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Review Your Insurance Coverage Before Disaster Strikes

Rosemary K. Heins, Extension Educator — Family Resource Management

2011; reviewed March 2013 by Sara R. Croymans, Extension Educator — Family Resilience

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.

For more information on doing a household inventory, visit List It or Lost 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.

 

Listen to a Related Audio Clip:

Review Insurance Before a Disaster

Rosemary K. Heins, Extension Educator — Family Resource Management

Reviewed June 2013 by author.

Severe weather forecasts sometimes include potential flood predictions. Whether you live in a flood prone area or not, it's good to review what your homeowners insurance policy does cover. There are other natural disasters besides floods.

However, flood damage is an exception since that type of damage is not covered by standard homeowner policies. And you need to keep in mind that few policies cover the cost of all damages no matter what the cause. Review your policy with your insurance agent before disaster strikes. You may decide you need additional coverage. 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.

Find out whether claims are paid on the basis of replacement cost or current market value. Will the reimbursement cover total replacement cost or a given percentage of the replacement cost?

Do you have a household inventory of personal property? This could be done by photos or video as well as a content listing. It would be wise to store a copy of this inventory in another secure location, other than your home. This may be with another trusted family member, too.

If you are a renter, do you have renter's insurance? Renter's insurance is usually not expensive. If you have insured vehicles, ask the insurance agent about the cost of adding on renter's insurance. In a recent flood recovery research study, it was found that renter's were among those not helped by government recovery programs.

Be ready for disaster when it happens — check out how your property is insured.

Check Over Insurance Before Disaster (audio; 2:03) — Be ready for disaster when it happens — check out how your property is insured. Transcript.

Other Recommended Resources

Disaster Recovery LogNDSU 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.

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