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Disaster decision - Do you need insurance?
By Jakob Jelling
The expenses involved with owning a home can be overwhelming at times
- routine maintenance, repairs, seasonal preparations, improvements.
Not to mention taxes, fees, and all those monthly bills. Some homeowners,
in trying to reduce their expenses, wonder if they really need disaster
insurance.
Disaster insurance is typically defined as additional homeowner's insurance
to cover events like hurricanes, tornadoes, earthquakes, and floods.
Home insurance policies typically cover hurricanes and tornadoes (review
your policy to be certain in covers damage from such events). But often
damage from floods and earthquakes isn't covered. This extra insurance,
if desired, must be purchased in addition to your standard homeowner
policy, and it can be expensive, depending on where you live.
Because disaster insurance can be expensive, it's a type of coverage
some homeowners opt not to buy. But in some cases they are required to
buy. For example, mortgaged homes in the US that are located in designated
flood hazard areas are required to buy flood insurance through the US
National Flood Insurance Program. Of course, once those mortgages are
paid, there is no longer a requirement to buy such insurance. But homeowners
in those areas should carefully consider whether they really want to
take the risk that their home and everything in it could be swept away,
leaving them with nothing but an empty lot. Homeowners that aren't in
designated flood hazard areas should still know that floods can cause
plumbing problems, like sewer and septic backups. These often aren't
covered in a standard homeowner's policy, and they may want to consider
an endorsement for coverage.
In the US, many tend to think that only the area along the west coast
is subject to earthquakes. This isn't true however, and 39 US states
have some potential for earthquakes. Coverage for seismic events can
be very expensive in California and other western states, but homeowners
in other states should evaluate the cost vs. the earthquake risk for
the area where they live.
I would like to thank Jakob Jelling
is the founder of http://www.cashbazar.com. Visit his website for
the latest on personal finance, debt elimination, budgeting,
credit cards and real estate.
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