By Shinae Young
During 2017, the United States had three hurricanes, which resulted in damage costs of more than $281 billion dollars, according to a May 24 article in The New York Times. Recently, as Hurricane Michael swept through the major part of the East Coast, the U.S. faced yet another tremendous amount of damage to millions of residences and businesses.
Here in the Midwest, we have tornadoes, which come with major flooding and wind damages.
The year 2016 really was the “year of the flood” in the U.S. In total, 19 separate floods swamped the nation that year, the most in a single year since records began in 1980.
The bottom line is, are you ready in the event a natural disaster hits your home?
If a homeowner makes a single homeowner’s insurance claim it leads to a nine percent premium increase on average across the U.S. The premium increases vary significantly by state, according to the analysis by InsuranceQuotes.com, a company owned by Bankrate.
Unfortunately, many homeowners are under-insured for natural disasters, particularly for flood damage, which isn’t covered under most policies. You can buy a separate flood insurance policy, but few homeowners do. Even if you believe you have full coverage, it is important to review and update your policy regularly, at least once a year. Most often, homeowners do not have a copy of their policy in hand since the mortgage companies are paying the annual premium from the escrow account. So take the time now before a flood, fire, or some other disaster strikes to make sure you have the right type and amount of homeowners insurance.
Here are a few steps to review your coverage:
1. Know what’s covered: The standard homeowner’s policies typically cover damage from wind, fire, explosions, lightning strikes, hail, and other perils. If your home is uninhabitable after a storm, your homeowners or renters insurance should also reimburse you for living expenses, such as a hotel room or meals out.
2. Know what’s excluded: Damage from floods, ground movement, such as earthquakes and sinkholes, and water backups are not included in homeowner’s policies. Ask your insurance agent for more detailed information on flood and earthquake insurance.
3. Get credit for updates, for example, installing impact-resistant windows, doors, and/or insulated or energy efficient roofs.
4. Opt for full replacement: Make sure your insurance will pay for the cost of rebuilding your home rather than insuring your home for its actual cash or market value, i.e. the amount it would cost to replace it minus depreciation.
5. Shop around: When it’s time to renew your policy, compare the same coverage offered by the insurers at the top of homeowner’s insurance ratings.
Last but not least, make an inventory list of your possessions and keep it up to date. This will make it easy to identify whether or not you have a sufficient insurance policy. It will also speed up the insurance claims process by helping to provide proof of losses for tax or disaster-aid purposes.
If you have any questions regarding homeowner’s insurance coverage or need detailed information, please contact the financial counselors at Financial Readiness Office, Army Community Service, 573.596.0212.
(Editor’s note: Young is the Financial Readiness Program manager.)