Disasters that Insurance Policies do not Cover

insurance-checkEvery year, many home and business owners discover there are certain disasters their policies do not cover. It is important to consider these issues before they happen and cause damage that will have to be paid for out of pocket. Earthquakes, floods and acts of terrorism are three types of disasters that a policy will not cover.

Flood Damage Protection
Every home and business owner needs to know if his or her property is located in a flood zone. If it is, it is crucial to purchase a flood policy. Business owners should also find out how often floods have happened in that particular area in the past. In some cases, the government is slow to map out flood areas, so it is important to ask more than one source. To purchase a flood policy, discuss options with an agent. Flood insurance is provided by the National Flood Insurance Program. If a building is in a flood zone and its floor plans do not conform to plain building codes, the government requires it to be torn down after damages are more than 50 percent of its market value. People may purchase ordinance or law coverage, which is helpful for covering the costs of tearing down a building. Business owners should also make sure their properties are compliant with any coinsurance clauses in their policies.

Earthquake Protection
Homeowners and business owners do not have earthquake protection in their policies. People who live in areas that are prone to earthquakes should purchase this coverage. Even if most earthquakes are small, history has shown that any areas prone to quakes will eventually have ones that are large enough to cause significant damage. For homeowners, there are special earthquake insurance policies, and there are endorsements available for commercial properties. There are different types of deductibles for earthquake policies. They are calculated on a percentage of the coverage instead of a specific dollar amount. For example, a building owner who insures a property at five percent for $200,000 would have to pay for the first $10,000 of damages. It is important for business owners to remember that interruption protection only applies for losses that occur due to covered disasters or incidents. If a business does not have earthquake protection and has to shut down for a while, there will be no compensation for lost income. However, businesses with an endorsement may make claims for earthquake damage.

Acts Of Terrorism Protection
In 2002, the Terrorism Risk Insurance Act was passed. It ruled that only businesses purchasing special coverage would be compensated for losses resulting from acts of terrorism. The only exception for this type of insurance is workers’ compensation, which only provides coverage for deaths and injuries resulting from acts of terrorism.

Nearly every business or home needs one or more of these types of coverage. Homeowners and business owners who are not protected could end up paying thousands out of pocket for damages. The premiums for these types of policies or endorsements are affordable, so it is important to discuss options and review coverage with an agent as soon as possible.

About Brian Hendricks

Brian Hendricks is the President of Fidelity Insurance Group. Brian started Fidelity in 2003 with 0 clients. Today Fidelity Insurance Group is a Premier Independent Insurance Agency in Florida with over 3,000 families and businesses insured. Brian currently serves on advisory boards for 2 of the largest property insurance companies in Florida. Knowlege, Integrity, and Committment are his and his agency's guiding principles.
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