If the past 12 months have taught homeowners anything, it should be that disaster can strike at a moment’s notice. Last year’s Superstorm Sandy along the East Coast and this spring’s tornado in Moore, Okla., caused widespread devastation, destroying many homes and leaving others heavily damaged.
In the aftermath, unprepared homeowners found themselves underinsured. In the Northeast, Sandy caused flooding, which isn’t covered in standard home insurance policies, in many areas that aren’t normally considered at risk for such disasters. Consider this fact: The Insurance Information Institute (iii.org) pegs insured losses from Superstorm Sandy at around $18 billion (not counting losses covered by federal flood insurance). Total damage from the storm has been estimated at $50 billion.
That’s a pretty huge disparity, even considering the flood insurance claims that aren’t included. What is the difference between covered losses and ones that homeowners will have to figure out themselves? In many cases, it is as simple as anticipating what could happen and being prepared.
Early estimates in Moore placed the damage at more than $2 billion, with as many as 13,000 homes affected by the high winds that cut a 17-mile swath of destruction through the region. Much of that damage likely will be covered, but only if homeowners and renters had adequate protection.
When should you prepare for tornadoes?
The answer to that question isn’t difficult. You should prepare long before it’s on the horizon. That means different things in different parts of the country, because the threats can be different.
The Midwest, for example, is more prone to tornadoes than other regions. That means you should dig out your home insurance policy annually to make sure you’re still fully covered for the worst.
Is your dwelling coverage, for example, set high enough to rebuild your house completely should it be destroyed by a covered peril? Have you made any updates in the past year that might increase the value of the home, such as adding granite countertops? Have you scheduled an endorsement to give you coverage for high-value items such as jewelry and artwork? Have you updated the home inventory of your possessions?
Don’t wait until the local weather forecaster has issued a tornado warning to resolve these questions. Do it now, while conditions are calm.
It’s also not a bad idea, while you’re reviewing your policy, coverages and home inventory to shop your home insurance coverage to see whether you’re getting protection at the right price.
What about other disasters?
Tornadoes aren’t the only natural disasters that can threaten a home. In the West, earthquakes and mudslides can cause trouble. Along the East Coast, hurricanes are a major concern, in particular because of the threat of flood damage.
To repeat, floods typically are not covered by standard home insurance policies. The same is true for earthquakes and mudslides.
All require separate policies. Check with your agent now if you believe your home could be threatened by any of the three. This is especially true for flood policies. They typically don’t take effect for 30 days after they’re purchased.
Natural disasters, by their very nature, defy most predictions, leaving homes in ruins and toppling family finances. A little preparation now can go a long way toward preserving your finances and giving you peace of mind in case disaster strikes later.