one of those disasters strikes, your insurance company doesn’t have to pay for the damages.

Here’s a quick look at a few common weather events and if they’re usually covered.

Weather Event Standard Home Insurance Policy Inclusion 
Earthquake No
Flood No
Hail Yes
Hurricane  Depends on location
Ice storm Yes
Lightning strike Yes
Wildfire Depends on location
Windstorm Depends on location 

Of course, insurance policies vary. Read your policy carefully to see what types of damages are included or excluded.

If you need to purchase a special insurance policy or endorsement to protect against a specific natural disaster, be mindful of the timing. Many insurers won’t allow you to add these when a weather event is predicted to happen soon.

Homes aren’t the only things that can get destroyed in a severe weather event; so can your car. Auto policies with comprehensive coverage typically insure against natural disasters. Collision-only insurance often excludes disaster-related coverage. Without comprehensive coverage, such repairs are generally out of pocket.

Does Home Insurance Cover Natural Disasters?

A standard home insurance policy usually covers many types of catastrophic events. However, if you live in an area prone to excluded perils, speak to your insurance agent about your options for additional protection.

Here’s more information about some common disaster coverages available.

Flood Insurance

Floods aren't covered by standard home insurance policies, although mobile-home policies may include it. FEMA states that in simple terms, flooding is excess water on land that’s usually dry and that impacts two or more properties or acres of land. For protection from flood-related disasters, purchase a policy from the National Flood Insurance Program (NFIP). Many major insurance providers offer flood coverage.

You can decide if you want to purchase building coverage, contents coverage, or both. Building coverage protects your home and home systems such as plumbing, electrical, and built-in appliances. Content coverage insures your personal belongings.

If you live in a high-risk area and have a mortgage, lenders may require you to take out a flood policy. The FEMA flood maps can help you assess your home’s risk.

Earthquake Insurance

Projections in the 1990s changed the way many insurance companies handled earthquakes. Back then, it was projected that a large earthquake could send insurers into bankruptcy. Afterward, most standard home insurance stopped including earthquake coverage.

If you live in an area where earth movement is common, consider purchasing an earthquake policy. Typically, this covers damages caused directly by the earthquake to your home and personal possessions. The cost of cleanup is also often included.

California, Washington, and Missouri are the top three markets for earthquake insurance in the country.

Windstorm Insurance

While wind is a covered peril on most insurance policies, you may need to add it to your policy if you live in a coastal city. Some policies also have a special deductible for wind losses due to hurricanes or other named-storm events such as tropical storms or cyclones. Currently, 19 states and Washington, D.C. have hurricane or named-storm deductibles, many of them in locations prone to these types of disasters. Other states may also allow insurers to have this type of deductible.

If you have a hurricane deductible, and a named storm causes wind damage to your home, you’d have to pay your hurricane deductible instead of your standard deductible. This deductible is usually a percentage of your home’s dwelling coverage. Choosing amounts between 1% and 5% are typical, although your options may go as high as 10%.

The hurricane deductible is higher than your standard home insurance deductible. For example, if you file a claim for $10,000 worth of hurricane damage on a $200,000 insured-value home with a 2% hurricane deductible, your insurance company would pay $6,000 on an approved claim and you’d be responsible for the remaining $4,000.

With hurricanes, wind isn’t the only type of damage your home might incur. Hurricanes often bring a surge of rainwater as well, which causes flooding. To have the best protection possible, you may want to purchase both hurricane insurance and flood insurance.

Fire Insurance

In 2021, wildfires ravaged 7.1 million acres in the United States. And while fires are typically covered on a standard homeowners insurance policy, some companies are issuing non-renewal notices for homes in areas prone to wildfires. Not being approved for insurance because of fire risk is also a possibility.

If wildfires are excluded from your policy, or you need additional coverage, you might be able to purchase a separate fire insurance policy. However, if you live in a canyon or other high-fire-risk area, your only option may be to purchase a Fair Access to Insurance Requirements (FAIR) Plan, which may be available to you when standard insurance isn’t.

Does Renters Insurance Cover Natural Disasters?

Similar to homeowners insurance policies, renters insurance covers your belongings when they’re damaged in some types of natural disasters. Typically, windstorms, fires, and hail damage are covered, while floods and earthquakes are not.

Make it a point to review your policy documents to see which natural disasters are excluded from your renters insurance policy.

Does Car Insurance Cover Natural Disasters?

If you have comprehensive car insurance coverage, damages from flooding and natural disasters such as hail, tornadoes, and ice are covered. Comprehensive coverage also usually includes striking an animal or explosions.

This type of coverage can help you repair or replace your car when something that isn’t collision-related causes damage to your car.

Choosing Insurance Coverage and Limits

Now that you know more about what natural disasters are covered by standard insurance policies, it’s time to think about what coverage you need. To help you decide if you need to purchase a special policy, ask yourself:

  • What natural disasters are common in my area? Your location can help you pinpoint the coverage you need, such as flood insurance if FEMA determines your home is in a special flood hazard area or has a moderate flood risk.
  • Are those disasters excluded by my current insurance policies? Each policy is different. Take time to read your documentation, and call your insurance agent if you can’t tell what’s covered.
  • Do I have enough money saved to pay out of pocket for repairs or replacement costs for my home and personal belongings if a disaster strikes? If you have the money to start over again if something happens and still pay off your existing mortgage, you may decide a separate policy such as earthquake insurance isn’t worth it. For most people, such policies are financial safeguards.
  • How much coverage do I need? What’s the value of your home, your car, and your possessions? Many Americans are underinsured, so make sure you have high enough limits to offer you full protection if you need it.

Answering these questions can help show gaps in your current coverage. This way, you can get the protection you need before a disaster happens.

Frequently Asked Questions (FAQs)

How do I get paid by my insurance company after a disaster?

Start by filing a claim with your insurance company. An insurance adjuster will assess the damage and determine what your policy covers. Once the determination is made, you’ll receive money for repairs and replacement of items up to your policy’s limits minus your deductible.

Can people who live in disaster-prone areas be denied insurance?

Yes, you can be denied insurance if you live in a disaster-prone area. However, many states have an insurance of last resort under the Fair Access to Insurance Requirements plan that you can purchase if you’ve been denied elsewhere.

What happens if a natural disaster destroys my house and the insurance doesn’t pay?

If you think the insurance company shouldn’t have denied your claim, you can use arbitration or appeal the decision. Contact your state insurance department for help first as they usually have a mediation process you can use. If your policy ultimately doesn’t cover the disaster, you’ll be responsible for repairs. Sometimes, government programs such as FEMA can offer help, but it’s not a guarantee.

Article Sources

  1. AON. "Weather, Climate & Catastrophe Insight: 2021 Annual Report."

  2. FEMA. "Flood Insurance."

  3. FEMA. "Earthquake Insurance."

  4. Missouri Department of Insurance. “Earthquake Insurance.”

  5. NAIC. "What You Should Know About Named Storm Deductibles."

  6. Progressive. “Does Homeowners Insurance Cover Hurricane Damage?

  7. Insurance Information Institute. “Facts + Statistics: Wildfires.”

  8. Insurance Information Institute. “​​What If I Can’t Get Coverage?

  9. Nationwide. “Underinsurance: Is Your Home Covered for All It's Worth?

  10. Missouri Department of Insurance. “Post-Disaster Claims Guide,” Page 10.