Know Your Home Owners Insurance Policy

Know Your Home Owners Insurance Policy

Know Your Home Owners Insurance Policy.  The upheaval after a sudden disaster can be overwhelming. People may lack basic needs such as food, water, electricity and phone service – and some even lose their homes and businesses.

Disasters also place demands on the employees of insurance companies. If a devastating event

damages your home or business — a hurricane, fire, tornado, windstorm, theft or other catastrophe — you may have to file an insurance claim at the same time as thousands of other people.

Being prepared can ease some of the burden. Homeowner’s insurance policies have limitations and certain procedures that must be followed. Here are some important steps to take before and after a disaster strikes:

After a casualty:

Call your insurance company as soon as possible to report the damage because insurance policies place a time limit on filing claims. Ask for the required forms to be sent to you. Find out if the insurer will be sending an adjuster to your home to inspect the property and when. Keep records of the time and date of your call, as well as the names of insurance company employees you speak with.

Ask questions such as: Does my policy cover this damage? What is my deductible (the amount of the loss you must pay)? What is the procedure for obtaining estimates to repair the damage or replace the property that was destroyed? How long will the processing of my claim take?

Find out what living expenses are covered. If your home sustains so much damage that you cannot live there while it’s being repaired, homeowner’s insurance generally pays some living expenses. There are limits on the amount covered but typical expenses include the cost of a hotel and restaurant meals. Keep receipts to submit to the insurance company. Make sure your insurer also has the phone number where you are staying temporarily.

Take photos or videotape the damage as soon as possible in case the claim is questioned or the insurance adjuster cannot come to your area right away.

Compile a list of lost or damaged items to help substantiate your claim. Give this inventory to the insurance company, along with any photos, receipts and other documentation you have.

Make temporary repairs. To protect your home from more damage, make reasonable temporary repairs such as covering broken windows and damaged roofs. Save receipts to submit them to your insurance company for reimbursement.

If the damage is the result of theft or vandalism, report the crime to the police and get a copy of the police report.

Do not accept an unfair settlement. After your insurance company receives the necessary information, it will accept or reject your claim and offer a settlement. If you don’t agree with the amount, you don’t have to accept it. Ask your agent for an explanation. In many cases, insurers will negotiate until both parties agree.

If you can’t reach an acceptable agreement, you can appeal to the company’s chief claims office. There may also be an arbitration process. If you still don’t get satisfaction, you can complain to the state insurance department.

Stay safe. Many injuries happen in the calm after a storm. Downed power lines, flooded roads, unstable buildings, contaminated water, falling debris and leaking gas lines are just a few of the hazards to avoid.  Know Your Home Owners Insurance Policy.

Before a casualty:

Keep your policy up to date. Have you built an addition on the house or remodeled the kitchen? You may need to increase coverage to protect the higher value of your property. Similarly, if your home’s value has greatly increased, you may need to adjust coverage so you are not underinsured if an emergency occurs.

Review the adequacy of your policy limits. Investigate how much it would cost to replace your home and whether your policy limits cover that amount. Try to obtain guaranteed replacement cost coverage, where the insurance company will rebuild your home even if the cost exceeds the policy limits. This doesn’t mean you have to insure your property for its full market value. Even if your home is totally destroyed, you won’t have to replace the land.

Be aware, however, that some companies no longer offer guaranteed replacement cost coverage and those that do define it in different ways. Some companies rebuild no matter what the cost, while others cap coverage based on a certain percentage of the policy’s face value. Make sure your policy has an inflation endorsement that increases coverage annually for increases in construction costs.

Obtain coverage for special risks. Basic policies provide protection from fire, smoke, windstorms, vandalism, and lightning. The most comprehensive policies cover every peril except those specifically excluded, typically floods, earthquakes, war, and nuclear accidents. You may need to obtain specific coverage for your area.

However, be aware that insurers can impose restrictions in some areas. For example, in some hurricane-prone states, many insurers only sell homeowner’s insurance policies with percentage deductibles for storm damage instead of the traditional dollar deductibles that are used for other types of claims. For example, with a policy that has a $500 deductible, the policyholder must pay the first $500 out of pocket. But if a house is insured for $200,000 and has a 2 percent deductible, the policyholder must pay the first $4,000 out of pocket.

Understand what other items are covered by your policy. Homeowner’s policies typically cover personal items, other structures on the property, landscaping, living expenses when a property is destroyed, and personal liability coverage. Carefully review the limits for all of these items, since you may be able to add endorsements if you need additional coverage. Pay special attention to limits for items such as jewelry, antiques, collectibles, and works of art.

Inventory your real estate and property. The easiest way is to take “before” photos or videos to compare with any “after” pictures you take in the event of a disaster. Don’t overlook anything. A complete inventory should include the landscaping and outdoor features, garage, attic, basement and autos. Include furniture, appliances, jewelry, artwork, and the contents of closets, cupboards and drawers. Be just as thorough when taking an inventory of your business property. Store the video or photos securely. Keep a copy in your safe deposit box and give a copy to a close relative or friend.  Know Your Home Owners Insurance Policy.

Make an “evacuation box.” Keep copies of important documents in an easy-to-carry container that you can grab as you leave your home in the event of an emergency. (Always store originals in a safe deposit box). This box should have documents and papers you need for income tax and insurance purposes, as well as medical information and a disk of important family photos.