How are "flood" and "earthquake" generally treated in property insurance policies?

Flood and earthquake are typically treated as excluded perils in most standard property insurance policies. This means that damage resulting from these events is not covered unless the policyholder specifically seeks additional coverage.

The rationale behind their exclusion lies in the high risk and potential for extensive damage these natural disasters can cause, which often exceeds what standard property insurance can feasibly cover. Insurance companies generally view these events as having characteristics that make them more unpredictable and catastrophic compared to common perils like fire or theft.

To obtain coverage for flood or earthquake damage, policyholders usually need to purchase separate policies or endorsements. Flood insurance, for example, is commonly provided through the National Flood Insurance Program (NFIP), which offers specific definitions and coverage limits that differ from typical homeowners' insurance. Similarly, earthquake coverage might require additional riders or separate policies, depending on the insurer and the location of the property.

Understanding that these two perils are generally excluded helps property owners plan effectively for their insurance needs and ensures they have the appropriate coverage in the event of such natural disasters.