Flood And Earthquake Insurance: Can You Afford Without It? | Eric ...

Even in areas where purchasing flood and earthquake insurance is not mandated by the state, mortgage brokers and lenders can demand it of homeowners in order to protect their investment. The reason for this is simple. Both floods and earthquakes can inflict horrendous amounts of damage, meaning that those lending institutions can lose hope of recouping their loans in little more than an instant if the homes are not covered.

Of course, having flood and earthquake insurance is also a good thing for individual homeowners. For them, the main benefit of having said insurance lies in understanding that their finances are not going to be ruined should those disasters come to pass. Being insured means getting financial assistance with repairing damages and rebuilding lives. In contrast, receiving the bill for fixing damages caused by floods and earthquakes can seem like salt being smeared into open wounds.

Furthermore, the need for flood and earthquake insurance is rising because although the number of earthquakes have remained constant, there is real and disturbing evidence that incidences of flooding are on the rise in recent times.

How to Figure Out If Your Home Needs Flood And Earthquake Insurance

Each homeowner should consider his or her need for flood and earthquake insurance based on local conditions. There is no point in getting insurance for disasters if those disasters are either impossible or too improbable. After all, a man living deep inland is not going to need hurricane insurance because he is never going to see a hurricane.

Here are some tips for people to figure out if they need flood and earthquake insurance:

- First, homeowners should figure out if their area experiences the disaster in question. In general, doing so is as simple as going to the Internet and consulting a search engine, but consulting local offices of the National Weather Service or even local insurance companies can also prove helpful.

- After estimating the chance that their area will experience the disaster in question, homeowners should then attempt to estimate the damage that it could do, and how much it would cost them to fix said damage. Speaking to local contractors can prove helpful in figuring out repair costs, as can totaling up the value of the personal possessions that might be lost.

- Speak to local insurance companies to find out the homeowners insurance rates needed to cover such contingencies. Similarly, use a shopping comparison engine to shop around for the best prices. Once that is done, compare the cost of insurance to the expected damages of not being insured. For example, an estimate of a 10% chance of flooding each year multiplied by $20,000 in damages produces an expected outcome of $2,000 in damages. If it costs $500 per year to purchase full coverage for the flood, then it makes sense not to go uninsured.

- Consider alternatives to purchasing insurance. Renovating the home in order to reinforce it against disasters can reduce the expected damages to a point where it is preferable to purchasing insurance. It does this by reducing the damages in case the disaster strikes.

In the end, purchasing flood and earthquake insurance is the most convenient option for homeowners living in flood and earthquake-prone areas because it costs less than renovation. Ignoring the problem is simply not a sensible solution because the consequences of disaster striking are so severe.

Jeff Mathis is an insurance consultant. He likes sharing his knowledge online by writing for a variety of insurance blogs. Click the link for more homeowners insurance rates and quotes.

Source: http://www.ericfinance.com/flood-earthquake-insurance/

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