If you’re an insurance agent or broker, of course you want to do well by your clients. Therefore it's worth taking the time to understand the differences between homeowners and natural disaster insurance particularly because the pace of climate change is making the latter increasingly more relevant. (In 2022, NOAA reports “there were 18 weather/climate disaster events with losses exceeding $1 billion each” in the U.S. “These events included 1 drought event, 1 flooding event, 11 severe storm events, 3 tropical cyclone events, 1 wildfire event, and 1 winter storm event.”) By understanding the scope of coverage and policy exclusions of both insurance types, you can help your clients make prudent decisions about protecting their assets against unexpected catastrophes.
Homeowners’ insurance protects your clients' homes and personal property from various risks, like fire, theft, and liability claims. The typical coverages included in a standard homeowners’ insurance policy are:
However, homeowners’ insurance has limitations when covering damages caused by natural disasters, which can leave your clients vulnerable to significant financial losses.
Natural disaster insurance is designed to protect your clients' properties and financial assets from damages caused by catastrophic events, e.g. hurricanes, floods, earthquakes, etc. It complements homeowners’ insurance by covering risks typically excluded or limited in standard policies.
Examples of disasters typically covered by natural disaster insurance include:
The main differences between homeowners and natural disaster insurance policies lie in the coverage they provide:
As an insurance broker or agent, consider encouraging your clients to evaluate their current coverage and consider the advantages of natural disaster insurance to ensure comprehensive protection for their properties and financial well-being. To speak with one of our natural disaster coverage experts click here.