Catastrophe Insurance Claims

What Is Catastrophe Insurance and What Does It Cover?

Catastrophe insurance covers a wide array of natural and man-made disasters. The rare events covered in these insurance policies are generally not common enough to be included in homeowners’ insurance.

However, these low-probability disasters can and tend to cause extremely devastating amounts of damage to many people at once. Catastrophe insurance claims can cover a variety of things. A general catastrophe insurance policy could include coverage for the following:

Tornadoes
Hurricanes
Snow and hail storms
Earthquakes and other land-related events (sinkholes, mudslides)
Floods
Lightning
Volcanic eruptions
Man-made disasters (Terrorism, riots)

Someone looking to purchase a catastrophe insurance policy could choose to get one that covers a variety of catastrophic events or specific ones. Some common types of specific-catastrophe policies are flood insurance and earthquake insurance.

Hazard Insurance is also similar to catastrophe insurance, but it excludes man-made disasters such as terrorist attacks and riots. It may cover all or only some natural disasters.

How Is Catastrophe Insurance Different From Traditional Homeowners’ Insurance?

Homeowners insurance generally does not cover any of the disasters in the list of catastrophic disasters above. Most notably, homeowners’ insurance policies rarely cover earthquakes and floods, which leaves many victims uninsured each year.

The reason homeowners insurance policies do not include these events is because they are hard to predict and the damages are hard to estimate. There aren’t very many people who would invest to protect themselves from events that are rare.

Additional Aspects That Are Important To Consider

When choosing a catastrophe insurance policy, it is important to carefully consider what types of losses it does and does not cover. Not all policies are created equal. Some may limit coverage based on region or type of loss. For example, earthquake insurance is more relevant to homeowners in California. Therefore, it is prudent to tailor coverage to regional risks.

It is also important to consider the policy’s deductible structure. Unlike standard fixed policies, catastrophe policies are typically calculated as a percentage of the insurable value of the property. For example, if the insured value of a home is $500,000 and the deductible is 5%, in the event of a loss you will pay $25,000 before the insurance kicks in. This is a very important financial consideration when planning your disaster budget.

Government Programs and Their Role in Catastrophe Insurance

In most cases, catastrophe insurance can be supplemented or replaced by government programs. One of the best known is the National Flood Insurance Program (NFIP). The NFIP is administered by the Federal Emergency Management Agency (FEMA). This program offers insurance policies against:

1. floods
2. for homeowners
3. for renters
4. for business owners in communities participating in the program.

Given that standard policies do not cover flood damage, participation in the NFIP is important for residents of coastal or low-lying areas.

Similarly, some states have specialized programs or public-private partnerships. These provide catastrophe insurance in high-risk regions. For example, California has the California Earthquake Authority (CEA). This organization offers earthquake insurance through participating insurance companies.

Typical Mistakes When Filing an Insurance Claim

The process of filing an insurance claim after a disaster can be stressful. To avoid delays in payment or denial, it is important not to make strict mistakes. Often, people forget to document damages or lose checks and receipts related to temporary repairs and moving expenses. Which is one of the biggest problems. Here’s what you should prepare in advance:

1. photo documentation of the damage
2. start a separate folder with copies of all documents
3. save every detail related to home restoration.

You should also notify the insurance company as soon as possible and review the filing requirements. Incomplete information or missed deadlines can make it very difficult to receive compensation.

If you are facing difficulties filing a claim or would like advice on catastrophic insurance claims, the legal team at KAASS LAW is here to help.

What to Keep in Mind When Filing a Catastrophic Insurance Claim

When a catastrophic disaster hits, it is imperative that you keep all of your receipts and bills in order to gain the most complete financial compensation from your catastrophe insurance claim. These events typically require several immediate/temporary repairs and may even cause you to relocate.

The catastrophe insurance claims typically cover for moving and living costs if the disaster prevents you from living at home. Make sure that you keep all records of any repairs and moving costs, however, keep in mind that spending more money on temporary repairs will come out of your final settlement.

You will need to record all specific damages to your property and all possessions that were damaged or destroyed. The more documentation that you can provide for your claim on losses, the faster and more accurately you will be compensated. Your compensation will partly depend on whether your policy gives people new replacements for lost items or gives the estimated value of the lost item in cash.

Are you in need of additional information regarding catastrophe insurance claims? Our legal team at KAASS Law would be happy to answer any questions that you have. Give us a call now at (310) 943-1171 for more information.