Natural Disasters, Are You Covered By Your Insurance?

People usually only realize how important it is to have natural disaster insurance when they strike. Thousands of people who lost their homes, cars and other property after Hurricane Sandy. Some of them were able to recover their losses from their insurance while others were left with nothing.

The National Association of Insurance Commissioners reported that almost half of U.S. residents are not prepared for disasters. About 48 percent never did an inventory of their belongings. While there are others who claimed they had the checklist, 32 percent of them had not taken any pictures of these possessions, and 58 percent did not have proof that can validate ownership like receipts.

The Rocky Mountain Insurance Information Association found that 2005 was the most costly year for insurance companies when it comes to natural disaster claims. About 27 major tropical storms hit the country, and 15 were hurricanes. Hurricane Katrina was among the most expensive storms with $48.4 billion in insured losses that year.

Meanwhile, one of the strongest and the most costly earthquakes that hit the U.S. was the Northridge earthquake in 1994. It shook California and measured 6.8 on the Richter scale. This natural disaster resulted in the destruction of over 8,000 homes, 12,000 injuries and 60 deaths.

The NAIC also revealed that about 55 percent of consumers do not have sewer line break insurance, 56 percent do not have water line insurance, 65 percent do not have flood coverage, and 69 percent do not have earthquake insurance. The organization pointed out that there are many vulnerable consumers who live in disaster-prone areas and do not have the right type of insurance coverage.

Preparing for the Disaster

When choosing the right kind of natural disaster coverage, consumers should take their location into account. They should be familiar with the type of natural disasters that may occur. This may include hurricanes, tornadoes, wildfire, floods, earthquakes or sinkholes.

Every state provides specific guides for residents. In Colorado, the state Department of Regulatory Agency or DORA provides information about disaster insurance that residents should be prepared for. In New York, the NYS Department of Financial Services also provides residents a guide for preparing for disasters

According to these government departments, consumers should make it a habit to review their renters or homeowners policy before any disaster strikes. Rebuilding homes and securing new properties can be very expensive and time consuming. With comprehensive insurance coverage, people can be sure that they are protected all the time.

Before a disaster strikes, consumers have to do the following:

· Keep an inventory.

Homeowners should be able to list all of their belongings. They have to include all furniture, artwork, electronics, large and small appliances, linens, silverware, dining tables, collectibles, curtains, vanity, exercise equipment, bicycles and anything else of value. It is best that they keep the list in a safe place or better yet send it to their emails or to their closest friends or relatives.

· Assess properties.

Homeowners have to make sure that their insurance policies are up to date. They should also double check to make sure their valuables are covered.

· Keep insurance documents electronically.

There is no safer way to keep documents than doing so electronically. To make sure that these important documents never get lost in cases of disaster, have them scanned and emailed. Aside from the insurance documents, properties and any items’ receipt should also be kept as proof of ownership.

Are you covered?

When purchasing natural disaster insurance, consumers should make sure that they are getting the right protection. The following are the available natural disaster insurance coverage policies they may buy.

· Flood

Generally, homeowner’s insurance does not cover flood damage. With this, the U.S. government came up with the National Flood Insurance Program that will help residential and commercial property owners protect their assets. The NFIP has a website that offers flood insurance for home and business owners including renters. However, they have to be located in areas that participate in the program. These communities are those that actively help reduce the risk of flooding in the area.

NFIP flood insurance covers the whole building including its foundation, detached garages, permanently installed cabinets, paneling, bookcases, wallboards and carpeting. It also includes window blinds, built-in appliances, cooking stoves, refrigerators, water heaters, furnaces, central air conditioning systems and the building’s foundation. The insurance also covers debris removal in addition to valuable personal items such as furs and original artwork up to $2,500, food freezers including content, dryers and washers, carpets, portable and window air conditioners, curtains, electronic equipment, furniture, clothing and other personal belongings.

· Wind

Wind coverage is typically a part of standard insurance policies. However, there are some parts of the U.S. that require consumers to purchase this separately. This includes the states of Florida and Texas. According to the Consumer Federation of America, many consumers may not know about hurricane deductibles. There are actually special deductibles applicable when the National Weather Service declares a storm to be a hurricane. These are usually one to five percent of the property’s value. Deductibles in states like Florida can go up even higher.

· Earthquakes

Damages due to earthquakes are not a part of a standard homeowner’s insurance. Consumers need to have a freestanding policy. In California, consumers buy earthquake insurance from the California Earthquake Authority. Unfortunately, consumers often end up complaining about the hefty deductibles. This is because they have to pay 10 to 15 percent of the home’s value. With this, some residents find it impractical. As a solution, experts recommend that homeowners who wish to protect their homes and properties against natural disasters like earthquakes have to carefully assess their needs while taking into account the property’s soil condition, the house’s age and how it was built.

· Fires

Generally, a standard homeowner’s policy already includes fire coverage. The only difference is the extent of coverage. With this, policy holders should review their policies to make sure they get all the coverage they need. Doing so will make them aware of what else they need to purchase to ensure full coverage. Nevertheless, the claims process remains the same.

The insurance company’s adjuster will assess the damage that will be used as a basis for reimbursement. The company will offer an amount to the policy holder. Consumers who are dissatisfied with the assessment may use a public adjuster instead. This professional will evaluate the damaged property’s value and negotiate with the insurance provider. However, they usually charge 10 to 15 percent of the claim. Alternatively, consumers may seek help from the state insurance commissioner’s office. With this, they can be sure of getting a good deal.

Should you get additional coverage?

The value of homes and other belongings changes almost every year. There are some possessions that may have become more expensive than when it was bought. Homes that undergo improvements definitely have higher value while the same is not true for computers and other major appliances. With this, it is important that consumers know when they need to increase or cut down on their coverage. They also have to be aware of the coverage limits. They can purchase more coverage if the existing policy does not meet the home and its content’s value. Doing so ensures consumers that they are fully protected no matter what kind of natural disasters strike.

Sources:

DORA
http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheadername1=Content-Disposition&blobheadername2=Content-Type&blobheadervalue1=inline%3B+filename%3D%22Are+You+Covered%3F+Disasters+and+Insurance.pdf%22&blobheadervalue2=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251815248857&ssbinary=true)

California Earthquake Authority
http://www.earthquakeauthority.com/index.aspx?id=1&pid=1

National Flood Insurance Program
http://www.floodsmart.gov/floodsmart/pages/residential_coverage/whats_covered.jsp