How much does flood insurance cost?
Exact flood insurance policy premiums depend on your location and other factors (such as your policy's deductible and your home's elevation); you can get a quote from a participating flood insurance provider. But if you live outside a high-risk flood zone, or you're willing to take some steps to lower your risk—like installing flood openings, elevating utilities to a higher floor of your home, or raising the structure of your home itself—you might qualify for cheaper coverage.
What about earthquake insurance?
Earthquakes are another natural disaster not covered by standard homeowners insurance. To protect yourself, you'd need a separate earthquake insurance policy or to buy a rider for your current homeowners policy.
Of course, many parts of the U.S. aren't prone to earthquakes. (Check FEMA's Earthquake Hazard Maps Opens in new window to see where the greatest property risks lie.) But even if you live far from a major fault line, you're not immune—as residents of Oklahoma and North Carolina recently learned.
Indeed, according to a 2014 U.S. Geological Survey study, 42 states have a "reasonable chance" of experiencing a damaging earthquake. Yet the reports that as of November 2018, only 11% of U.S. homeowners had earthquake insurance Opens in new window.
That doesn't mean "The Big One" is coming your way no matter where you live—or even that earthquake insurance is available in your state. (Check with your insurance agent or state insurance authority to find out.) Also note that coverage doesn't come cheap. According to the III, deductibles often range from 5% to 15% of the policy limit—so if you buy $200,000 in coverage, your deductible might be as high as $30,000.
How much homeowners coverage do you need?
Keep in mind that your homeowners policy needs to cover not just your purchase price or what you'd need to pay off your mortgage, but completely rebuilding your home. Depending on how long you've lived there, the cost of rebuilding might be a lot more than it cost to buy your home. And if you're hit by a catastrophe that affects hundreds of homes in your area, the price of construction and building materials might push it even higher.
Also, your homeowners coverage amount might have to change over time. For example, if you've made improvements, renovations, or additions (even of special features or expensive items like a standby generator or electric car charger), you might need more "full replacement" coverage in the event of a disaster. Do an updated home inventory to estimate the value of your personal property and how much it would take to fully replace your belongings.
Most homeowners insurance policies will replace personal belongings at a level of equivalent to 50–70% of the coverage Opens in new window for the structure of the house. So if you have a $300,000 policy, depending on the details you might have $150,000–$210,000 of coverage for personal belongings. If you have high-value items such as jewelry, artwork, musical instruments or special equipment that would be expensive to replace, you can get extra protection by buying a "floater" for your policy.
What about renters insurance?
If you don't own your home, you can get renters insurance that works in some of the same ways as homeowners insurance. Renters policies don't cover the costs of damage to the building or rental property structure; those are the responsibility of the landlord. However, renters insurance can help protect your personal belongings Opens in new window from disaster, and it also covers personal liability and additional living expenses.
To decide how much coverage you might need, do a home inventory of all your possessions. Also consider getting replacement-cost coverage instead of actual cash value coverage. Actual cash value coverage will recoup only the amount of money your possessions are estimated to be worth today. Replacement-cost coverage might raise your policy premiums a bit, but it can help you replace your things faster. You can also add a "floater" Opens in new window to your policy to cover certain high-value possessions.
Like homeowners insurance, renters insurance covers losses due to certain types of disasters: fire or smoke, windstorms, lightning, vandalism or theft, water damage such as burst pipes, flooding caused by plumbing issues, and overflows from an upstairs neighbor. However, it doesn't cover flooding or earthquakes. (You can buy separate flood or earthquake policies as a renter, or get a rider for your policy, depending on your state and your insurer's options.)
The good news is that renters insurance tends to be quite affordable (and costs less than comparable homeowners insurance). As of 2017, the average renters premium was $180 per year Opens in new window (vs. $1,211 for homeowners coverage). Not bad for peace of mind.