Understand Your Homeowner's Insurance Policy:
Be prepared before the storm hits
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Many victims of Katrina thought they were covered by their insurance policies. Sadly, as we all now know, many did not read or understand their policies "fine print." When they went to file their claims, many were denied. Their dreams sit in ruin because they lack the funds to rebuild.
While we here in Kansas City may not have to worry about Category 5 hurricanes, the possibility of severe storms does exist. Living in the mid-West brings with it the threat of damaging winds, pelting hail, ice storms or roaring flood water, causing hundreds of million of dollars of damage to property across the region.
Your first priority should be to protect your family and your property. You should also guard against any adverse financial consequences of the disaster if possible.
Insurance offers financial protection against storm damage, but you need the proper insurance in the right amounts to protect against property loss. Many times consumers fail to make proper insurance arrangements for themselves or their property before a storm hits.
The important thing is to begin planning now — before the storms hit! Here's how to know if you have the right homeowner's/renter's insurance.
Homeowners/Renters
- Check your coverage. Not all policies cover these expenses: water and windstorm damage, debris or tree removal, sewer back-up due to flooding or sump pump failure, additional living expenses if disaster forces you from your home.
- Check limits, including contents' coverage.
- Get a free copy of the Homeowners Shoppers Guide from the Kansas Insurance Department for more details.
Homeowners:
- Minimum recommendation: full replacement or replacement cost coverage. This means the structure can be replaced up to the limits specified in the policy. Use current appraised value to be sure the policy reflects the real replacement cost and update the policy to include any home improvements or remodeling that has been done. Become familiar with the deductibles on your policy.
- Buy replacement cost on possessions: Very important! A standard policy only pays for the depreciated value not what it would cost you to replace the item at today’s prices. Use a home inventory to make sure you have adequate coverage to cover the value of your property.
Renters:
- You should buy renter’s insurance that pays for damaged, destroyed, or stolen personal property. The landlord’s insurance won’t cover damage to or loss of your possessions.
Special coverage
You may need additional coverage for floods, earthquakes, home offices, specific jewelry, collectibles, artwork, furs or other high-dollar items. Ask you insurance agent about this additional coverage.
Property records
Update your inventory at least annually. Photograph and videotape each room and the exterior of your home. List model and serial numbers and attach sales receipts. Be sure to include items in the basement or attic. Photograph the landscaping and note any special building materials used inside or out. Photograph cars, boats and recreational vehicles and also any outbuildings on your property. (There are computer software programs available to make this job easier for you and to update annually.)
Safeguard your records
If you evacuate, take insurance policies and an inventory. Keep copies of both, including receipts, somewhere outside your home.
This inventory list will help you prove the value of what you owned if your possessions are damaged or destroyed and a claim is filed. Make sure to leave a copy with a relative or friend or in a safe deposit box.
Federal flood insurance
Consider buying federal flood insurance if damage from rising water is possible. Homeowners, farm and ranch, renters, condominium, and mobile home policies DO NOT cover damage caused by rising waters.
Auto policies for storm damage
Check your auto policy. Comprehensive coverage ("other than collision") pays if a storm or flood damages your car.
After the storm
- Survey the damage and take photographs or video of damaged areas, if possible.
- Report the damages to your agent or insurance company as soon as possible.
- Make a note of when you called and the person you talked to.
- Make only temporary or emergency repairs as needed to protect your property from further damage. This would include boarding up broken windows, placing plastic over the roof where it is leaking, and drying out wet carpets and furniture. Keep all receipts for materials used and a note of hours spent making repairs.
- Do not make permanent repairs until you are authorized to do so by the adjuster.
- Do not discard damaged items until a claims adjuster sees them.
- If you must move out of your home, keep your receipts of hotel bills and meals. Your policy may reimburse these additional living expenses.
Settling Your Claim
- Be present when your adjuster inspects your property.
- If a disaster occurs, adjusters will handle the largest losses first, but will work to handle all claims as quickly as possible. If you do not hear from your adjuster in a reasonable length of time, contact your agent or company again.
- Be careful of "public" adjusters, who offer to appraise your damage for a percentage of the claim value. The Kansas Insurance Department offers free services to help you obtain a fair settlement.
- Do not accept an unfair settlement. If you cannot reach an agreement, call the insurance company. If you are still not satisfied, contact our Consumer Assistance Division at 1-800-432-2484.
- Beware of "fly-by-night" contractors. Get more than one bid and hire a local reputable contractor to do the repair.
Basic coverages
Coverage for the Structure of your Home
This pays to repair or rebuild if it is damaged or destroyed by fire, hurricane, wind, hail, lightning or other disaster listed in your policy. Separate coverage must be obtained for flood or earthquake protection.
Be sure to obtain "full replacement cost" coverage for your home. Note. You do not need to insure the land, only the physical structures and contents.
Most policies also cover "detached" structures, (i.e., garage or shed) up to 10% of the coverage on the structure. Additional coverage can be purchased.
Coverage for your personal property
This pays to replace the contents of your home if items are stolen, damaged or destroyed by a covered risk. Most policies cover up to 70% of the amount of your coverage on the structure. If you have specialty items (jewelry, electronics, antiques) or collectibles (stamps, coins, figurines) you may need a separate "Rider" for those items. Consult with your homeowners' insurance agent to confirm that your coverage is adequate.
Consider videotaping and/or completing a detailed inventory listing of the contents of your home. Keep this documentation off premises, such as in a safe deposit box.
Liability protection
This covers you against lawsuits for bodily injury or property damage that you, family members or your pets cause to other people. Liability limits generally start at $100,000. It is recommended to have at least $300,000 in liability protection.
You can purchase an umbrella liability policy, which provides coverage beyond your auto and homeowners liability protection. This coverage costs about $150 to $250 per year for a $1,000,000 policy.
Ways to reduce the cost of homeowner's insurance
- Shop around for competitive quotes. Visit Insure.Com or Quicken
- Check the financial health of insurance companies with rating companies such as A. M. Best Company and Standard and Poor’s
- Increase your deductibles — deductibles of at least $500 are recommended. If you can afford to raise it to $1,000, you may save as much as 25% according to the Insurance Information Institute.
- If possible, purchase auto, homeowners and umbrella liability coverages through the same company. Inquire about discounts.
Source: Kansas Commissioner of Insurance
420 SW 9th Street
Topeka, KS 66612
785-296-3071 or 800-432-2484
E-mail address: commissioner@ksinsurance.org
Bulletin: Before and After the Storm, A Home Insurance Guide
