The number of natural disasters is climbing each year, according to a report issued by Munich Re, the world's largest reinsurance firm. Insured losses from disasters such as floods, hurricanes and tornadoes globally averaged $9 billion a year in the 1980s and jumped to $36 billion per year in the 2000s. The Munich Re attributes the increase to climate change — a matter of some debate.
Bad weather is doing more damage, no matter the reason. So, what do you do when Mother Nature wrecks your house?
One of the first calls you make is to your insurance agent. But it’s more important to talk to the person providing your homeowner’s insurance before disaster strikes, says Joel Ohman, a certified financial planner and the founder of the website InsuranceProviders.com.
“It is quite common for homeowners to think that their homeowners insurance policy covers a whole lot more than it really does,” says Ohman. “The typical homeowners insurance policy does not cover damages due to landslides, floods and earthquakes.”
Property damage from a tornado or a wildfire is certain to be covered.
Damage from a flood will certainly not be covered under a standard homeowners insurance policy. Homeowners living in a flood plain are usually required by the mortgage lender to buy a separate flood insurance policy. The Federal Emergency Management Agency (FEMA) encourages all homeowners and renters to buy flood insurance through the National Flood Insurance Program. Flooding can happen anywhere it rains and just a few inches of water from a flood can cause major damage. From 2007 to 2011, the average residential flood claim amounted to almost $30,000.
If your home is damaged during a hurricane, things can get tricky, Ohman says.
“Many times it comes down to what element of the hurricane caused the damage to the home — the wind or rain or flooding,” Ohman says. “Sometimes this is very difficult to determine and must be decided in court.”
If your community is included in a federal disaster declaration, after you hang up with your insurance agent, call FEMA to register for possible federal assistance.
Federal disaster assistance from FEMA may include grants to help pay for temporary housing, emergency home repairs or other serious disaster-related expenses not covered by insurance, such as repair of wells or septic tanks, medical and dental expenses, or funeral and burial costs.