Catastrophe insurance protects businesses and residences against natural disasters such as earthquakes, floods and hurricanes, and against man-made disasters such as terrorist attacks. These low-probability, high-cost events are generally excluded from standard hazard insurance policies, which makes catastrophe insurance necessary.Catastrophe insurance is different from other types of insurance in that it is difficult to estimate the total potential cost of an insured loss, and a catastrophic event results in an extremely large number of claims being filed at the same time. This makes it difficult for catastrophe insurance issuers to effectively manage risk. Reinsurance and retrocession are used along with catastrophe insurance to manage catastrophe risk.Different types of catastrophe insurance are available to cover various natural disasters and damage caused by terrorism. Homeowners insurance may contain certain types of coverages, but earthquakes and floods, for example, are typically excluded. Many homeowners policies cover only named perils, which can vary policy to policy and by insurance company. Even an “all perils” policy may exclude some events or contain specific policy limits, so you may not be fully insured for a major loss. That's where catastrophe insurance comes in. The coverage you should consider buying will mostly depend on the area in which you live. This explanation of insurance benefits is provided by Insurance Marketplace.