A standard homeowners policy covers the structure of your house for disasters such as hurricanes and windstorms, along with a host of other disasters. It’s important to understand the elements that might affect your insurance payout after a hurricane, and adjust your policies accordingly.
Check your policy limit and make sure the amount is enough to rebuild your home – The cost of rebuilding or extensively repairing a home is dependent on a number of factors—and, remember that the real estate value of a house is not the same as the cost to rebuild. Therefore, it pays to understand in detail what it will cost to rebuild in the event your house is severely damaged or destroyed and make sure your insurance will cover that amount.
Unlike the standard “dollar deductible” on a homeowner’s policy, a hurricane or windstorm deductible is usually expressed as a percentage, generally from 1%- 5% of the insured value of the structure of your home. Like any deductible, a hurricane or windstorm deductible will affect the bottom line of your insurance payout. If you have a high hurricane or windstorm deductible consider putting aside the additional money you may need to rebuild your home.
Check the Declarations (front) page of your Homeowners Policy. A hurricane deductible is applied only to hurricanes, whereas a windstorm deductible applies to any type of wind. If your policy has a hurricane deductible, it will clearly state the specific “trigger” that would cause the deductible to go into effect.
Understand what disasters your insurance policy covers—and those it doesn’t – Standard homeowners insurance policies provide coverage for hurricanes, wind, theft, fire, explosion, lightning strikes and many other disasters. However, all policies also list exclusions, which are events NOT covered by the policy. One common exclusion is flooding. People tend to underestimate this risk, but 90% of all natural disasters—especially hurricanes—include some form of flooding. If you live in a flood zone or a hurricane-prone area, a separate flood insurance policy is a must. Another common exclusion is sewer backups (which is also not covered by flood insurance) Sewer backup insurance is also good to have in hurricane-prone areas.
If you own a co-op apartment or condo – check with your management company and the bylaws to understand what is covered under the building’s master insurance policy versus what damages you need to cover in your own co-op or condo owner’s insurance policy.
Imagine the cost of repurchasing all of your furniture, clothing and other personal possessions. Whether you have homeowner’s insurance or renter’s insurance, your policy provides protection against loss or damage due to a hurricane. Homeowners policies provide approximately 50 to 70% of the amount of insurance you have on the structure of your home. If you rent, know that your landlord’s insurance will only cover the structure of your home—you need a renter’s policy to protect your possessions against loss or damage.
Whether you own or rent your home creating a Home Inventory will enable you to determine the value of your possessions. Cross-check the inventory total with your policy to see if you are sufficiently insured for either replacement cost or cash value of the items. The inventory will also speed the insurance claims process and help provide proof of losses for tax or disaster aid purposes.
Be sure your policy provides enough coverage for Additional living expenses (ALE) – the extra costs incurred if you need to live elsewhere because your home is rendered uninhabitable as the result of a hurricane (or any other insured disaster). While your home or apartment is being repaired or rebuilt, ALE covers hotel bills, restaurant meals, etc.—expenses over and above what your customary living expenses would be at home.
Generally, the ALE policy limit is 20% of the amount of insurance coverage on the structure of your home. Standard renters’ policies also provide for ALE. Depending on where you live (which may dictate your expenses), you may want to consider a higher ALE. Also review the time limits in your policy as reimbursements may be limited to a specified amount of time.
If you rent out part of your home, ALE coverage also reimburses you for lost rental income. Make sure your policy reflects the current amount of your rental income.
Content Source: iii.org