Do home insurance policies include flood and earthquake coverage?
No, standard homeowners insurance policies do not include flood or earthquake coverage. Homeowners must purchase flood insurance separately – either through the National Flood Insurance Program (NFIP) or a private insurer – and add earthquake coverage as an endorsement to their existing policy.
Standard home insurance policies cover a wide range of perils that may cause damage to the home’s structure or the owner’s personal property. Two types of coverage that are not included under traditional policies, however, are flood insurance and earthquake coverage.
Many homeowners are confused as to why this coverage is excluded, especially since floods and earthquakes can cause so much damage to a home. The potential for catastrophic damage is actually the very reason these insurance policies must be purchased in addition to a standard homeowners policy. Events like floods and earthquakes are likely to cause widespread damage to many properties, which makes the risk pool too expensive for insurance carriers. These perils need to be accounted for under their own categories.
Key Takeaways
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Standard home insurance does not cover floods or earthquakes
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Flood insurance must be purchased separately (NFIP or private)
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Earthquake coverage is added as an endorsement
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Flooding can occur even in low-risk areas like PA and NJ
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Earthquake coverage is typically affordable in low-risk regions
What are the Risks of Flood and Earthquake Damage?
A flood is defined by the insurance industry as water that enters a home from an external source and affects at least two properties or two acres of normally dry land. Floods can come from running water sources like rivers, creeks, and streams. They can also happen with sudden events like heavy rain fall, storm surges, storm drain overflow, and rapid snow melt. This means that even homes far from large bodies of water may have flood risks.
Homes in Pennsylvania and New Jersey are almost never very far from a water source that could rise and cause flooding; our area boasts many beautiful rivers, including the Delaware, the Perkiomen, the Schuylkill, and of course there’s the countless creeks that outflow from these rivers. However, even without a nearby river, stream, or pond, severe weather is common enough to pose a risk to any given property in the Southeastern PA or Southern NJ region. In areas like Bucks County, Montgomery County, and South Jersey, heavy rainfall and stormwater overflow are common causes of flooding, even outside designated flood zones. Since just an inch of water can cause $25,000 or more in damage, it’s important for homeowners to take the risk of flooding seriously.
Earthquakes, while not at all common in Pennsylvania and New Jersey, do still occur. Even mild earthquakes can cause structural damage to a house. The most common type of damage happens to masonry, brick, and foundation elements of a house. As might be expected, the older the home, the higher risk of damage from seismic activity.
How Do You Get Flood Insurance for Your Home?
Homeowners have two options for obtaining flood coverage, and they can carry both types if desired. The National Flood Insurance Program (NFIP) is a federal insurance program that independent agencies can offer. The limits are set by the program and include:
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Up to $250,000 for the dwelling
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Up to $100,000 for personal property
There is a 30-day waiting period from purchase of policy until coverage begins, except in the case of buying a home with a mortgage that requires the insurance. Premiums are based on the statistical flood risk to the home, which considers things like elevation, flood zones, and type of construction. Most policies are affordably priced at $400 to $2,000 per year.
Private flood insurance offers more coverage for homeowners who feel they need more financial protection. Policies may provide up to $1 or $2 million in dwelling coverage, living expenses when the home is uninhabitable, and higher limits for personal property.
Flood insurance typically covers damage to the home’s foundation, mechanical systems, appliances, flooring, and personal property. Outdoor property structures and features are excluded from coverage, and so are vehicles. Homeowners with finished basements need to review their policy closely with their agent to understand what would or would not be covered in the event of a flood. This is often dependent on the flood risk to the property.
Sometimes flood insurance is required by mortgage companies, especially if the house is at higher risk for flooding. Even though it might not be otherwise required, most insurance agencies in Pennsylvania and New Jersey prefer to have homeowners at least consider it. If the out of pocket costs to replace or repair the house from water damage would be unaffordable, then insurance is the best choice.
Additionally, homeowners should consider the other things they can do to protect their homes from floods. Simple measures such as a high-quality sump pump, sealing cracks in the foundation, safeguarding electrical systems, and adding flood sensors can go a long way.
How Do You Add Earthquake Coverage to a Home Insurance Policy?
Earthquake coverage is simpler than flood insurance. In most cases, it can be added to a standard policy as an endorsement, which is “an amendment to an existing insurance contract that changes the terms of the original policy”. Because Pennsylvania and New Jersey are low-risk states, annual premiums are usually less than $500. For the affordability of knowing that the home’s foundation, chimney, and structural elements would be repaired after seismic damage, the endorsement is a good choice.
Earthquake coverage deductibles tend to run high, which is anywhere from 5% to 25% of the dwelling coverage. Homeowners with older stone or brick houses should review their risk with an insurance agent who understands the risks particular to the Southeastern PA and Southern NJ area. With so many older and historical homes, it takes an experienced agent to help assess the need for coverage and the advisable deductibles.
Frequently Asked Questions about Flood and Earthquake Insurance
Do I need flood insurance if I’m not in a flood zone?
You may want to consider it. Many flood claims occur outside high-risk flood zones, especially due to heavy rain, drainage issues, or rapid snowmelt.
Does homeowners insurance ever cover water damage?
Yes, but usually only if it originates inside the home (like a burst pipe). External flooding is excluded.
Is earthquake insurance required in Pennsylvania or New Jersey?
No, but it may be recommended depending on the home’s structure and age.
How much does flood insurance cost?
Most policies range from $400 to $2,000 annually, depending on risk factors.
Review Comprehensive Options for Flood and Earthquake Protection in PA and NJ
Both insurance risks and coverage possibilities can quickly become overwhelming to homeowners. Sales tactics that use fear or total risk elimination to pressure clients into more coverage than they need do not typically benefit homeowners. The appropriate coverage for any given homeowner should be tailored to their real world circumstances, which includes structural and property risks, budget, lender requirements, and personal priorities. Because coverage needs vary significantly by location, home structure, and financial situation, homeowners should review their options with a licensed insurance professional.
At Freedom Insurance Group, we have been serving homeowners in the Philadelphia, Mercer, Burlington, Bucks, and Montgomery County region for over 20 years with insurance assistance. Our agents know the area well, and we have insight into realistic flood or earthquake risks that national and online insurance providers simply do not understand. When we talk to clients about their insurance needs, we are coming from a place of experience and practical knowledge.
If you are not sure that you have the right flood, earthquake, or other coverage as part of your homeowner policy, contact us. We will go over the recommendations that are customized to your home’s location, age, and property so that you can make the best decision for your risks and priorities. Give us a call at 215-673-0300 or reach out online to get started.
