Are there any disasters my property insurance won't cover?

Yes. Floods, earthquakes, nuclear disasters, acts of terrorism (commercial property) - to name a few - are generally not covered. 

 

 

Property insurance policies usually exclude coverage for flood damage. Low to moderate flood risk areas account for over 25% of flood claims. In high risk areas, the average home has a 26% chance of being damaged by a flood over the life of a 30 year mortgage. Coverage for commercial structures is also available through the FEMA program.

 

If you need to buy a flood insurance policy, contact your insurance agent. If you have questions regarding remapping, this post from Atlantic Soundings may be of help.

 

 

Coverage for earthquake damage is excluded in most property insurance policies, including homeowners and businessowners package policies. Endorsement to a homeowners policy is normally available. Endorsement to a commercial policy may be available. If not, a separate policy may be required.

 

Earthquake policies have a different kind of deductible -- a percentage of coverage rather than a straight dollar amount. If the building is insured for $100,000, with a 5% deductible, for example, in the event of an earthquake, you would be responsible for the first $5,000 in damage. This deductible typically applies separately to earthquake damage.

 

Remember that business interruption insurance, which reimburses you for lost income during a shutdown, applies only to causes of damage covered under your business property insurance policy. If your business premises are shut down due to earthquake damage, you need to have earthquake coverage on the basic policy to make a claim under a business interruption policy.

 

 

All property policies (personal and commercial) exclude coverage for nuclear disaster. The nuclear industry is made partially responsible by legislation requiring the industry to respond to nuclear damage. First party coverage is typically not available.

 

 

Under the Terrorism Risk Insurance Act of 2002, only businesses that purchase optional terrorism coverage are covered for losses arising from terrorist acts. The exception is workers compensation, which covers injuries and deaths due to acts of terrorism.

 

Personal property coverage (homeowners) does not exclude Terrorism losses.

 

Another discussion of this topic can be found at Atlantic Soundings.

 

Source: Insurance Information Institute www.iii.org