Uncover the Gaps in Natural Catastrophe Insurance

The outstanding consumer question, does insurance cover natural disasters?

The answer is that there is no single insurance policy specifically labeled for natural disasters, but there are home insurance plans that cover several types of potentially home-damaging disasters.

The natural disasters covered by home insurance depend on the type of policy taken out. The most common homeowners insurance policy is called HO-3, which includes coverage for fires and some damage from tornadoes and hurricanes.

Unfortunately, home insurance does not cover all natural disasters, but it is possible to purchase separate policies for specific cases that are not covered. A standard home insurance policy does not cover floods, earthquakes, landslides or landslides.

Home insurance typically covers wind damage, but not flooding, making wind a covered peril and flooding an excluded peril. This means that your insurance does not cover all types of damage a hurricane can cause, as the storm surge created by a hurricane would be considered flooding under most policies.

Most home insurance policies cover damage caused by wind, hail, fire and lightning. Although many policies offer this coverage, they differ in the level of coverage. For example, HO-3 and HO-5 both protect your property against fire, but HO-3 is an actual cash value policy, while HO-5 is a replacement cost policy for your goods.

Insurance companies do not categorize damage according to the type of natural disaster, but according to the peril itself. A peril is defined as a hazard or event that can cause harm. For example, wind damage and flooding are two perils that can be caused by a hurricane. Owners may be able to add a rider that expands the risks covered by their policy.

Natural disasters are on the rise as the number of billion dollar natural disasters has increased 163% over the past 20 years and shows no signs of slowing down.

Severe storms are the most common natural disaster; however, we have also seen a sharp increase in the number of forest fires, floods and cyclones.

Many states have seen a staggering increase in major natural disasters over the past 20 years, but Texas has faced more major natural disasters than any other state. Over the past 40 years, Texas has experienced 137 natural disasters, including 103 in the past 20 years. During this time, Hawaii had the fewest natural disasters.


Depending on the climate and proximity to the state, tornado insurance can be a big help. According to the National Weather Service, 1,376 tornadoes were recorded in the United States in 2021.

Tornadoes can occur in almost any state, but most tornadoes occur in the Midwest and Southeast in places like Texas, Alabama, Mississippi, and Georgia. Although tornadoes are more common in these states than others, they should be of concern to all homeowners.

Since wind is a covered peril in most homeowners insurance policies, you will usually have coverage for damage caused by tornadoes.


Although there is no single insurance policy that covers hurricane damage, you can purchase homeowners insurance, flood insurance, and in some states, windstorm insurance for protect your home against hurricanes.

Forest fires

Standard home insurance policies cover wildfire damage, but some insurers don’t write policies in high-risk areas, making it sometimes difficult for homeowners to get protection against this natural disaster.

Wildfires aren’t the only way fires can start in your home. A stray spark from a fireplace or electrical outlet can also start a house fire. Fortunately, home insurance generally covers fires of all types, unless they are the result of negligence. Home and personal property are covered in the event of a fire by a standard home insurance policy.


Home insurance does not cover damage caused by earthquakes. However, you can purchase a separate earthquake insurance policy to protect yourself and your home against this disaster.

We recommend getting earthquake insurance if you live in an earthquake prone area. According to the US Geological Survey, California and Alaska have the most damaging earthquakes than any other state.

Landslides and mudslides

A standard home insurance policy does not cover landslides and mudslides. You can take out a “difference in conditions” (DIC) policy to protect your home from this. A DIC policy provides protection against perils that a home insurance policy will not cover, such as landslides and mudslides.

Flood insurance

Flood insurance is a separate insurance policy from home insurance. Flood insurance is federally required if you live in a designated high-risk area, designated by FEMA, and have a federally backed mortgage. Even though you’re not required to have flood insurance, it’s still a good idea if you want your home to be fully protected against natural disasters like hurricanes and floods.

Most people buy flood insurance through the National Flood Insurance Program (NFIP). NFIP policies are supported by the government but administered by private companies. Private flood insurance companies make up a very small percentage of all flood insurance policies, but they are slowly gaining popularity.

The average cost of flood insurance is around $958 per year for an NFIP policy, but rates vary depending on where you live. Since the premiums are set by the government, the price does not vary from company to company. Some people find cheaper coverage with a private company, but private options are more limited.

Volcanoes and tsunamis

Volcanoes and tsunamis are less common natural disasters, but they can cause a lot of damage. A standard home insurance policy usually covers volcanic eruptions, but it does not cover damage caused by a tsunami. However, if you have flood insurance, it may cover damage caused by a tsunami.

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