The day after thethat ravaged parts of the Midwest and South this week, homeowners may rightly be concerned about whether they are financially protected against potentially devastating storms.
The past three years have seen the highest ever insured losses from natural disasters, according to a recent report by Aon. Tornadoes are just one of the severe weather events that can destroy or damage property. Some 1,200 of them strike the United States each year, and the phenomenon has been reported in all 50 states.
A recent study suggests that these storms could occur more frequently due to global warming, as well as moving eastward toward the densely populated southern states of Alabama, Mississippi and Tennessee.
Before a storm hits, homeowners or renters can take steps to ensure they are financially protected against tornadoes.
Home insurance should cover you
Wind damage, including that caused by tornadoes, thunderstorms, and straight-line winds known as “derechos,” is covered under a standard homeowners insurance policy.
“Tornado coverage isn’t a separate policy that you need coverage for — it’s covered by your standard policy,” said Karen Collins, vice president of property and environment at American Property. Casualty Insurance Association (APCIA), an industry group.
Review your landlord’s policy. One of the first pages, titled ‘statements’, lists your coverage limits and how much you could collect in a claim. Covered items include rebuilding costs, as well as replacing destroyed property inside your home — called “contents coverage” or “personal property coverage,” Collins said. There should also be coverage for your living expenses, such as a hotel, if you need to move while your home is being repaired.
What are the deductibles?
Most home insurance policies come with a deductible – a certain amount of money you must pay for repairs before your coverage takes effect. You may have a flat rate deductible or, as is becoming increasingly common, the policy may specify different deductibles for certain situations.
“In many areas, insurers have implemented wind deductibles,” said Amy Bach, executive director of United Policyholders, an insurance consumer advocacy group. “Some of them will have wind speed clauses, where if the wind reaches a certain speed, the allowance applies.”
Often, instead of being represented in dollars, the wind deductible will be expressed as a percentage of the entire policy, which can be a significant sum.
“These franchises represent a bigger shift than before,” Bach said.
She advises calling your insurance company before a potential disaster to go over your policy.
“You want to know, ‘Do I have a wind franchise?’ and ‘Can I buy a policy with a lower deductible or a flat deductible?’ It’s a little better,” she said.
Real costs or replacement costs?
An insurance policy will cover your belongings for their actual value or replacement cost – for example, the price of new furniture, carpets and appliances that you may need to buy if your current home is destroyed.
Think of it this way: your 12-year-old sofa might only be worth $500 on the market, but if your belongings are destroyed and you need to replace it, you could shell out $2,000 or more for a new sofa.
For this reason, replacement value policies tend to be more expensive, but they can also save you some hassle. This type of policy might make even more sense today, as the price of home furnishings has skyrocketed in recent years.
Think about flooding – even outside the flood zone
During most tornadoes, flooding isn’t an issue, which is a good thing considering flooding requires dedicated flood insurance.
Water damage from above, on the other hand, should be covered by a standard policy, said Loretta Worters, spokeswoman for the Information Insurance Institute.
“Floods are considered a rising body of water, so if they came from the ground, you wouldn’t have cover,” she said. However, if a tornado rips off part of your roof and your house is damaged by rain, it should be “a covered peril,” she said.
Nonetheless, homeowners should consider additional flood coverage if they live in a low-lying area or a location that receives heavy rainfall. With climate change making rainfall more intense, many places are experiencing flooding for the first time. A severe storm that causes tornadoes could also create flash floods.
Bach also noted that insurance companies have become more aggressive in defining certain types of water damage as flooding – such as when a storm damages part of a home’s sewer system and water backs up into the house – and refuse to cover it. It’s a possible scenario you should discuss with your insurance company, she said.
“Before you incur a loss, call your insurance company and get emergency sewer and drain coverage,” she said. “If you have a sump pump, ask them if it’s covered if the sump pump fails.”
Such coverage is usually available as an add-on or “endorsement” in industry parlance.
Renters insurance: Necessary, and quite cheap
If you are renting, it may be a good idea to take out a separate tenant’s insurance policy, which should cover your belongings in a range of scenarios – storms, burglaries or other unforeseen events.
A home insurance policy will cover the owner’s belongings, but your landlord’s policy will not extend to your belongings. Renters insurance often also covers temporary accommodation if you have to leave your home in the event of a disaster.
“It’s a couple hundred dollars a year, and it makes a big difference,” Worters said.
Home office? You might need an additional font
If you have a side gig or home office that you use for work, make sure it has explicit storm protection. This could mean getting a top-up on your insurance policy from your home insurer.
“Most homeowners policies will have a cap on commercial property, and it’s something like $1,500, $2,500. So if you have more than that, you’re out of luck,” said Bach.
You can also purchase separate commercial coverage, which will protect your side gig from liability if you run into legal trouble, like being sued by a disgruntled customer or spectator.
Think about your car
If you have a car, consider shelling out for additional loss coverage. Non-driving damage is only covered under a ‘comprehensive’ policy, colloquially referred to as ‘full coverage’.
“If you have debris falling on the car, or hail or even flooding, that’s covered under a full policy,” Collins of APCIA said. “And if you need to be in another vehicle during [yours is] be repaired, you will also have a small cover for this. »