Insurance Tips to Follow Before the Hurricane
If you live along the coast of the eastern or southern United States, it’s impossible to know when a storm like Katrina or Sandy will hit and cause widespread destruction. That doesn’t mean you can’t be as prepared as possible from an insurance standpoint. Of course, it’s absolutely crucial that you purchase flood insurance since flood damage isn’t covered by homeowner’s insurance. Beyond that, reviewing your insurance coverage and keeping these tips in mind can help you to be better prepared in the event a storm hits your area.
Check for a hurricane deductible. Does your insurance policy include some type of deductible in the event of a hurricane or wind event? That has happened in Florida, South Carolina, Louisiana and elsewhere in the aftermath of major hurricanes since Hurricane Andrew devastated sections of south Florida in 1992. Your policy could include a deductible of between 1 and 5 percent of the value of your home, or a flat amount such as $10,000 or $20,000. Talk to your agent about an umbrella policy to make up the difference, if you are concerned about coming up with that deductible.
Flood policy boost. The goal of any homeowner is to have a new home and all new belongings in the event of a disaster. However, if that disaster is a flood, policies under the National Flood Insurance Program are capped at $250,000 for the structure and $100,000 for contents. If that isn’t sufficient for your home, it’s possible to get additional coverage to boost your total flood insurance. Check with your insurance agent to see if your flood coverage is sufficient.
Guaranteed replacement costs. Let’s assume that a devastating hurricane has seriously damaged your home. Your insurer has approved payment for a new home. Unfortunately, construction costs have skyrocketed since the storm and your insurance payout will be 20 to 30 percent short of rebuilding a structure similar to the one you lost. This can be avoided by making sure you have the proper coverage. The language used by different insurers can vary, but the most common choices include extended replacement cost. This pays about 20 to 25 percent above the coverage limits for your house. Some insurers offer guaranteed replacement costs, which rebuilds a house no matter the cost. For example, extended replacement cost for possessions that were lost will pay about 20 to 25 percent above the policy limits to account for higher costs following a storm. Even better is guaranteed replacement costs. The important issue to remember is to go over your policy carefully with your agent and make sure you understand the coverage in place in the event your home or some of your possessions must be replaced. If it doesn’t seem sufficient, ask about how to supplement that coverage.