Review Your Insurance Coverage Before Disaster Strikes
Rosemary K. Heins, Extension Educator — Family Resource Management
2011; reviewed March 2016 by Lori A. Hendrickson, Extension Educator — Family Resiliency.
Did you know that there's typically a 30-day waiting period before a new insurance policy goes into effect? Even if you don't live in a flood-prone area, it's important to know if your insurance covers floods and other disasters.
What damage is covered by your insurance?
If you do not know the answer to this question, it’s very important to take the time now, before disaster strikes, to review your insurance policies.
Start by reviewing what your policies cover. Use the Dollar Works 2 Action Page 10-8: Reading Your Insurance Policy (173 K PDF) to describe the coverage you have under each policy. If you have questions or concerns, discuss them with your insurance agent before disaster strikes. You may decide you need additional coverage.
If you are a renter, do you have renters insurance? Renters insurance covers your personal property and is usually not very expensive to purchase. If you do not have renters insurance, ask your vehicles insurance agent about the cost of adding on renters insurance. According to a recent flood recovery research study, renters typically did not qualify for very many government recovery programs; they needed to rely on their own insurance coverage.
Keep in mind that few insurance policies cover the cost of all damages no matter what the cause. Flood damage is not usually covered by standard homeowner policies and you may have to purchase additional flood insurance. For more information, see Protect Yourself with Flood Insurance on the National Flood Insurance Program website.
In general, property insurance will include some coverage for “fire or lightning damage” and/or “wind and hail damage” which is typical damage from tornados. Again, you may need to purchase additional coverage to be adequately covered.
How are damage claims paid?
To be better prepared, ask your insurance agent whether claims on your policies are paid on the basis of replacement cost or current market value. Will the reimbursement cover total replacement cost or just a given percentage of the replacement cost?
Regardless how claims are paid, it’s important to prepare yourself by having a complete household inventory of your personal property.
- List all of your property in a notebook, take photos, and/or videotape your property.
- Store a copy of this inventory in a location outside of your home, like with a trusted family member, so it stays protected in case a disaster strikes your home. If you are prepared with a complete household inventory, the claims process will be much easier for you after a disaster.
For more information on doing a household inventory, visit List It or Lose It — The Case for Household and Property Inventory.
By checking out how your property is insured, you will be better prepared for disaster when it happens.
Minnesota Department of Commerce. (2016). Disaster Information Center.
National Endowment for Financial Education. (2015). Disasters and Financial Planning: A Guide for Preparedness and Recovery.
Meeting Your Insurance Needs — Insurance is the primary way you protect yourself against financial loss caused by illness, accidents and other destructive or damaging events. Part of the Getting Through Tough Times series. English | español
Disaster Recovery Log — NDSU Extension Service — Free Android app that helps you proactively develop a household inventory prior to a disaster.
Minnesota Department of Commerce — More information about insurance in Minnesota.
Insurance Information Institute — Organization that works to improve the public’s understanding of insurance.