In light of the recent hurricanes that have ravaged the East Coast, the earthquake that decimated parts of Mexico, and wildfires in the West that are burning up acres and acres with buildings along with it, it seems like a good time to do a check-up of your homeowners insurance policy. Will you be covered when disaster strikes? This fall, I encourage you to check in with your insurance agent to review your policy, determine if there are holes, and see if you are able to cover those holes with additional insurance as you deem necessary. Here are some questions to guide that conversation:
How am I covered in the case of water damage?
Water from a natural disaster is usually treated differently than water damage from typical weather. For example, a flood or a storm that causes the roof to lift off, subjecting the contents to inches of rain is different than a typical rainstorm which causes the roof or the basement to leak – perhaps from multiple events. I encourage you to ask a number of questions around the different types of water damage your home might sustain so you understand what you are and are not covered for. Some areas may offer or require additional flood insurance (if you have a mortgage and live in a flood-prone area, you may have a separate flood insurance policy so check on that too).
How am I covered in the case of wind damage?
Does your insurance company treat a tree falling on your roof differently than the wind ripping the roof off? What if the wind knocks off your roof gutter causing water to enter your house? Think about the different wind events that might befall your property and ask questions.
Am I covered in case of an earthquake?
It might surprise you to know that most policies do not cover earthquake damage, but often you can get coverage added on. The deductible for that policy may be high, so make sure you understand the process for filing a claim if your property sustains damage during an earthquake.
What happens if my belongings get damaged?
Most insurance will cover your belongings in the home if they are damaged, but what about your lawn furniture and BBQ? How about your hot tub? What about your priceless collection of antique clocks? What if you have a storage shed full of furniture that you inherited but aren’t sure what to do with?
What are the holes you see in this policy?
Ask your agent directly what holes they see. As he or she have likely seen a number of claims, it will be easy for them to see some typical issues that are not covered by their policy. Some may have additional coverage that you can get but in some cases, you will need to cover these items yourself (such as landscaping damage). It is important to know this information and make a plan.
Your home is likely your most valuable asset! Don’t let a disaster drain your equity. Get smart about your homeowners insurance and protect your investments.