Hurricane Insurance Update
A natural disaster is bad enough without a insurance disaster on top of it. Here are seven suggestions for proper coverage
The three big tropical storms in 2005—Katrina, Wilma, and Rita—collectively left behind a staggering $55.9 billion in insurance claims, according to the Insurance Information Institute, which tracks industry statistics. Now, as we begin another hurricane season, it's time to take a closer look at your coverage. Here, a few things to keep in mind before you crack open the file:
1. If you don't live in a coastal area, most non-flood related hurricane damage will be covered in your homeowner's policy under a "hurricane deductible," which will either be a percentage of your home's total value or a fixed-dollar amount. If you live in a place like Florida or Texas, however, expect to either have a separate windstorm premium or become part of state-run "windstorm pool".
2. It you install storm shutters or other defensive measures on your home, you may qualify for reduced wind-damage premiums. According to Applied Research Associates—a Raleigh, North Carolina engineering firm that conducts home evaluations for insurance firms—less than one percent of Florida residents have had their home inspected for possible premium reductions. Of the 2,000 inspections the company undertook last year, 99 percent qualified for discounts, which the company says could easily save homeowners a few hundred dollars per year.
3. Determine if your coverage limits are still realistic. In a 2005 survey by Marshall & Swift/Boeckh, a firm that supplies property evaluations to the insurance industry, 59 percent of American homes were found to be undervalued by an average of 22 percent. if you needed to rebuild tomorrow, would your present policy allow you to do so in today's heated construction market?
4. Take an updated home inventory with a videocamera. Walk through your house and garage, opening all drawers and closets. Burn the footage onto a DVD and stash it in a fireproof and waterproof safe.
5. Flood damage is not covered by your home insurance company; it must be purchased separately through FEMA's National Flood Insurance Program. The good news is, flood coverage is relatively cheap. Visit www.floodsmart.gov for quotes and referrals.
6. Flood insurance isn't just for coastal dwellers who might experience a hurricane's storm surge. "When you get 20 inches of rain, you are going to flood," says Tom Johnston, vice-president of the International Hurricane Protection Association trade group. "And you are going to need that insurance."
7. If you are ordered to evacuate your home in advance of an approaching storm, your homeowner's policy may cover your living expenses under a so-called "Additional Living Expenses" clause. Check now to see if your policy offers this benefit—and if you do need to bug out, be sure to save all receipts from hotels and restaurants for later reimbursement.