Helping Buyers Understand Home Insurance Coverage of Natural Disasters

Climate change has increased the frequency and severity of things like tornadoes, earthquakes, flooding, and hurricanes. Because of this, you’re likely to get questions from your clients about whether they are protected in these extreme weather situations. We’re here to help with a breakdown of what you need to know to answer your clients’ questions.

What’s the Difference Between Home Insurance and Home Warranties?

First, let’s make sure your client understands the difference between home insurance and warranties. A home warranty is a product offered by a company that maintains, repairs, or replaces any specific component of a home for a set time. This usually applies to significant home appliances, electrical and plumbing systems, and a residence's heating and air conditioning systems.

On the other hand, home insurance covers loss or damage to property. It's generally limited to necessary replacements and repairs resulting from damages, and it will usually cover some natural disasters and accidents. 

What Does Homeowner’s Insurance Cover?

According to the Insurance Information Institute, standard homeowner’s insurance will cover property damage resulting from:

  • Wind

  • Hail

  • Lightning

  • Wildfires

  • Volcanic eruption

You probably noticed some disasters aren’t listed there – so what can a homeowner do if they’re concerned about floods and earthquakes?

A Separate Policy

Standard homeowners insurance doesn't cover flooding or earthquakes, so in most cases, homeowners will need to buy separate policies to cover these events. This is important to bring up in areas where flooding and earthquakes are a concern!

A flood insurance policy will offer protection from floods associated with hurricanes, tropical storms, and heavy rains. Likewise, earthquake insurance will help homeowners pay for repairs to their homes and damages to their personal property resulting from an earthquake. 

So, if the homeowner doesn’t have an insurance policy that covers flooding or earthquakes, chances are they will not be protected. The critical thing is that insurance policies vary, so encourage buyers to shop around and make sure they understand what is and isn’t covered by their policy.

Are you equipped to help your clients navigate the challenges of climate change? Make sure to prepare yourself and read this article about things agents need to know about climate change. Make sure you’re prepared for all the questions your clients may have and take a course with Aceable.

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Lauren Summerlin

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