If you live in a hurricane zone, now is the time to take action. You can't prevent a storm from battering your home, but having the right insurance can help protect you financially against disaster. Take these four steps to make sure you have what you need — and get paid if your home is hit.
No single insurance policy will cover all types of hurricane damage. For example, most homeowners insurance policies won't pay for flood damage, so if you want coverage, you'll need. Don't wait until a storm is on the horizon: It can take up to 30 days for a new flood insurance policy to go into effect.
You might not think you need flood insurance if your mortgage lender doesn't require it and your home isn't in a "special flood hazard area," the Federal Emerg
ency Management Agency's term for high-risk flood zones. But it's still worth considering, says Camille Garcia, director of communications and public affairs at the Insurance Council of Texas. She notes that most of the homes that flooded in Texas during Hurricane Harvey were located outside of high-risk flood zones.
Another common source of hurricane damage is wind. While most standard homeowners policies cover wind damage, it may be specifically excluded in some parts of the country, says Joe Meisinger, chief underwriting officer and head of national products for person
al insurance at Travelers. In these primarily coastal areas, you may need a separate windstorm policy. Finally, don't forget about your car. To cover flood damage, you'll need comprehensive-auto-insurance, an optional coverage type. Check your declarations page or ask your agent whether you have it.
"The last year, so many of us have sheltered at home [and] done a lot of DIY projects," Garcia says. If this is you, "make sure that your agent is aware of that." If you've made significant upgrades to your home, she explains, you might need to increase your policy limits to be fully covered. Another reason you might need more coverage: It may now be more expensive to repair or rebuild your home than when you bought the policy. "The cost of labor and the cost of lumber … have gone up considerably because we are in this housing frenzy right now," Garcia says. And if a hurricane devastates a particular region, that can spark even higher costs locally because contractors and materials are in such demand.
To make sure your dwelling coverage will be sufficient to rebuild your home, ask your insurer about extended replacement coverage. With this optional add-on, your insurer will pay a set amount above your dwelling limit if rebuilding ends up costing more than expected.
"I think of it as a security blanket," Meisinger says. "If something happened and you didn't get a calculation 100% right, it gives you that extra layer of security."
For some homeowners, a hurricane claim could cost significantly more than other claims. "If you live in a hurricane-prone area, you could very likely have a separate hurricane deductible you'd have to pay out-of-pocket," says Jessica Hanna, senior vice president of public affairs at the American Property Casualty Insurance Association, an industry trade group. Meisinger notes that these separate deductibles may apply to hurricanes, named storms or wind, and could be a fixed dollar amount or a percentage of your dwelling coverage. For example, say your policy has a $250,000 dwelling coverage limit and a 2% hurricane deductible. You would be responsible for the first $5,000 worth of damage before your insurance company would pay out for a hurricane-related claim. Keep in mind that multiple deductibles may apply to damage from a single storm. "Let's say the wind took off your roof, but you also have ... flooding in your home," Garcia says. You'd need to file two different claims — one with your homeowners or windstorm insurer, and one with your flood insurance company. That means paying both deductibles. Raising deductibles can save you money on your premiums, but the strategy could backfire if you'd have trouble coming up with enough cash to cover the deductibles in an emergency.
Imagine coming home after a hurricane and finding a pile of rubble. When filing a claim, would you remember every kitchen gadget or pair of shoes that needs to be replaced? Spare yourself the hassle by creating a home inventory in advance. "Use a smartphone to take pictures and videos of your belongings, including … your furniture, appliances, clothes, jewelry and art," Hanna says. She recommends uploading the files to a cloud storage device for easy access. Whatever you do, don't wait until the last minute to make hurricane-preparation. When it comes to keeping your home, family and finances safe, Garcia says, "Preparation is key to everything."
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