Last week, I had the honor of being invited to attend and testify at a Senate Financial Institutions, Housing and Insurance Committee’s Work Session. I was asked to speak about catastrophe coverage on a standard homeowners insurance policy.
And so I found myself on my way to Olympia, WA yesterday morning, with a short presentation and a stack of handouts in my purse, and with shaky knees. It’s not every day that one is invited to testify in front of several State Senators! The fact that the session was being broadcast live on TV (on TVW, Washington State Public Affairs TV Network) did not help calm my nerves!!
But – I did it! And what helped me a lot, was the realization of just how important this information is. So many homeowners seem to have no idea about the catastrophic loss exclusions on their homeowners policy.
Among the most important ones:
Earthquake and Flood are NOT covered on a standard homeowners policy. Coverage needs to be purchased separately as an endorsement, or as a stand-alone policy. Many homeowners take a gamble on this topic, and decide that the odds of their home being damaged or destroyed in an earthquake or a flooding event are rather slim. That is not correct!
My research has turned up some numbers that baffled even me, and I consider myself an insurance insider:
1. Only about 25% of all flood losses occur in actual high-risk flood zones. The rest – 75% (!) – happen in low-risk areas! (There are a variety of factors that can cause flooding, but I’ll talk about those another time.)
2. The risk of an average home being destroyed in a fire is about 10%. THE RISK OF AN AVERGAE HOME BEING DESTROYED IN A FLOOD IS ABOUT 26%! Yet, most people consider fire protection more important.
Oh my.
If you would like to receive a copy of my Catastrophic Loss Exclusions worksheet, or more information on the topic, please e-mail me at claudia@mcagent.org.