Even with adequate time to prepare for a disaster, you still may suffer significant, unavoidable damage to your property. That’s when insurance for renters or homeowners can be a big help. Also, be certain that health insurance policies are current and meet the needs of your family members.
Many people affected by disasters have been underinsured – or worse – not insured at all. For example, homeowners insurance doesn’t cover floods and some other major disasters. Make sure you comparison shop for the insurance you need to protect against the hazards you may face (including type of coverage, amount of coverage, and hazard covered – flood, earthquake).
In your search for home owner's insurance, you should consider the following:
- Investigate buying a guaranteed replacement cost policy. When and where available, these policies can pay to rebuild your house, including improvements, at today's prices, regardless of the limits of the policy.
- Have your home periodically reappraised to be sure the policy reflects the real replacement cost.
Update the policy to include any home improvements, such as basement refinishing. Annual automatic increases may not be enough to cover these.
- Buy a policy that covers the replacement cost of your possessions. Standard coverage only pays for the actual cash value (replacement cost discounted for age or use).
- Be very clear about what the policy will and will not cover, and how the deductibles work.
In your search for renter's insurance, you should consider the following:
- Make sure you purchase renter's insurance that pays for damaged, destroyed, or stolen personal property. Your landlord's insurance won't cover damage to or loss of your possessions. Also, consider special coverage like flood insurance for your belongings.
- Be clear about what a policy will cover. Some policies cover more than others. For example, will the policy pay for living expenses if you have to live somewhere else temporarily, or for damage from sewer backup?
Since standard homeowners insurance doesn't cover flooding, it's important to have protection from the floods associated with hurricanes, tropical storms, heavy rains and other conditions that impact the U.S.
National Flood Insurance Program (NFIP)
In 1968, Congress created the National Flood Insurance Program (NFIP) to help provide a means for property owners to financially protect themselves. The NFIP offers flood insurance to homeowners, renters, and business owners if their community participates in the NFIP. Participating communities agree to adopt and enforce ordinances that meet or exceed FEMA requirements to reduce the risk of flooding.
The FloodSmart Campaign is an integrated consumer awareness and education campaign launched by the National Flood Insurance Program (NFIP) in 2004 to alert property owners to their flood risk and encourage them to contact their insurance agents to protect their property and ensure their financial security with flood insurance. The campaign also works with members of the insurance community to educate them about the importance of flood insurance coverage for their clients.
At FloodSmart.gov, consumers can see just how much damage flooding can cause, assess their individual flood risk and learn more about the claims process. Consumers can also use the “Find an Agent” tool on FloodSmart.gov or call a "1-800 phone number" to locate an agent in their area and obtain a flood insurance policy.
FloodSmart.gov - FAQs
Consider these questions when purchasing a policy.
Most residential insurance policies do not cover earthquake damage - a separate policy is required. Without earthquake insurance to help you recover from catastrophic damage, you will be responsible for all costs to repair or rebuild your home, to replace your personal property, and to live and eat elsewhere.
While it's nearly impossible to predict where the next quake will hit, homeowners can get a rough idea of their risk by using seismic hazard maps from the U.S. Geological Survey. As one would expect, the biggest high-risk zone is along the West Coast in California, Oregon and Washington. But there are also hot spots in Nevada, Utah and Wyoming. Further east, a major hazard area called the New Madrid Seismic Zone straddles parts of Illinois, Missouri, Arkansas, Tennessee and Kentucky. South Carolina has its own red zone. And much of Hawaii and Alaska are also rated high risk.
Premiums and Deductibles
As with any insurance policy, the cost of earthquake coverage is based on the probability that you'll have damage to your home. Premiums for earthquake insurance vary widely based on a number of factors.
Where you live is what matters most. Coverage in high-risk areas is much more expensive than in areas that have never had a significant quake. But the age, construction type and value of your house also make a difference.
Earthquake Insurance premiums typically are high ($5,000 annually for a $200,000 home), and deductibles may range from 5% to 20% of the policy's coverage.
California Earthquake Authority - The CEA offers earthquake insurance policies to help homeowners, mobile home owners, condominium owners, and renters recover from damaging earthquakes.
USGS Publications - USGS Geologic Hazards Science Center
- Image Source: http://www.wilmingtonnc.gov/Home/News/tabid/429/ItemID/1160/View/Details/Default.aspx [Accessed Marhc 23, 2014]
- Image Source: FloodSmart.gov – Website: http://www.floodsmart.gov/floodsmart/
- FloodSmart.gov – FAQS – Considering Purchasing a Policy: http://www.floodsmart.gov/floodsmart/pages/faqs/faqs_considering.jsp
- FloodSmart.gov – Email Subscriptions: http://www.floodsmart.gov/floodsmart/pages/media_resources/subscribe.jsp
- California Earthquake Authority (CEA) – Website: http://www.earthquakeauthority.com