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Licensed property and casualty insurance agent
NPN: 21630969
Updated
Catastrophe insurance is extra coverage you can add to your standard policy for certain natural disasters that standard homeowners insurance doesn’t cover. You can include the protection as a separate policy or add-on. Depending on the risks in your area, you may need more than one type of coverage.
The cost, deductible, and options for catastrophe insurance can vary by location. Here’s how to determine the coverage you need and how to get a home insurance quote.
You usually have to buy separate policies for flood and earthquake coverage.
Most standard homeowners insurance covers windstorms, hurricanes, and wildfires, but you may have a separate deductible for these events.
Catastrophe insurance claims often come with higher deductibles — usually between 1% and 5% of your coverage limit.
Catastrophe insurance protects your home during events that don’t happen often but cause a lot of expensive damage. It also applies to human-made disasters, such as riots.
Catastrophe insurance is a type of coverage that helps homeowners protect their property. Unlike hazard insurance, it covers extreme events rather than everyday risks.
Below are some key features to consider about catastrophe insurance.
Stand-alone policy: This coverage is often separate from your regular homeowners insurance.
Endorsement: In some cases, you can add catastrophe coverage to your standard homeowners policy.
Deductibles: The deductible is often a percentage of your policy limit and is usually higher than for standard coverage.[1]
Special terms: Catastrophe insurance may come with its own specific terms or conditions.
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Standard homeowners insurance doesn’t cover every situation. Without extra coverage, you might face high out-of-pocket costs or even be unable to live in your home after a disaster.
For example, if a hurricane causes flooding in your home, a standard policy won’t pay for the water damage — only for wind damage to your roof. You’ll have to cover the costs yourself unless you purchase separate flood insurance. In some areas with a history of costly losses, lenders may also require this insurance if you live in a flood zone.
The kind of catastrophe coverage you need depends on your location, and this also affects the price. For example, a flood policy might be affordable in Michigan, but the same coverage could cost three times as much in Louisiana.
Let’s look at the most common disasters and see how catastrophe insurance can help in each case.[2]
Disaster Type | Typical Damage to Homes | Covered by Standard Homeowners Policy? | Typical Deductible Type | Special Coverage Notes |
|---|---|---|---|---|
| Flood | Severe structural damage | No | Fixed | Private insurer or NFIP |
| Earthquake | Cracked foundation, walls, and roof | No | Percentage | Endorsement |
| Hurricane or windstorm | Siding, exterior, and roof damage | Yes | Fixed or percentage | High-risk areas have a separate percentage-based deductible |
| Wildfire | Total loss | Yes | Fixed | “Hardening” features recommended to reduce wildfire risk |
| Hail | Siding, skylight, and window damage | Yes | Fixed | Included with standard homeowners insurance |
| Tornado | Broken windows and doors | Yes | Fixed | Included with standard homeowners insurance |
While each insurer offers different policy types and coverage, the basic features are generally similar.
Catastrophe insurance protects you from natural disasters. What you’ll have coverage for depends on the type of disaster, not how big it is.[3]
Home structure: This covers the building itself, including the exterior walls, foundation, and other main components.
Essential systems: Most policies help repair or replace major systems, such as your furnace, plumbing, and heating, ventilation, and air conditioning systems (HVAC), if a covered peril damages them. But home insurance policies don’t cover standard maintenance or wear and tear of your home’s systems.
Permanent installations: You’ll have coverage for built-in features like cabinets and staircases.
Personal belongings: This includes most of your items, such as furniture, clothing, appliances, and electronics.
Your policy may help pay for extra living expenses if you can’t stay at home during repairs.
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The kind of disaster your policy covers makes a big difference in what’s included. For example, flood insurance from the National Flood Insurance Program (NFIP) won’t cover things like pools or sheds not attached to your home.[4] But earthquake insurance usually covers those items.
Below are some things your policy might not cover:
Personal property outside the home: Some policies don’t cover pools, separate sheds, or other parts of your property not attached to the house.
Vehicles: Auto insurance will usually cover your car and other vehicles that move on their own instead.
Business losses: These policies don’t pay for lost income from your business.
Avoidable damage: Most policies won’t cover damage not caused by the disaster, such as problems from putting off repairs.
Federal disaster aid can help with some losses, but it’s limited and doesn’t replace having insurance.
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Each policy protects against certain major disasters, and most homeowners combine multiple coverages based on regional risk, property type, and lender requirements.
Flood insurance covers damage from flooding, with up to $250,000 in dwelling coverage. Most people get this through the NFIP, run by the federal government. You can also buy a policy with higher coverage limits from a private insurer.
Most home insurance companies offer earthquake coverage as a separate policy or add-on. Deductibles are usually 5%–15% of your policy limit. In California, homeowners can also get coverage from the California Earthquake Authority (CEA), a nonprofit organization.
Standard home insurance usually covers windstorms and hurricanes as named perils. Depending on location, you may have a separate deductible for these storms — often between 1% and 5% of your home’s insured value.
Most standard home insurance policies cover wildfires. If you live in a high-risk area, it may be harder to find coverage from private insurers, so you might need to look into a state-sponsored plan for protection. In states with frequent wildfire losses, you may also face more exclusions and higher deductibles.
Most homeowners should have some form of catastrophe insurance. How much home insurance you need and the type of coverage depend on your location and the risks in your area. Your home’s value and property details also play a role.
A risk-based approach can help you decide what coverage to add. Check the risks where you live, and ask an insurance agent for advice on catastrophe insurance. Standard policies often cover more than you think, so you may not need as much extra coverage.
The cost of catastrophe insurance depends on your area, the type of risk, your property’s value, and your deductible. For example, 37% of flood policies cost less than $1,000 per year, and 69% cost less than $2,000 per year, according to Federal Emergency Management Agency (FEMA) data.[5] Earthquake premiums can vary widely by location and risk.
Insurers use past disaster data to set prices and coverage. If your area has a history of severe weather or disasters, insurance will likely cost more. Companies also use risk zones to judge local risks.
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Use the checklist below to help you find the right coverage. Keep in mind that every homeowner’s catastrophe insurance needs are different.
Identify the risks at your location, such as being near water, recent severe weather, or your fire zone. Check if your policy covers these risks.
You can add most catastrophe insurance to your current policy as endorsements. But some types of add-ons, like flood insurance, need a separate policy from your insurer or a different program.
Catastrophe insurance can have separate limits and different deductible calculations. Make sure you know the coverage limit and deductible percentage — especially since the limit determines how much you’re responsible for paying.
You may get catastrophe coverage from a private insurer or a government program like the NFIP. Each has its own rules for coverage amounts, location, and home condition.
These common questions about catastrophe insurance can help you figure out how much coverage you might need.
It depends on where you live and the local risk factors. For example, lenders might require flood insurance in high-risk flood zones.
Catastrophe insurance is peril-specific, so you need to buy a separate policy or endorsement for each type of coverage. You can get coverage for disasters that standard policies don’t cover.
It depends on your home’s value and its location. The main goal is to have enough coverage to pay for repairs or to rebuild if needed.
Yes. You can add catastrophe insurance to your homeowners policy. For flood insurance, you may need a separate policy from the NFIP, but your insurer can help you with the details.
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Licensed property and casualty insurance agent
NPN: 21630969
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