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Top Catastrophic Insurance Claims Explained

Man holding cell phone clicking on icons toward the screen with the words Damages Claim

Disaster won’t wait. Whether it’s flooding, wildfires, or hurricanes, homeowners need to protect their families and their homes from devastation. One integral part of any home preparation plan is homeowners insurance, which helps you get back on your feet after a catastrophic event.

In honor of National Preparedness Month, we welcomed Michelle O’Connor of O’Connor Insurance Associates, Inc. to discuss what you need to know about homeowners insurance and catastrophic claims.

What is a “CAT” claim?

A catastrophic claim on your homeowners insurance – or a “CAT claim” – stems from a “natural and man-made disaster that is unusually severe,” according to the Insurance Information Institute.

Weather events that qualify as CAT claims include tornadoes, hurricanes and tropical storms, other wind/hail/flood incidents, and winter storms. A standard homeowners insurance policy generally covers property damage and the loss of personal property from fire (including wildfires), hail, and windstorms. However, earthquakes and at times, hurricane damage, may require additional coverage.

Hailstohail hits the pavement in front of a home's garagerms generally are covered under standard homeowners policies.
Hailstorms generally are covered under standard homeowners policies.

It can be difficult, especially for new homeowners, to know which coverage they have and which coverage they need. If you’re ever in any doubt, we recommend you reach out to your insurance agent to find out.

If you’re looking for a quick overview of the different CAT claims and the best ways to prevent having to file a claim, then read on!

Earthquake – To endorse or not to endorse?

a living room in disarray from an earthquake
Are you covered?

If there’s a whole lot of shaking going on, you’ll need to add an endorsement to your policy or even take out a separate earthquake policy.

If you’re thinking, “Do I need earthquake coverage?” you may wish to speak to an insurance agent about adding coverage that covers earthquakes (and completing earthquake preparedness). After all, California isn’t the only place that shakes, rattles, and rolls.

“We actually had an earthquake on August 9th in North Carolina,” recounts Michelle. “It was above five on the Richter scale. We’ve not really had that as a threat to our area, so it’s definitely something we’re having conversations with our clients about now.”

a yellow house falls off its foundation after an earthquake
If you live in an area with frequent earthquakes, you may need an endorsement or earthquake policy.

Homeowners that were in the immediate area suffered foundation damage.

“It’s expensive and makes the home unlivable until it’s repaired,” says Michelle.

For California homeowners, earthquake coverage may be expensive but imperative as an earthquake can devastate a home (and your savings).

Keeping your house cool and safe in extreme heat

a desert landscape with a cactus and a yellow overlay
Intense heat can damage a home’s systems.

In the desert Southwest, temperatures can reach over 100 degrees routinely and cause equipment to break down. Air conditioners, water heaters, and even roofs can be damaged. However, high heat isn’t just a southwest issue.

“In the Carolinas, we have heat and a lot of humidity,” says Michelle. “Certainly, air conditioning units break down, but most of our carriers aren’t offering that endorsement yet.”

Homeowners may also want to take proactive measures, such placing their HVAC systems in the shade and preparing for a power outage, before extreme heat arrives.

The most frequent natural disaster

flood waters surround a house and cover the windows
Along with most natural disasters comes flooding.

According to the National Flood Insurance Program (NFIP), 90 percent of all U.S. natural disasters involve flooding. Flood damage is not covered by a standard policy and requires purchasing separate flood insurance coverage, many times supplied by the NFIP. It can be a prerequisite to getting a mortgage if you’re buying a home in a designated flood zone.

“If you live by a body of water, typically, homeowners flood insurance is going to be required,” says Michelle. “There’s flood plains that have been established that allow the mortgage companies to know that your home’s at a higher risk.”

a light sign pokes up from flooding water
Flooding can occur outside of designated flood zones.

Even if you don’t need or have a mortgage, some homeowners should consider purchasing flood insurance. If you live in a flood plain or in a place that sees unusually high rainfall totals, contact your insurance agent to discuss your flood insurance options.

“This is a hot topic in North Carolina,” says Michelle. “We’ve had torrential rains in recent years, and the lack of flood policies in the middle of the state and some mountainous areas as well – homes can still flood in an hour or two.”

rising flood waters surround two benches
Understand what “flooding” is and how it relates to your homeowners insurance.

But how do you know you should buy flood insurance?

Most homeowners have “sewer and drain” coverage in their homeowners policy. This addresses items that overflow in your home, like a toilet or a sink, though a homeowner still may need an endorsement for sewer or water backup into the house. However, neither of those situations are what insurance carriers consider “flooding.”

“I always simplify the flood definition as rising or standing water,” says Michelle.

Rocking like a hurricane

dark clouds move over a suburban neighborhood
Intense storms can create wind and hail damage.

Many standard homeowner policies cover damage from hailstorms and windstorms, which would include damage from hurricanes. However, if you live in an area that sees hurricane damage frequently, you may need additional coverage.

“We live in an interesting place where there’s a hurricane that threatens us just about every other week,” laughs Michelle. “On the coastal areas of both North Carolina and South Carolina, you have to add on wind and hail to your policy, and typically, it does have a separate deductible. It’s the bulk of the policy cost to add those coverages on.”

hail lays upon a ground in clumps
Some coastal areas need additional hailstorm and windstorm coverage.

The home’s proximity to the coast determines how much a homeowner needs to pay for the extra coverage, which is desperately needed in high-risk areas.

“It’s the risk factor,” says Michelle. “The things that are not as likely to happen, the insurance companies are going to be willing to cover at no additional cost.”

Before a hurricane hits, make sure to prepare your family and your home with these quick tips.

How to keep your claims all “CAT”

a homeowner signs a paper after having home improvement work done
Use home insurance responsibly.

Some homeowners are confused between homeowners insurance, a home warranty, or out-of-pocket expenses. Homeowners should only use their insurance policy for large losses and not think of it as a maintenance. That’s what a home warranty is for.

Home warranties help keep your maintenance costs manageable with a monthly cost and a service fee, while homeowners insurance should only be used for incidents that cost more than your deductible amount.

“If you think about the home policy as being for catastrophic things, the other issues are things that should be taken care of on a regular basis,” says Michelle. “That includes being able to budget for those items, and scheduling those items, which the vipHomeLink app does a beautiful job of reminding homeowners.”

a woman in a sweater looks over paperwork while on a cell phone
Give your insurance agent a call.

To keep your number of claims low, increase your deductible. This can also help you to save money on insurance costs by reducing your premium. If you have any concerns or are unsure about your policy or deductible, reach out to your insurance agency. They want to hear from you.

“The one thing I want to tell policyholders is not to be afraid to call us,” says Michelle. “There’s lots of things that happen that if our policyholders would just give us a call first, we could talk them through and provide advice.”

This includes putting on an addition to their home or even hiring a nanny.

“We can talk about all your options,” says Michelle. “We may think of something that you hadn’t that can change the course of your decision.” (See a snippet above from a previous episode of the vipHome Podcast where Michelle discusses contractors and insurance.)

And finally – stay on top of home maintenance

two cell phones in front of an affluent blue home with the vipHomeLink dashboard up on the screens
vipHomeLink can help!

By understanding home insurance, home warranties, and home maintenance – you can save money and time, and gain peace of mind. That’s why the vipHomeLink home management app sends you maintenance reminders, so you don’t have to suffer a non-CAT claim. We help you know what to do and when to do it, and connect you with experts in the industry whose expertise you can trust.

Give your house a home with vipHomeLink. Subscribe to vipHomeLink with a monthly or annual membership.


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