Weather a Natural Disaster With the Right Home Insurance

No homeowner wants to imagine how a severe weather or climate-related event could wreak havoc on their property. But it’s difficult to ignore the frequency and the costs of such events happening in Colorado.

A five-year analysis conducted by the National Centers for Environmental Information found that natural disasters cost the U.S. $18 billion per year on average. From 2002 to 2021, Colorado recorded 45 natural disasters. Although it may be hard to imagine, in the last 40 years, wildfires, floods, and hail storms have cost the state anywhere between $20 billion and $50 billion. In 2015, data reported by insurance companies to the Fast Track Monitoring System calculated that 54 percent of Colorado homeowner’s insurance claims were catastrophe-related. 

Whether you have a home insurance policy or are shopping around for a better one, here’s what to know about taking proactive measures to safeguard your home and future against nature’s whims.

Reading and Interpreting Your Policy

When it comes to protecting your property from a natural disaster, understanding what your home insurance policy covers is a must. 

In the U.S., homeowners can choose from several standardized insurance plans, HO-1 through HO-8, which offer various levels of protection depending on the homeowner’s needs and the type of residence being covered. 

Sounds straightforward enough, but herein lies the problem with insurance: Policy language tends to be exacting. Here’s what I mean by that: Fire doesn’t necessarily mean wildfire. Water damage does not equal flood. But when you’re the one with the damaged home in dire need of relief, fire damage looks like fire damage. Water damage looks like water damage. 

You and your insurance provider may not be thinking about your predicament in the same way, which can be incredibly frustrating. But understanding how insurance companies view, read, and interpret policies concerning common natural disasters will go a long way toward helping you recover sooner. 

Hailstorms

Colorado is no stranger to hail, and the Rocky Mountain Insurance Information Association (RMIIA) reports it as the costliest insured weather event in the state. Since 2009 alone, hailstorms have caused over $5 billion in damage. 

Between April and September each year, these storms can wreak havoc on your property in a short amount of time. They can damage roofs, chimneys, windows, sidings, gutters, and more. 

While most types of policies have a carveout for hail damage, disputes can occur even if your coverage is “comprehensive.” 

The Juncture Where Disputes Can Surface

In my experience, conflicts typically arise when a contractor recommends replacing more than what your insurance company will agree to cover. This can create a significant financial burden for you and possibly force you to forego necessary repairs. 

Wildfires

Even the most limited home insurance policies conclude fire is a covered peril. But a study funded by the Colorado Division of Insurance found that the average homeowner insurance premium in the state increased over 50 percent between January 2019 and October 2022. On top of that, I have had countless conversations with frustrated homeowners who are struggling to find insurers who will work with them at all. 

[heading 6] If your property is damaged by a wildfire, your insurer should help pay for: 

• Your home’s structure
• Detached structures
• Your belongings
• Additional living expenses 

Yet most standard homeowners’ insurance that claims to cover the repair and replacement of homes lost or damaged in a wildfire will not cover everything. State data shows less than 10 percent of insurance companies representing homes lost in the 2021 Marshall Fire actually covered the all rebuilding costs, indicating that most of these homeowners were underinsured. 

Preparing Your Property for the Worst

Insurance companies take action to properly mitigate property for wildfires seriously. Whether you have kept up with wildfire mitigation efforts could end up making or breaking your chances at securing coverage in a high-risk area. 

Common Exclusions and Limitations

Unfortunately, a policy that sounds all-inclusive or inclusive enough may have exclusions or limitations, depending on how it is set up. 

Exclusions

Exclusions explicitly state that certain types of losses will not be covered by your policy. These are some common exclusions: 

Floods

While most home insurance policies stipulate coverage for some type of water issues, insurance companies do not actually cover flooding. The Federal Emergency Management Agency (FEMA) defines a flood as “a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or two or more properties.” Hence, you do not see coverage for floods on standard home insurance policies. 

Flood coverage requires a separate policy from the National Flood Insurance Program (NFIP). 

Mold

Most home insurance policies don’t cover mold because it’s considered a preventable issue. Insurance companies often claim you can avoid it by controlling your home’s humidity and ensuring proper ventilation. But there are plenty of circumstances where mold accumulation is unavoidable, some of which might involve an insurance company failing to cover a full claim for an issue that was, as they call it, “preventable.” 

Limitations

Limitations put restrictions on covered events. Here’s how limitations can trip up policyholders: 

• Time Limits: Certain costs may only be covered for a short period after a covered event.
• Coverage Caps: Specific items may be subject to a payment ceiling. 

Know When to Hire a Bad Faith Attorney

You want your policy to work for you. However, it’s important to remember that insurance companies are for-profit businesses. They lose money when they pay claims, and disaster recovery is extremely expensive. 

Consider contacting a bad faith attorney if the insurance company:

• Refuses to consider a natural disaster an “extraordinary life event” when setting rates and coverage. Colo. Rev. Stat. §10-4-116
• Raise rates or fees as a condition for honoring your claim.Colo. Rev. Stat. § 10-11-118(2)
• Cancels your policy if the property is unoccupied for reasons out of your control. 3 CCR 702-5
• Denies coverage included in your policy due to filing delays. C.R.S. 10-4-110.8
• Takes longer than 30 days to process your claim or 60 days to inform you of a decision. C.R.S. 10-4-419

Contact our Insurance Claim Denial Attorneys

If your property has suffered damage or destruction and you suspect your insurance company is making matters worse by acting in bad faith, give Robinson & Henry’s Bad Faith Team a call at 303-688-0944 to begin your case assessment.