Insurance, News

Protect Your Home Against Natural Disasters

What It Really Costs to Protect Your Home Against Natural Disasters
The insurance industry has very precise parameters for what defines a natural disaster, and how much they cost. According to the Insurance Information Institute, the term “catastrophe” in the property insurance industry means a single or series of incidents caused by natural or man-made disasters that are unusually severe.

The insurance industry says a catastrophe has occurred when claims are expected to reach a certain financial limit, and more than a specified number of policyholders and insurance companies are affected. Although the insurance industry’s definition of catastrophe applies to all disasters, not all disasters cost the same amount of money; and depending on the disaster, it might be covered by standard insurance policies.

How much you’ll pay for insurance varies depending on your location and the age of your home. That can feel like a big expense, but knowing you’ll be reimbursed if something happens to your most valuable investment can be priceless. Plus, your mortgage company may require that you keep a certain level of homeowners insurance.
The first step is knowing what type of coverage you need. Standard home insurance typically includes four parts:

Dwelling coverage: This covers damage to the house itself.
You should have enough insurance to cover the cost of rebuilding your home, from the foundation up, in case of a fire or other disaster that make it impossible to salvage. That may be more coverage than you think.Sometimes it’s cheaper to just get a policy that covers you for a dollar number that covers your mortgage, but you want to be sure that you can replace what you have if something happens.

Other structures: This part of the policy covers external structures on your property, such as fences, detached garages and sheds. Loss-of-use coverage: This is typically a smaller amount of coverage that you’d be able to access to pay for alternative accommodations if you were unable to live in your home while it’s being rebuilt or repaired after an event like a natural disaster or a fire.

The standard homeowners policy has loss-of-use coverage worth 20% to 30% of the home value, you may need more if rentals are very expensive in your area, or less if you have access to other shelter in the case of an emergency, such as a second home or nearby relatives who would take you in.

Personal property coverage: This would cover lost or damaged things inside your home. You can use an app such to document your things and estimate their cost. Follow these additional steps to make sure you’re getting the best policy for a reasonable price:

Insurance Home House Live Car Protection Protect Concepts

While your mortgage lender can require that you get home insurance (and may recommend a preferred insurers) they can’t force you to use a specific insurer, and you should shop around for a policy. Be sure to get quotes from at least three insurers.
Gathering quotes is easy via online portals, like InsuranceQuotes.com for US and Confused.com for UK .

You may also have access to discounted rates via your employer, credit union, or other association. Look for a company with a strong rating from agencies. Insurance commissioner may also have a “complaint index,” which can give you a sense of whether the agency gets a lot of complaints relative to its size.

Before you start looking at ways to cut your insurance costs, it’s important to understand what your current policy covers. Even though insurers have tried to make their contracts easier to digest, those thick renewal documents can still be confusing. Start with the declarations page, which is essentially the summary of your coverage. Then take a look at the exclusions page to see what your policy specifically doesn’t cover. You can’t just blindly trust that your insurer has sold you the right policy.

Type of natural disasters

Insurers offer a variety of discounts to homeowners for everything from paying your annual premium in full up front to keeping your policy for more than three years. The biggest discount — more than 35% — goes to new construction owners, but you may be able to shave off more than 19% by bundling your home and auto policies with the same insurer. Make sure you’re getting all the discounts for which you qualify.

There are a lot of different discounts out there offered by different insurance companies.If you’ve upgraded your roof or windows in the past year, installed smoke d etectors and fire extinguishers, or made energy-efficient upgrades, you may be entitled to additional money off.

When choosing your premium amount, consider the cost of repairs or other issues that would prompt you to file a claim. Avoiding small claims can also help keep your premiums from increasing.

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Insurance, News

How to Buy Flood Insurance Coverage

In US Hurricane season brings more wind, rain and catastrophic loss to people and phone calls, emails and claims to home insurance companies. The majority of those calls and claims are due to flooding – not damage caused by rain, wind or fallen objects. And the response from your local agent may surprise you. Unfortunately, flood insurance is typically not covered in most homeowners insurance policies.

If you’re a homeowner and you carry a homeowner’s insurance policy on your house, you may think you’re completely covered. However, you could be leaving yourself open to some major out-of-pocket repair costs if your house sustains water damage. More than 20 percent of flood claims originate from outside of a flood zone, which means that virtually no home is safe from potential flooding, even if you live well outside of a floodplain.

Is Flood insurance included in Homeowners Insurance?

Floods are the most common natural disaster, and therefore the most costly type of natural disaster, especially in the U.S. The only way to completely cover yourself, and your home, is by purchasing flood insurance. Without it, you’ll be paying out of pocket for any and all repairs to your home if it floods.

All it takes is a few inches of water to do some devastating damage to your home. And, while there may be a handful of homeowners policies that include flood insurance, it’s more than likely you won’t be covered under your normal policy.

But it’s not just homeowners who may need a flood insurance policy. Renters typically aren’t covered for flood damage under a standard rental policy, and while you likely won’t be the one ponying up for the cost of new floors and drywall (if the flood wasn’t your fault), you do need a contents-only flood policy to make sure your furniture and other items are covered. It will help pay for the cost to repair or replace your items in case of flood damage.

Wondering how to buy flood insurance? It isn’t like buying homeowners insurance. You can only purchase flood insurance through an insurance agent . If you already have an insurance agent, start with them, but be aware that not all agents offer it, and it can be tricky to find in areas that are prone to flooding.

Which insurance carriers offer flood insurance?

Not all agents or companies offer flood insurance.

What you need to know before you buy flood insurance

Before you make that call to your insurance agent, though, you need to know what to ask to make sure you’re completely covered.

  • What flood zone do I live in? What is my property’s flood risk?
  • Is there a flood map change coming that could affect what I pay? Many communities are built on a flood zone, and you may not even be aware that your house is situated on one. It’s important to know what the risk is for flooding to your home–a number of factors can affect it–and changes are frequently made to the flood map, which could raise the cost of your policy.
  • What will and won’t be covered? As with any insurance policy, there are things that will or won’t be covered, and it’s important to know what the policy covers before you buy flood insurance. Does it cover the contents of your home or just damage to the property? What types of floods are covered?

What does a typical flood insurance policy cover?

In general, flood insurance policies only cover damage from natural flood disasters, not from an overflowing toilet or broken pipe. So in order for your flood policy to cover damage, it has to be from a naturally occurring incident.

There are a couple of types of flood insurance, and what kind you have will dictate what’s covered. The first is building property coverage, which covers:

  • The structure of your house
  • The electrical and plumbing systems
  • Central AC, furnaces, vacuum systems, etc
  • Refrigerators and built in appliances
  • Permanently installed carpeting
  • Window blinds
  • Detached garages

If you want the items inside your house to be covered under your flood policy, you’ll have to purchase what is called “personal property coverage,” which covers most personal belongings, separately. This type of policy covers:

  • Clothing, furniture and electronic equipment
  • Curtains
  • Portable air conditioners, window units
  • Carpets not included in building coverage
  • Washers and dryers
  • Food freezers and the food in them
  • Valuables like artwork and fur

Rental-specific coverage

Businesses and homeowners aren’t the only ones who need flood insurance; renters should look at what options are available, too.
The cost of the policy will depend on where you live and how much of a flood risk there is to the property you’re renting. If you’re located in a low- to moderate-risk area, you may qualify for a Preferred Risk Policy, and it won’t cost much at all.

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Insurance, Travel insurance

TRAVEL INSURANCE: understand the underlying details to protect yourself before signing for one

Travel insurance should fill a gap when traveling in terms of any unforeseen events that may occur. Traveling without one is not just risky but you could find yourself stranded on vacation in case of natural disasters away from home when you have overlooked terms and conditions of the policy.  

While you understand this important fact, it is detrimental that before you sign up for one, that you prudently acquaint yourself with its travel terms and conditions, what the insurance is liable for and to what extent you are protected.

events, unforeseen
Are you covered for canceling your trip due to severe weather? photo by Sergiu Jurga on UnSplash

The following are not covered or are partially covered in the travel insurance:

  • Missing a flight or being late is not covered by most travel insurance policies except if you get involved in an accident as it is beyond your control. This accident has to be one that takes place on your way to the airport. This depends on the details on the terms and conditions of the policy.
  • Natural disaster: unforeseen events or natural disasters may be severe to a point of causing damage or loss but if there is no damage or loss caused, the insurance will not cover this. This will depend on what your insurance regards as damage.
  • No trip enjoyment: if a hurricane or heavy rain affect your planned activities but not cause any damage to you, the insurance does not cover lack of enjoyment.
travel insurance, policy
Personal emergencies causing you to cancel your trip? Will you be reimbursed? photo by Assama Azam on UnSplash

The benefits should be outlined in the terms of coverage

  • If a natural disaster occurs during your trip, for example at your destination location, before you even arrive, the benefits will start to count.
  • If fire, floods or natural disasters affect your home and prevent you from taking the trip causing you to cancel it, your benefits may start to roll in depending on your insurance policy.
  • If a natural disaster damages your vacation residential home before you embark on the trip, causing you to cancel the trip, your cancellation benefits apply in this case.