End-of-the-world doomsayers predict the demise of civilization every ten minutes, or so. They point to cosmological signs, revelatory Scriptures, and natural disasters as the reason for their belief. As Gildshire sees it, the cosmos isn’t giving up its secrets, and revelatory Scripture can be interpreted any way one likes. Natural disasters, though, good grief! Are we having fun yet? Whether they mean the end of the world as we know it, natural disasters are cropping up with a ferocious frequency. Do you know if you are protected? Are there tweaks and tune-ups you should do under the hood of your insurance coverage? What can be done to protect you and your loved ones when the next disaster strikes? Because it is coming, from the sky, the ocean, or the crust of the Earth herself. Are you okay, or should Jake at State Farm expect a call?
Wildfires: While your homeowner’s policy has holes (such as sinkhole coverage, usually not included) it does well when it comes to fire, and wildfires are no exception. We have to ask, though, if you have enough protection from a financial standpoint. Insurance experts tell us that some downline items are of utmost importance. Be sure your policy generously compensates you for loss of use. The average homeowner who suffers a complete loss will spend thousands of dollars on hotels and meals away from a burned-down home. A good starting point number is $13,000. Go up from there, depending on your family’s size and age brackets. (Teenagers are more expensive than toddlers.)
Hurricanes: One Gildshire reader said it as well as anyone. “I don’t know why anyone wants to move to Florida.” Thousands do, though, every year. Welcome to Hurricane Alley, the price you pay for endless sunshine and a citrus tree in the backyard. Hurricane coverage in the average homeowner policy is dicey. A loss suffered as a result of wind may be covered, but at a higher deductible. Water and storm surge damage is trickier yet. Homeowners policies typically cover water damage due to hurricanes only in limited instances. Sit down with your agent, or have a video chat if you don’t have an agent, and find out, to the penny, what a hurricane will mean to you. Speaking of water…
Floods: First the bad news. According to the Insurance Information Institute, standard homeowner’s and renter’s policies do not protect in the event of flood damage. However, flood insurance coverage is available through the National Flood Insurance Program. Flood policies differ from homeowner’s policies in a few key ways. Homeowner’s coverage starts the day you purchase it, but flood insurance has an effective date 30 days after purchase. One homeowner’s policy covers structure and contents, while flood insurance is one or the other, so you’ll need separate policies. Also, max coverage for a structure tops out at $250.000. Max coverage for contents maxes out at $100,000. People who live in a certified floodplain have no choice but to purchase flood insurance. Do you live in such a place? Find out here.
Earthquakes: Folks who live on California’s San Andreas Fault have a unique way with earthquakes. They wait for the house to stop shaking and go about their day. Tough crowd, those folks. For most of us, earthquakes are scarier than that, partly because homeowner’s insurance doesn’t cover earthquake damage. You’ll need a separate policy or endorsement on your homeowner’s policy. Unfortunately, it has high deductibles and expensive premiums. For example, in California, the average earthquake policy is $726 a year, and policy deductibles run 10-15%. More bad news? Your earthquake insurance won’t cover flooding from an earthquake-caused tsunami. You need separate flood insurance for water damage from that bad boy. “I’m a renter. My renter’s policy will cover it.” Actually, it won’t. Your renter’s policy won’t include earthquake coverage for possessions or help with living expenses during repair. Ask a broker about earthquake policies for renters.
Are you prepared for natural disasters? We certainly hope that is the case. Hold your loved ones close, and look at your insurance policy over their shoulder. You’ll need their love, and that coverage, afterward. Courage, friends.