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Are these 5 natural disasters covered by your homeowners insurance?

Natural disasters and insurance

Natural disasters are a fact of life. Between 2000 and 2013, natural disasters in the U.S. cost insurers an average of $29 billion a year in insured losses, according to Munich Re and the Insurance Information Institute (III).

Although 2014 was relatively quiet -- just $15.3 billion in losses -- the threat of a hurricane, tornado, flood or other disaster is never far away.

The typical homeowners insurance policy reimburses losses for many types of natural disasters. However, several other events are not covered.

Following is a list of five natural disasters and information about whether your homeowners insurance has your back after nature unleashes its fury.

1. Hurricanes

Hurricanes and tropical storms have the greatest insurance impact of any natural disaster, accounting for 40.4 percent of total catastrophe losses in the U.S. between 1993 and 2012, according to the III.

Generally, homeowners insurance picks up the tab for damage associated with hurricanes.

It is important to note that in 19 hurricane-prone states and Washington, D.C., insurers may attach a separate hurricane deductible to homeowners policies.

This type of deductible can help lower your annual premium, but it also leaves you on the hook for higher out-of-pocket costs when a hurricane damages your property.

Some homeowners who live in high-risk coastal areas that are extremely vulnerable to damage from storm winds may be required to purchase a separate wind-only policy in addition to their homeowners coverage.

This is especially likely in parts of Alabama, Florida, Louisiana, Mississippi, North Carolina, South Carolina and Texas, says Lynne McChristian, Florida representative for the III.

Such residents can purchase coverage through a state-run insurance program (which vary by state) or a private insurer.

It is often less costly to go with a state-run program. Historically, such programs have not charged rates that reflect the true cost of the risk.

However, rates are trending upward in these programs as they try to ensure the wind pools have the money needed to pay future hurricane claims, McChristian says.

She adds that from a customer service perspective, private-market wind-only coverage is often a better bet.

Many private insurers have extensive experience dealing with wind claims and tend to react more quickly in the wake of a hurricane than state-run programs, which can be easily overwhelmed.

"We always say you don't shop by price alone, you shop by service," McChristian says.

2. Tornadoes

Between 1993 and 2012, tornadoes were second only to hurricanes in terms of total U.S. catastrophe losses, accounting for 36 percent of such damage costs.

Tornadoes are most likely to rip through what is commonly known as "Tornado Alley." The III groups eight states in that region -- Arkansas, Iowa, Kansas, Louisiana, Missouri, Nebraska, Oklahoma and Texas.

Homeowners insurance covers damage related to twisters. Most homeowners policies also provide coverage for additional living expenses that kicks in if your home is destroyed or damaged badly enough that you cannot stay there for a period of time.

Also known as "loss of use" coverage, this reimburses you for expenses such as hotel and restaurant bills.

Policies generally cover additional expenses up to a stated amount, says Lori Conarton, spokeswoman for the Insurance Institute of Michigan.

"Many policies provide coverage for about 20 percent of the insurance on your house," she says.

3. Earthquakes

Earthquakes and other geologic events (such as sinkholes, landslides and volcanic eruptions) accounted for 4.7 percent of total U.S. catastrophe losses between 1993 and 2012.

It may come as a surprise to learn that earthquakes have originated in 39 states, according to the III. In addition, damage associated with earthquakes has impacted all 50 states.

However, some states are at much higher risk of temblors than others. According to the U.S. Department of the Interior, they are:

• Alaska.
• California.
• Hawaii.
• Nevada.
• Washington.
• Idaho.
• Wyoming.
• Montana.
• Utah.
• Oregon.

If you live in an earthquake-prone state, it is wise to purchase an earthquake policy. Simply put, standard homeowners insurance does not cover earthquakes.

Earthquake coverage is available as a separate stand-alone policy, or as an endorsement to an existing homeowners policy. In addition, in California, the nonprofit California Earthquake Authority (CEA) insures about 10 percent of the homes in the Golden State.

As with hurricanes, deductibles may be set at a percentage of the overall policy limit.

4. Flooding

Wind, hail and flooding accounted for 3.8 percent of total U.S. catastrophe losses between 1993 and 2012.

Flooding is extremely common, causing damage in 90 percent of all U.S. natural disasters, according to the III.

Yet, a homeowners insurance policy will not protect you against losses related to flooding.

To make sure your home is protected, you need to purchase a flood insurance policy through the federal government's National Flood Insurance Program (NFIP).

Flood insurance is available in two types of policies: one that covers the structure of your home, and another that covers your personal possessions.

If you buy flood insurance, be aware that some items will remain outside the scope of your coverage.

For example, most items in your basement are excluded from flood-insurance coverage, says Loretta Worters, a vice president at the III.

"A big problem today is people turning their basements into apartments with full kitchens or living rooms," she says. "These items are not covered."

To learn more about what is and is not covered, take a look at the NFIP's summary of what is and is not covered.

5. Hail

Each year, hail causes more than $1 billion in damage to crops and property in the U.S., according to the National Oceanic and Atmospheric Association (NOAA).

As noted above, hail joined wind and flooding in accounting for 3.8 percent of total U.S. catastrophe losses between 1993 and 2012.

Hail can strike in any state. But just as there is a Tornado Alley, there is also a Hail Alley that includes the states of Colorado, Nebraska and Wyoming, III says.

Homeowners insurance will cover damage caused by hail. But if you live in an area especially at risk for hail storms, you may be charged a percentage deductible.

One way to reduce your costs is to prevent damage from occurring in the first place. You can do this by installing a hail-resistant roof with material such as impact-resistant asphalt shingles.

Insurers may require homeowners without impact-resistant roofs to carry a higher percentage deductible, says Carole Walker, executive director of the Rocky Mountain Insurance Information Association.

That makes an impact-resistant roof a smart investment.

"It will save (homeowners) money and make their home more insurable, especially if they live in a hail-prone area," she says.

The Insurance Institute for Business and Home Safety offers a guide for selecting the right roofing material on its website.

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