3+ years experience in insurance and personal finance editing
Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.
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A catastrophic event is a single widespread event that results in at least $25 million in damages, according to the Insurance Information Institute (Triple-I).[1] While standard homeowners policies cover some catastrophes, you may need a separate insurance policy for others.
It’s important to know which catastrophe coverage you need so you have adequate insurance if a disaster occurs. Compare home insurance quotes from multiple companies to find the best coverage for your needs.
Quick Facts
Catastrophe insurance can cover damages from large-scale natural or human-made disasters.
Two types of coverage for catastrophic events include earthquake and flood insurance.
Catastrophe insurance fills coverage gaps in your homeowners insurance policy.
How catastrophe insurance works
Standard home insurance excludes coverage for certain perils and natural catastrophes, like floods and earthquakes, and man-made disasters, such as terrorist attacks or nuclear destruction.
Home insurance policies typically include coverage for the following perils: fire, lightning, windstorm, hail, riot or civil commotion, aircraft, vehicles, volcanic eruptions, falling objects, and more.
To get insurance for catastrophic events like floods and earthquakes, you’ll need to purchase a separate insurance policy from a private insurer or the government. Homeowners and small-business owners who live in high-risk zones should consider whether to purchase any catastrophic insurance to protect their assets in addition to standard home insurance.
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How to ensure you have enough home insurance coverage
You need to consider various factors when determining if you have enough home insurance coverage to protect your home. The following tips can help you find the best coverage situation for your insurance needs:
Determine your dwelling replacement cost. Work with your insurance agent to estimate the replacement cost of your home and attached or detached structures. Consider adding guaranteed or extended replacement cost insurance for additional coverage above your policy’s limit.
Make a home inventory list. Conduct a home inventory to determine the value of items that require coverage. Actual cash value (ACV) is the default coverage for your personal property, but you can upgrade to a replacement cost policy if you need more coverage. If you own high-value items like jewelry or antique furniture, you can add a personal articles floater or buy a separate insurance policy to increase your coverage.
Evaluate your finances. Protect yourself from liability costs by purchasing enough insurance to replace your assets. The III recommends buying at least $300,000–$500,000 of personal liability coverage.[2] If you have a high net worth, attractive nuisances or your property, or own investment properties, consider a personal umbrella insurance policy.
Assess other coverage needs. The standard insurance policy excludes coverage for damage from floods, earthquakes, water backups, and more. Figure out the risks associated with your area and purchase specialized insurance products accordingly.
Review your coverages. A good rule of thumb is to review your policy each time it renews (usually once a year). While home renovations and improvements can increase your property’s value, you’ll need to make sure your policy accounts for those additions.
Flood insurance: What to know
Floods are high-cost events. According to the Federal Emergency Management Agency (FEMA), 1 inch of flooding can cause $25,000 in water damage to your home.[3] Homeowners who live in high-risk flood communities should purchase this disaster insurance to protect their property from costly damages.
A standard homeowners insurance policy doesn’t cover flood losses, so you must purchase flood insurance separately if you decide you need it. This benefit is available through the federal government or private insurers.
The National Flood Insurance Program (NFIP), a program established by the federal government, provides an affordable solution to flood insurance. Your policy covers up to $250,000 in dwelling insurance and $100,000 of personal property insurance, up to the ACV.[4]
Buying through a private insurance company is typically more expensive. But you’ll receive more comprehensive coverage, like higher policy limits and insurance for the full replacement cost of your home.
Catastrophe vs. hazard insurance: What’s the difference?
Hazard insurance covers perils in the homeowners insurance policy. Meanwhile, catastrophic plans cover damages after a wide scale disaster event. While different, the coverages have some overlap.
Your homeowners insurance policy can cover catastrophes in some circumstances. For example: Wildfires, tornadoes, and winter storms can cause extensive and expensive damages. People in low-probability areas can still file insurance claims for these events under their policy.
In contrast, no home insurance company covers certain natural disasters like floods or earthquakes in a standard policy due to the severity and frequency of damages. Therefore, you’d need catastrophe insurance to fill the gaps in your homeowners insurance policy.
Below, you can see the differences in what perils catastrophe and hazard insurance can cover.
Catastrophe Insurance
Hazard Insurance
Flood
Earthquake
Landslide
Mudslide
Tsunami
Hurricane
Terrorist attack
Nuclear disaster
Warfare
Windstorm and hail
Fire and lightning
Explosion
Smoke
Riots
Vandalism
Theft
Weight of ice, sleet, and snow
Volcanic eruption
Falling objects
Damage from vehicles
Damage from aircraft
Accidental discharge of water
Accidental tearing apart, cracking, etc.
Freezing of appliances or HVAC
Artificially generated electrical currents
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How to protect your home from catastrophes
Even though you can’t prevent catastrophes from happening, you can take steps to protect your house. The following list includes ways you can better prepare your home for potential catastrophic events including flooding, earthquakes, tornadoes, wildfires, and more.
Set up water detectors with automatic shut-off capabilities.
Install a sump pump for your basement.
Regularly clean gutters, downspouts, and drainage areas.
Clear snow and ice away from foundations.
Securely strap down your roof.
Add reinforcement such as roof straps, metal connectors, or retrofit clips.
Invest in impact-resistant windows, doors, and garage doors.
Keep gutters clear and remove dead vegetation around your property.
Remove flammable materials near your home.
Retrofit “cripple walls” with plywood and bolt the house to its foundation.
Install flexible gas and water pipe fixtures.
Install an earthquake-activated shut-off valve on the main gas line.
Know how to shut off utilities and avoid storing flammable liquids in the garage.
The difference between catastrophe insurance and homeowners insurance can be confusing. Take a look at the following questions about catastrophe insurance to determine if it’s the right insurance for you.
What is a catastrophe in insurance?
A catastrophe is a significant and widespread event that results in substantial financial losses. Standard homeowners insurance coverage excludes some catastrophes, such as human-made events (acts of war, industrial disasters, etc.) and natural disasters (floods, earthquakes, etc.). You’ll need to purchase separate insurance to receive coverage for those disasters.
Common catastrophe insurance options include flood and earthquake insurance.
Can you add catastrophe insurance to a current homeowners or renters insurance policy?
Yes. You can add catastrophe insurance to your homeowners or renters insurance policy by purchasing a stand-alone policy or endorsement. Common catastrophe insurances include flood and earthquake insurance.
These policies have separate premiums, deductibles, and coverage limits. You can purchase flood insurance through the federal government.
What does catastrophic coverage cover?
Catastrophic coverage protects you and your property after a disaster event resulting in significant damages. Your homeowners insurance policy can cover some catastrophic events, like wildfires, but it doesn’t cover floods and earthquakes.
Excluded incidents require a separate insurance policy.
What is a catastrophic loss in insurance?
A widespread severe event causes a catastrophic loss. It results in at least $25 million in damages and affects a certain number of policyholders and insurers.
FEMA. "National Flood Insurance Program Summary of Coverage."
Alani Asis
Alani Asis is a personal finance freelance writer with nearly three years of experience in content creation. She has landed bylines with leading publications and brands like Insider, Fortune, LendingTree, and more. Alani aims to make personal finance approachable through fun, relatable, and digestible content.
Edited byKatie PowersAuto and Life Insurance Editor
Katie PowersAuto and Life Insurance Editor
Licensed auto and home insurance agent
3+ years experience in insurance and personal finance editing
Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.
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