Floods & Other Disasters

Most basic homeowner's insurance policies protect you from natural disasters. These include weather-related events such as storms, hail, wind and tornados. Basic coverage also includes man-made disasters such as fire, smoke or civil disturbances.

Two major exclusions, however, are flood and earthquake insurance. Flood insurance is provided through the National Flood Insurance Program, a division of the U.S. Federal Emergency Management Administration.

Earthquake insurance can be obtained through an endorsement to your existing policy or a separate policy, according to the Insurance Information Institute:

Flood insurance. The National Flood Insurance Program (NFIP) was created in 1968 to find a cheaper alternative to mounting disaster-relief payments associated with river and coastal area flooding.

In order to obtain flood insurance, a community must participate in a FEMA-approved community floodplain program. That includes building necessary drainage infrastructure that can withstand all but the worst of floods.

If you are seeking a flood insurance policy for a single-family residence, you can find plenty of information on 2008 premiums at the NFIP Web site. Your lender or insurer can also determine if your home needs flood insurance coverage.

Earthquake insurance. The California Earthquake Authority (CEA) issues policies for California residents, who buy most earthquake insurance in the U.S. The CEA was formed in 1996 after the Northridge earthquake, which killed more than 50 people and resulted in about $12.5 billion of property damage.

The CEA uses a tier system of different rates, charging a higher rate for homes located close to a fault line. The average rate is about $3.30 per $1,000 of appraised value, according to the CEA. For a home valued at $200,000, that translates into an annual premium of $660.

If you live in another state, contact your state insurance commission or insurance agent to see whether you may want earthquake insurance coverage. The National Association of Insurance Commissioners (NAIC) maintains a directory of state insurance commissions at its Web site.