Hurricane Florence; Insurance Woes

September 14, 2018
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As Hurricane Florence barrels toward the Southeast Coast, homeowners in North Carolina, South Carolina, and Virginia are bracing for potentially huge damage to their residences.  According to estimates by CoreLogic, which provides risk data to major insurance companies, if Florence maintains its Category 2 status, residents could face as much as $62.4 billion in replacement costs from the storm surge.

According to Consumer Reports, many homeowners are underinsured for natural disasters, particularly for flooding damage, which isn’t covered under most policies.  Homeowners need to buy a separate flood insurance policy, but few actually do. 

The non-profit agency known for their unbiased product ratings and reviews, says even if you believe you have full coverage, it’s important to review and update your policy regularly.  It might be a good idea to check now.

Consumer Reports recently surveyed 19,100 members who live in areas hit by Hurricane Harvey, Hurricane Irma, or the California wildfires last year.  The organization believes those people are in a unique position to tell you what you need to do to protect your home, family, and belongings before disaster strikes.  45% of those in Irma’s wake had property damage, as did 15% of those affected by Hurricane Harvey. Although only 2% of the people in areas swept by California’s wildfires had property damage, 26% of them had their homes completely destroyed.

From the Consumer Reports website, here are some lessons CR members learned that could protect you from devastating financial loss if disaster—natural or otherwise—strikes: 

1) Review Your Coverage: It's important to know what you have covered and what you don't. Sometimes insurers change your policy when you renew.

    A) Know what’s covered: While there are often exceptions for people who live near the coast, standard homeowners policies typically cover damage from wind, fire, explosions (such as from a propane tank), lightning strikes, hail, and other perils. That means that hurricanes, tornadoes, and wildfires should be covered by most policies. Any outbuildings on your property such as a garage, shed, or fence, are also usually covered. Damage to outbuildings was the most common problem reported by our survey respondents.  If your home is uninhabitable after a storm, check to see if your insurance will reimburse you for living expenses, such as a hotel room or meals out.  Also see if theft or vandalism is covered by your policy.

    B) Know what’s NOT covered: Damage from floods, ground movement (such as earthquakes and sinkholes), and water backups isn’t included in homeowners policies. Don’t forget to factor in the deductible. Most homeowners policies are subject to a deductible of $500 to $1,500.  Some are a percentage of the policy, which could be a big expence. If your home is insured for $350,000 and your policy has a 5 percent deductible, you’ll have to pay $17,500 out of pocket on a covered claim. Other exclusions to keep in mind include hail damage to the roof, which may not be covered if the roof is more than 10 years old.  You might also need a special personal property endorsement for items like jewelry, artwork, and furs.

2) Get Credit for Updates to Your Home:  For example, installing impact-resistant windows and doors if you live in a hurricane zone could earn you as much as a 45%discount on your premiums

3) Opt for Full Replacement:  Consumer Reports says 18% of the people in their survey said they were underinsured, which can be a serious problem when a home is a total loss.  Rather than insuring your home for its actual cash or market value, you could opt to insure for full replacement cost.  That usually costs about 10-20% more per year, but it will pay to rebuild your home exactly as it was, even if the amount exceeds the estimated value

4) Shop Around: When it’s time to renew your policy, Consumer Reports says you should compare the same coverage offered by the insurers at the top of their homeowners insurance ratings.  Amica Mutual Insurance Company and USAA are among the highest-rated homeowners insurance companies reported by members who filed claims of $10,000 or more between 2013 and 2016. They also received the highest marks in all categories.

5) Ease the Claims Process by taking an inventory of your belongings and keeping it up to date. That will make it easy to see whether you’re sufficiently insured and could speed the insurance claims process by helping to provide proof of losses for tax or disaster-aid purposes.  Take photos or video of your possessions.

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More details are available at Consumer Reports