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    Insurance | 3 min read

    5 Hazards That Could Make Your New Home a Risky Investment

    When you purchase a new home or property, there are many things to consider beyond price, location, and square footage, particularly if it’s a vacation home near a flood plain or the coastline. These picturesque homes that check all your “want boxes” have more considerations to contemplate.

    Don’t be blinded by ocean-front property or open fields of solidarity and fail to consider the possibility of storms and wildfires. While there will always be things that are beyond our control, no matter where you choose to purchase a home, here are five risks that could affect your insurance policy needs and rates:

    1. Winter Storms

    While disasters can happen anywhere, some places are better known for their fair share of winter storms, which often bring a combination of freezing rain, ice, snow, and high winds that can cause power outages for days. What's more, when that ice and snow melts, it can lead to severe flooding. I’m sure if you ask anyone across the state of Texas, you would be hard pressed to find someone who expected Winter Storm Uri to wreak the havoc that it did. We aren’t used to seeing snow in South Texas—especially not snow that sticks around for a week and knocks the power grid out of commission.

    One thing is for certain, though. We all learned, when it comes to winter storms, preparation is key. Not only is it critical to have food, water, and other essentials to sustain you and your family for several days during a winter storm, but these storms can wreak havoc on our homes, so it’s important to prepare your home for the harsh cold and potential flooding as well.

    Related Reading: Prevent Bursting Pipes This Winter with These 5 Tips

    2. Floods

    Floods are the most common natural disaster in the United States. In fact, as of March 31, 2021, U.S. flood claim payments have totaled over $71 billion! The scary part of it all is that it can happen anywhere it rains and particularly in areas that experience high annual rain totals. A flood can occur with just a few inches of rain, and cost tens of thousands of dollars in damage.

    The first thing every homeowner should be aware of is that EVERY HOME—no matter where it's located—is in a flood zone. And that means, every homeowner should have enough flood coverage to fully protect their largest investment. That means, you need standard NFIP flood insurance if your home value is less than $250,000, and standard flood insurance PLUS additional excess flood coverage if your home value is greater than $250,000. When a home is in an area that is more prone to flooding, lenders will require a borrower to have adequate flood coverage, but just because your lender doesn't require flood insurance, doesn't mean you don't need it.

    3. Tornadoes, Thunderstorms, and Hail

    Since 2008, convective storms—which include thunderstorms with lightning, hail, tornadoes, and destructive winds—have caused $10 billion per year in insured losses in the U.S. No matter where you live, it’s difficult to determine when and if these catastrophic events could occur. Err on the side of caution and consider purchasing an insurance policy that covers these instances to protect you from an unfortunate situation.

    4. Wildfires

    Of the most high-risk possibilities, it seems wildfires are among those that could be the most preventable. If you’re searching for property in desolate or dry, windy areas, there are many things you can do to protect your property. Ready.gov provides a checklist on how to prepare for a wildfire.

    Wildfires are known to spread quickly, and even if you are prepared for the worst, your neighbors may not be as cautious. Besides properly insuring your home, work to educate those living around you to collaboratively put an emergency plan in place.

    5. Earthquakes

    While most people believe that “serious” earthquakes are restricted to California, the National Earthquake Information Center reports that 20,000 earthquakes occur each year around the globe.

    And, did you know that earthquakes don't just happen along the edges of continental plates? It's true—one of the most violent earthquakes to take place in American history actually occurred along the New Madrid Fault Line, which is located along border where Missouri meets Kentucky and Tennessee.

    While it’s nearly impossible to predict when and where disaster will strike, one of the smartest things you can do is to be aware of unexpected possibilities.

    When it comes to Mother Nature, there is very little, if anything, we as humans can do to prevent natural disasters from occurring. The best you can do is be alert, be prepared, and protect your high-risk property with proper and adequate insurance.

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    John Hannah

    John Hannah is the AVP of Product Management for SWBC Insurance Partners. In his role, he reviews and analyzes P&C insurance product programs to meet and exceed financial goals. He assesses the risk and profitability of prospective and existing clients, to include underwriting, coverage and pricing recommendations.

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