Disaster Insurance – Can You Afford to Live Without It?

Some of the most popular states in America for living are also the most at-risk for natural disasters. Florida and California are attractive for people from all walks of life due to the temperate climates and beautiful views. Yet, these two states and others in the neighboring regions are prone to floods, earthquakes and fires. But while they’re the most well-known, they’re not the only states with inherent disaster issues. The Midwest states are prone to tornadoes, and the states that border the Mississippi are always at risk of the river overflowing its banks. Having a disaster insurance rider on top of the regular homeowner’s insurance is well worth exploring and for good reason.

Disaster Insurance

Image Credit

Examine the Current Homeowner’s Policy

Just because the home is situated in a state that is known for natural disasters, it does not mean the insurance policy automatically covers those events. Also, if there is a disaster clause in the policy, it may not have enough coverage to meet the replacement value of everything that’s been lost. It’s better to be over-insured than under-insured to avoid paying too much out of pocket.

If there is not enough coverage, the insurer has no obligation to cover the shortfall. What this means for the homeowner is finding a lending institution to give them a loan, dipping into savings or asking family for assistance. No one really wants to be in this situation, and it’s avoidable by taking the time to examine the policy beforehand, something many fail to do. Sometimes, people go through the policy, find out they need a supplemental policy to cover the shortfall, and decide against it. But is it wise to go this route?

Forgoing Extra Insurance for Disasters

Many people feel that their insurance is sufficient or decide to take the risk of nothing ever happening to their home. They may decide that the cost of the extra policy is too high and they prefer to not spend the money. It’s gambling against the odds that nothing is ever going to happen to the home, or adverse weather conditions won’t strike. The problem with this line of thinking comes down to the fact that weather patterns are unsettled and more unpredictable, along with the fact that more homes are being built in disaster prone areas. The reason for the latter is due to the mentality that the once in a lifetime or century event won’t happen, and profit comes before prudence. .

Yet, when an adverse event does happen, the homeowner is left holding the bag to the point that they’ve not only had their home severely damaged or destroyed, but they’ve also lost a lot of money. The mortgage still has to be paid even if the home is unlivable. It’s an untenable situation, but it can come about, especially if the homeowner gambled on saving money in the short-term.

On the flipside homeowners don’t have to gamble when it comes to property.  As we all know property can be a great investment.  Specialists like Robert Stones at Target Markets can advise on how to invest in property

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.