What Is Disaster Insurance for Houses?
Disaster insurance is not really a common option. It is a common misconception that homeowners insurance covers disasters, though this is only true in some cases. Disaster insurance covers homes both for the damages done by the disaster, as well as the continuing mortgage payments on the damaged house. If your home lies in an area prone to flooding or hurricanes, then specific and specialized disaster policies might be a necessity.
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Types
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Major firms like Wells-Fargo offer disaster insurance aimed at paying some or all of the mortgage on a damaged house. They explicitly cover the areas of fire, flood, wind, earthquake, landslides, mudslides, gas leaks and volcanic eruptions. Most other plans pay out on damages if the house is declared "unlivable" by an insurance adjuster. Some do both.
Features
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"The New York Times" reports that disaster insurance can be expensive. Flood insurance, for example, can have 10 to 15 percent deductibles on top of a sizable monthly premium. Homeowners looking at such insurance should contact the local government for advice on the frequency and likelihood of flooding or other such disaster.
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Effects
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Home disaster insurance should cover those areas not covered by homeowners. In general, homeowners insurance will cover fire, lightening, hail, wind, freezing and ice weight damages. Even in areas that most homeowner's policies cover, such as fire, the payout is not enough to cover the damages, and there is still the question of paying the mortgage on a house in which you can no longer live.
Misconceptions
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Homeowner's insurance, according to "The New York Times," does not cover some disasters. Most common disasters not covered are floods and earthquakes, and, increasingly, hurricane damage in areas prone to this type of disaster. The result is that the Times recommends one look into specific policies aimed at earthquakes or earth movements like mudslides and flood insurance.
Benefits
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The Wells-Fargo plan, to cite a well known example, will pay the mortgage on a damaged and unlivable house for up to two years as the structure is being repaired. Even more, their specific benefits include a full payment on the remaining mortgage if the land the home is on is condemned as unfit for habitation due to disasters. Most policies require an adjuster to declare the home unlivable for more than 48 hours.
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References
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