The 10 most expensive natural disasters in U.S. history all have occurred in the last decade. These catastrophes have resulted in insurance companies having to cover losses averaging $10 billion each year since 1989, compared with just $2 billion yearly from 1980 to 1988. With the potential catastrophe payouts insurers face far exceeding their reserves, it's no surprise that major companies, including Allstate and State Farm, are raising catastrophe-policy premiums and deductibles. "The insurance industry is saying to the homeowner, If you choose to live here, that's great, but you have to take on more of the risk," says Jayna Neagle, of the Washington, D.C.based Insurance Information Institute. "It's all about sharing the risk."

If you live where tornadoes, floods, hurricanes, and earthquakes are a regular occurrence, catastrophe insurance is an important consideration. Ask these questions to avoid paying too much or choosing a company that a disaster could drive out of business:

Do you have proper coverage? Amazingly, most people don't. For instance, only 20 percent of homeowners in floodplain areas carry flood insurance, even though their flood risk is 26 times their fire risk. Similar figures hold in many earthquake- and storm-prone areas. Find out if you need catastrophe coverage by calling your agent or state insurance board. Obtain information on flood, storm or quake risks in your region and compare it to risks posed by the "normal" hazards your homeowner's policy covers; if catastrophe risk exceeds normal risk, buy expanded coverage.

Is the insurer financially stable? A huge catastrophe can shake the stability of weaker insurance companies, putting them at risk of a default that could leave policyholders uncovered. A.M. Best and Standard & Poor's now rate insurance companies to reflect their ability to withstand such catastrophes. Check an insurer's rating with A.M. Best, S&P, or Consumer Reports magazine. Look for an A rating or better (such as AAA or A++). Avoid lower-rated companies (those with a B or lower rating).

Are the premiums and deductibles reasonable? Double-digit increases in catastrophe premiums are common in high-risk storm and earthquake areas. These increases vary widely by company and region, so if your premium jumps up, shop around for an insurer that's not as exposed to catastrophe-related payouts.

Also be aware of the change to "percentage deductibles" that require homeowners to cover a percentage of the damages rather than a set figure. For example, if the deductible is 5 percent and losses are $100,000, the policyholder covers the first $5,000.

According to J. Robert Hunter, insurance director for the Consumer Foundation of America, homeowners are not always clearly notified of the change. "A lot of people have been misled," Hunter says. "The disclosure is really vague, buried in a lot of fine print."

When you're ready to buy, try these shopping tips:

1. Purchase all your insurance (homeowner's, auto, life) from an insurer that offers a multiple-policy discount. Also check if your insurer gives a "loyalty" discount for staying with them for three to five or more years.
2. Go with a high deductible; this can save up to 20 percent in premiums if you have savings to do it.
3. Install smoke detectors, a burglar alarm, storm shutters, dead bolts, and a fire-sprinkler system to reduce the premium on your homeowner's policy. The same goes for using storm- or earthquake-resistant construction methods or materials.
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