The 2016 Hurricane season is upon us. Now is the time for New Jersey coastal residents to review their current insurance coverage to understand coverage options when faced with a potentially destructive storm.
The Insurance Information Institute (I.I.I.) has published a storm checklist to encourage consumers to review their current insurance policies and to speak with their insurance agent about their needs. The checklist includes information on hurricane and windstorm deductibles, flood insurance and the importance of keeping coverage up-to-date.
❏ Check your policy limit; is it enough to rebuild your home?
Make sure to have enough coverage to completely rebuild your home in the event it is severely damaged or destroyed. And, remember, the real estate value of a house is not the same as the cost to rebuild.
Consider these homeowners coverages to help protect against the costs of rebuilding after a hurricane:
- Extended Replacement Cost Policy – pays an additional 20 percent or more above the policy limits.
- Guaranteed Replacement Cost Policy – pays the full amount to rebuild your home whatever the ultimate cost.
❏ Do you know everything you own and how much it’s worth?
Imagine having to re-purchase all of your furniture, clothing and other personal possessions and think about what that would cost. Most insurers provide some coverage for personal possessions-but is it enough? The best way to determine what you actually need is to conduct a home inventory—a detailed list of your belongings and their estimated value.
Check what type of insurance you have for your belongings:
- Replacement Cost Coverage – pays what it would cost to replace your personal possessions at their current value.
- Actual Cash Value Coverage – pays to replace your personal possessions only at their depreciated value.
❏ Does your policy provide enough Additional Living Expenses coverage?
Additional Living Expenses (ALE) coverage kicks in if your home is rendered uninhabitable as the result of a hurricane or other insured disaster. ALE covers the extra costs involved in living away from home—hotel bills, restaurant meals and other expenses, over and above your customary living expenses—incurred while your home is being repaired or rebuilt. If you rent out part of your home, this coverage also reimburses you for lost rental income.
Check that the coverage is adequate for your needs:
- ALE coverage is generally equal to 20 percent of the amount of insurance coverage that you have on the structure of your house; however, most insurers offer the option of higher coverage limits.
- Many policies provide ALE reimbursements only for a specific amount of time; make sure you’re comfortable with the time limits in your policy.
❏ What is the percentage of the hurricane/windstorm deductible stated in your policy?
Insurers include separate deductibles for hurricanes and/or windstorms in their homeowners policies. Unlike the standard “dollar deductible” on an auto or home policy, a hurricane or windstorm deductible is usually expressed as a percentage. It is clearly stated on the Declarations (front) page of your homeowners policy.
Hurricane and windstorm deductibles generally range from 1 to 5 percent of the insured value of the structure of your home. A hurricane deductible is applied only to hurricanes whereas a windstorm deductible applies to any type of wind. If your policy has a hurricane deductible, it will clearly state the specific “trigger” that would cause the deductible to go into effect.
❏ What disasters does your insurance policy cover?
Standard homeowners insurance policies provide coverage for hurricanes, wind, theft, fire, explosion, lightning strikes and a host of other disasters. However, all policies also list exclusions—such as for flood or earthquake—which are NOT covered by the policy. Get to know the exclusions in your policy and either talk to your Insurance Professional about purchasing separate coverage, or be prepared to pay the cost of those damages out-of-pocket.
Important additional coverages to consider in hurricane-prone areas:
- Flood Insurance – Separate flood insurance is available from LG Insurance Agency.
- Sewer Back-Up Coverage – Can be purchased either as a separate policy or as an endorsement to an existing homeowners policy. Sewer backups and damage from runoff water caused by major downpours are not covered under standard homeowners nor by flood insurance.
❏ But, wait, what about your flood insurance policy?
People tend to underestimate the risk of flooding, but 90 percent of all natural disasters include some form of flooding—especially hurricanes! If you live in a flood zone, or a hurricane-prone area, a separate flood insurance policy is a must. But it’s equally important to understand what it actually covers and keep in mind: There is a 30-day waiting period for a flood insurance policy to go into effect so don’t wait until a storm is imminent to apply for coverage.
❏ If you rent your home, have you bought renters insurance?
While your landlord may provide insurance coverage for the structure of your home, as a renter you are responsible for your own belongings. Renters insurance covers the loss or destruction of your possessions if they are damaged by a hurricane or other disaster listed in the policy. A standard renters insurance policy also includes ALE coverage if you are unable to live in your house or apartment due to damage caused by a hurricane.
Don’t wait to review and update your insurance until after you have a loss—there are few things worse than finding out you did not have the right kind of coverage when you are ready to file a claim. Call LG Insurance Agency, your local Jersey Shore insurance agent. We can provide guidance on how to get the insurance protection that’s best for your budget and your needs.
All content provided in this blog is for informational purposes only. Topics discussed on this blog relate to insurance products and issues in a general application, and are not an offer of insurance, a guarantee of coverage, or applicable to specific and individual circumstances. Contact LG Insurance Agency for questions and information specific to your insurance needs.