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News of a named storm heading our way puts people in motion, checking coverages and asking questions. However, now is the time to make sure you have the coverage you need and to make necessary changes because many insurers won’t sell policies when storms are approaching.
Start out by asking yourself these questions today:
1. Do I have an adequate Dwelling coverage limit?
Take out your Homeowners insurance policy and look for the “Declarations Page.” This is the summary of coverages you have in place.
Your Coverage A, commonly called dwelling coverage, is the maximum amount your insurance company will pay you to replace your home.
Is it enough to rebuild and replace your home? Remember that the cost to replace your home is not your home’s market value (or the amount you could receive if you sold your home). Replacing your home involves cleaning up the site where your home used to sit and buying building materials at current-market costs to rebuild.
If you’re not sure your Coverage A is adequate, talk with an Insurance Agent.
2. Do you know what Ordinance and Law is, and do you have the coverage?
While Ordinance and Law coverage isn’t a topic of conversation in some parts of the country, that’s not the case everywhere.
Building codes change over time (they changed dramatically following Hurricane Andrew in 1992). Subsequently, the cost to repair and rebuild homes may dramatically increase as building codes requires owners to bring homes into compliance (think structural, electrical, heating, ventilation, air conditioning and plumbing).
Perhaps most costly of all, building code changes may require elevating above the flood line before building a new home.
Ordinance and Law coverage can provide coverage for these costs in the event of a covered loss. If you don’t have this coverage, talk with an Agent.
3. Do you understand how the Hurricane Deductible works?
Your Florida Homeowners policy features a “Hurricane Deductible” that is a percentage of your Coverage A limits, versus a flat dollar amount.
A common Hurricane Deductible is 2% of your Coverage A. Therefore, if you own a $1 million home, your Hurricane Deductible is $20,000. If water or wind from a named storm damages your home, you are responsible for paying your deductible amount before other coverage starts paying.
Check to see if you have a Windstorm Deductible, which is a percentage of Coverage A.
It’s important to know your deductible amounts and that you can afford them.
If you don’t know how much your deductible amounts are, talk with an Agent.
4. Do you know the difference between Actual Cash Value and Replacement Cost when it comes to your personal possessions?
Actual Cash Value pays damages equal to the replacement value of damaged property, minus depreciation. For example, if you have a five-year old refrigerator, its actual cash value is lower than buying a new refrigerator.
Replacement Cost coverage pays the dollar amount needed to replace damaged personal property without deductible for depreciation.
Regardless of which you choose (though I always recommend Replacement Cost for obvious reasons), know that there is a limit on the amount of money an insurer will pay for Personal Property losses—it’s on your policy’s Declarations Page. If this amount isn’t enough to replace your Personal Property, call an Agent right away.
5. Do you have Flood insurance?
Many insurance policies don't cover flooding unless you have purchased a separate Flood insurance policy. If you live anywhere--hurricane zone or not--that sees a lot of flooding, you should consider purchasing Flood insurance.
6. Are there Wind Damage exclusions on your policy?
Check for Wind Damage exclusions, and if your standard policy doesn't cover Wind damage, buy Windstorm insurance from your state's insurance program. For instance, in hurricane-prone states--Louisiana, Texas and Florida--some standard Home insurance policies won't pay for windstorm damage.
7. Do you fully understand your policy’s exclusions when it comes to a hurricane?
Other exclusions can include power failure, which can contribute to spoilage of food (some carriers do offer endorsements for this) or earth movement like a mudslide.
I don’t mean to disrupt your morning or evening as you read this, but I do want you to know that some action on your part right now may save heartache later.