Standard Homeowner’s Insurance Doesn’t Cover Earthquakes and Flooding

by Kevin Mercadante

Many homeowners are completely unaware that their homeowners insurance policy does not cover earthquakes or flooding. Worse, they may assume that they’re covered and take no action as a result. That assumption could be the most costly financial mistake you ever make. Both flooding and earthquakes come without warning and can do enough damage to send you to the poor farm.

For that reason, you should invest some time reviewing your homeowners insurance policy to see what it covers – and what it doesn’t.

Homeowners Insurance for Earthquakes and Flooding

What homeowner’s insurance typically covers

A typical homeowners insurance policy covers an exhaustive list of casualties, which may blind the homeowner to an equally important consideration – casualties that the policy doesn’t cover.

They typically cover losses that result from theft, fire damage, internal malfunctions (like a burst water pipe) and a host of environmental sources, such as wind damage or tree limbs falling on your house. They generally also provide coverage for less well-known casualties, such as losses incurred as a result of the theft of your credit cards, or even the contents of your safety deposit box at the bank.

Policies will also be very specific as to the contents that will be covered, including the physical structure of a home, your home furnishings, appliances, carpet and drapes, and personal effects like computer equipment an jewelry.

When you see such a long list of covered casualties, it’s very easy to assume that the policy has everything imaginable covered. But that’s a bad assumption since it is almost certain that your homeowners insurance policy does not cover the two biggest threats of all – earthquakes and flooding.

Your homeowners insurance doesn’t cover flooding

The reason that people don’t know that flooding is not covered under their homeowners insurance policies often owes to the fact that they live in an area that has not experienced flooding in many years. If you have a mortgage, and your property is located in a flood zone, the mortgage lender will require you to carry flood insurance for the term of the loan.

However, it is still possible that you might not have flood insurance if your mortgage is paid, or if the property should be determined to be in a flood zone after you took your mortgage.

It’s easy have to see why you would avoid having flood insurance if you possibly could avoid it. Flood insurance is expensive. The actual premium that you will pay for the coverage will depend upon your specific location within the flood zone, and how frequent flooding actually is in your area (it is possible to be in a flood zone even if the neighborhood has not experienced flooding in decades). On an annual basis, the cost can run anywhere from a few hundred dollars per year to several thousand dollars. It will very likely be more expensive than your regular homeowners insurance policy – even though it covers only a single threat.

It doesn’t cover earthquakes either

Perhaps the biggest complication with earthquakes is the very real potential for total destruction of your property. And since earthquakes can change the topography of an area, it’s even possible that your property will no longer be buildable in the aftermath of a particularly severe earthquake.

And once again, earthquakes are not covered by standard homeowners insurance policies. Unless you have a specific earthquake policy, you are not covered.

Earthquake insurance can be even more expensive than flood insurance. Exactly how much the premiums are will depend upon how close you are to a known fault line, the activity of that fault line, and the history of earthquakes in the area. The structure of your home – more specifically, whether or not it is built to withstand an earthquake – will also affect your premium.

Why this can be an issue even if live in an area NOT prone to either threat

Most people will happily ignore the whole issue of flood or earthquake insurance if they are not located in an area that is prone to the threat. That can actually be the worst situation of all.

Here’s why…

It’s possible for an area to experience an earthquake or flood even if it never has in the past. The earth itself is not entirely stable, and subject to change due to weather or shifts in the Earth’s surface. In particular, when it comes to flooding, an area which has never experienced flooding could suddenly have it happen as a result of large-scale development in adjacent areas that are no longer available to take water runoff. This outcome is especially possible in areas that are experiencing rapid development.

Should either an earthquake or flood hit your home, your homeowners insurance will not cover the damage. It will not matter if the property has never been determined to be in a potential threat zone.

For this reason, you may want to give serious consideration to adding both types of coverage even if you are not in areas determined to be high risk. The good news is that obtaining either type of insurance is extremely inexpensive in an area that is not high risk. You may be able to take the policy for just a couple hundred dollars a year. And that’s a small price to pay for a very large amount of coverage against an extremely destructive threat.

You should be able to add an earthquake policy through your current homeowners insurance company, and you can obtain flood insurance through the National Flood Insurance Program.

One more caveat about homeowner’s insurance…

This is a good time to point out an important fact about homeowners insurance policies – or any other type of insurance for that matter. Unless a threat is specifically mentioned as a covered risk in your policy, it will not be covered.

People usually look at their homeowners insurance policy once – when they first buy it. After that, it won’t be opened again – unless there’s a need to file a claim. If the claim you hope to file isn’t listed as a covert risk, you will most likely be out of luck.

That being the case, today will be a really good day to dust off your homeowners insurance policy and do a detailed review. You might even want to discuss it with a friend or relative who is in the insurance business, to get their opinion.

Were you aware that earthquakes and flooding are not covered under your homeowners insurance policy?

Another type of Insurance coverage when you own a home that is something that you may want to look into is Mortgage Life Insurance, this in the instance that the homeowner passes and leaves behind a mortgage, this will help the surviving spouse and/or children with the remaining mortgage cost, check out our post for more details.


Published or updated August 18, 2016.
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