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QUESTION: I would like to get home owners insurance policy that includes flood, hurricane, and sinkhole coverage. Can I get all this coverage from one insurance policy?


ANSWER:The answer to your question comes in several different parts:

You will see many insurers offering an "all perils" policy. Do not be deceived by these words. In fact, there are usually so many exceptions and limitations that the policies cover little more than fire and storm damage. Never buy an "all perils" policy without first reading all the small print.

In principle, you want a homeowners policy with named perils. Whether you will be able to find a single insurer that will accept all three perils will depend on where you propose to or actually live.

Hurricane - do not be deceived by references to winds in a policy. Damage caused by high winds is not the same as the damage caused by a hurricane. If you live in an area at risk from a hurricane, local insurers will have clear guidelines on what perils they will accept. Those that will accept the risk will have a fixed premium rate depending on your zip code. Note: the Multiple Peril Insurance Act of 2009 which is intended to amend the National Flood Insurance Act of 1968 is stuck in Washington. This will amend the definition of windstorm to include any hurricane, tornado, cyclone, typhoon, or other wind event but change the way in which multi-peril insurance can be sold.

Sinkhole coverage - this will also depend on where you live and, more importantly, what is known about the area. If there are geology reports showing a high risk of damage to the foundations and/or structure of buildings in this area, most companies will refuse coverage or only accept the risk at a high premium rate.

Flood - this is growing more common as the weather patterns change and more of the US is covered in concrete, leaving less ground to soak up the water. Whether you can buy this coverage in a high risk area will depend on whether the area is covered by the National Flood Insurance Program. If it is, the cover should be affordable for the property itself, less so for contents. If not, it will be difficult to find affordable cover.

If this question is being asked about a property you are thinking of buying, get a CLUE report and have a home inspection done (followed up by a geology report if necessary). In theory, you can find out the risk level from FEMA (see http://www.fema.gov/news/newsrelease.fema?id=25759) but accessing http://floodsmart.gov for a search by address can be challenging.


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