Is Your Homeowners Insurance Ready for Hurricanes?

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As summer approaches, many of us feel the need to sit back and relax. Time seems to slow down and all you want to do it kick off your shoes and lay by the pool — but don’t get too comfortable because you may be getting all kinds of wet pretty soon, and not at a water park. For this, you’ll need more than a towel and sun to dry you off – you’ll need to know that your homeowners insurance is up to date and know it covers what’s possibly around the corner. 

So what’s around the corner just waiting to strike? Hurricanes. Warm weather is nice, but it breeds hurricanes – and Colorado State University is predicting an above average active year for 2013. If you live on the east coast or the gulf, now is the time to start examining your coverage limits and covering any gaps. Hurricane season starts June 1 and lasts until November 30th — a long time to leave your home (and assets) vulnerable to natural disasters.

Overall, 18 tropical storms are predicted to strike this year, and it’s predicted that 9 of those will turn into hurricanes. If 2013 is anything like 2012, though, get ready. Last year, Colorado State predicted 10 tropical storms and that only 4 of them would turn into hurricanes.

It’s a good thing nobody was placing bets on their predictions — the team was far off base, and in a very unfortunate way. Overall, a total of 19 storms formed, and 10 turned into hurricanes. Talk about lowballing Mother Nature. In fact, one of these storms turned out to be the horrific Hurricane Sandy, which killed dozens of people and caused damage totaling billions of dollars. The Northeast is still recovering from that storm, and many people are still awaiting assistance.

Winds & Flooding: Byproduct of a Strong Storm

Based on data recorded since 1950, an average year of hurricanes can include up to 12 tropical storms and 7 hurricanes. While a tropical storm is generally less of a threat than a full-blown hurricane, it can cause damage. To officially become a tropical storm, a tropical depression must reach sustained wind speed of at least 39 mph. At this point, a wind warning may be issued. It’s recommended that you secure any loose property you may have and if there’s time, try to cut off dead branches on that tree that covers your garage. If you have loose shingles on your roof, they may be missing the next morning and don’t count on your plastic patio chairs staying put.

Even a Tropical Storm Can Cause Big Damage

A tropical storm’s biggest threats are heavy rain and flooding, and for low-lying coastal communities, that can spell disaster. Don’t underestimate the damage that a tropical storm can do. Take Tropical Storm Allison for example. Allison never made it to hurricane status, but she certainly has a place in the history books.

Causing 41 deaths and at least $5 billion in damage, she wrecked the Gulf of Mexico in 2001. Landing in Freeport, Texas, Allison slowly made her way across southern Texas and managed to hit Louisiana after that. The heavy rains caused widespread flooding. The Port of Houston received 37 inches of rain and other cities reported varying amounts of flooding well over 30 inches. Allison also caused 23 tornadoes, which are a force to be reckoned with in and of themselves. When it comes to having the right amount of insurance, don’t ever low ball. You never know when a tropical storm will come barreling into your city.

Hurricane Sandy and Homeowners Insurance

The deadliest,  most expensive storm of 2012, and the 2nd most expensive hurricane in the history of the U.S., Hurricane Sandy hit during October, just as hurricane season was winding down. Estimates put damage at close to $75 billion, killing 285 people from her birth to her death. 24 states were affected, including New York, hitting New York City especially hard with flooding and loss of power. Homes are still waiting to be rebuilt and some businesses are just now waiting to be rebuilt. For many, homeowners insurance covered some damage, but for others, even with additional flood insurance, the recovery effort has been difficult.

Consider the plight of Woodbridge, N.J. resident Jason Crea. His house was totaled in Hurricane Sandy. No problem, his insurance paid, right? Of course they did! All $37.74 of it, that is, minus his $1K deductible. How is this all that Crea received? While his house didn’t have much flood damage, Crea had a basement. Because his house was located in a flood plain, he was required to purchase federal flood insurance. This requirement is actually a courtesy in a way – it encourages homeowners like Crea to remember that homeowners insurance never covers flood so he wouldn’t make the mistake so many homeowners have in the past in assuming their homeowners insurance covers floods. Unfortunately, Crea still made that mistake, thus with the check he got, he can barely afford Applebee’s with.

Crea also purchased a contents policy because as a part-time music instructor, he had valuable musical equipment and electronics and needed protection. Like most homeowners, he used his basement for the storage of those items, as well as collections and a home gym. What his insurer failed to mention and what Crea didn’t know was that according to his policy, the basement isn’t considered a room covered by his contents policy. All his expensive equipment, which he thought was covered, was in much worse condition than any instrument rock stars destroy on stage. Luckily, Crea had made the smart decision of insuring his home for its replacement value. That claim is still in process.

What You Can Do to Make Sure You’re Prepared

No one wants to sit down and read an entire homeowners insurance contract, and even if you make the effort, it’s hard to understand all that insurance jargon. Although many insurers base their entire marketing campaigns on slogans promising that they’ll be there for you, watch out for you, and sometimes even magically appear when you need money, that’s not always the case.

For great insurance professionals, there’s an unspoken “hippocratic oath” we take, promising to do all we can to ensure you understand your coverage.  However, there is a time that consumer responsibility comes into play, and there’s a lot of truth to being you being your own best advocate.  It’s ultimately your responsibility as a homeowner to make sure you’re protected. Insurance is still a business and no one likes giving away money (although Crea’s insurer probably didn’t flinch when writing his check). To make sure your homeowners insurance company pays for more than just your dinner or gas for a couple days,  here are some simple steps to take to make sure you’re covered and to hopefully prevent you from finding yourself in a situation like Crea’s:

  • Always insure your house for its full replacement value and update your coverage annually.
  • Make an inventory of your personal belongings and schedule any valuable items. Note where they’re stored and make sure coverage extends to every part of your house. You may think you don’t have much, that it wouldn’t cost much to replace everything you own, or that you’ll be able to remember your possessions if something happened. However, that’s not true. After traumatic events , whether a fire, storm, or other kind of loss of personal property, it is extremely difficult to recall every single thing under your roof when in such emotional distress.

    Even if your home doesn’t look like a Pottery Barn catalog, the value of your personal property is likely high enough to make it financially uncomfortable to start over from scratch. Ladies of any stage and age, consider this: How many pairs of shoes are in your closet right now? How many handbags? Clothing?  Male or female, how much do you think it would cost to go out and buy every item in your home right now, down to your toothbrush? It’s easy to hit $20K in personal property quickly.  Take a written inventory (include approximate value) and video recording of your possessions, then store copies in at least two other places aside from your home.

  • Purchase flood insurance.  This is only available through the National Flood Insurance Program (NFIP.)
  • Review your living expenses. If you’re displaced for months, your homeowners insurance can help pay for any incidental expenses you incur after a loss causing you to be displaced from your home. These covered expenses can include any temporary housing, food, extra transportation expenses incurred if you have to drive further to get to work from your temporary housing than you would from your own home or if being displaced requires you to take public transportation, some food expenses, and any other extra expenses incurred as a result of your loss up until your home is finished being repaired or until you find a new, permanent residence if your home is a total loss.

Hopefully, Colorado State’s meteorologists in training are wrong – or right, depending on which way you look at it. Maybe their 2013 predictions will end up being much higher than what Mother Nature throws at us this year, or in the event that their figure turns out to be slightly accurate, hopefully it won’t be higher as was the situation in 2012. When it comes to your homeowners insurance though, it’s not about predictions – it’s about probability and possibility, and those are things worth preparing for.

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