The very last thing you need to be worrying about as the storm clouds gather, is “will my insurance policy cover this?”
Use this period to cover basics–like checking cover is adequate, what is covered, understanding the cover and being confident that you have the best cover for your circumstances.
Make sure your insurance cover matches the rebuild/repair costs of your home.
Usually a rebuilding cost is applied to the total square footage of your home (which can include any garages, garden sheds or other outbuildings, docks and stand alone walls) to produce a value, known as the sum insured.
Your insurance will cover the cost of rebuilding your home, not the market or sale value. If you have made improvements or additions to your property, inform your insurance company. It may mean only a modest difference to your premium.
How much will you receive in compensation?
The “grey areas” of understanding cover often relate to deductibles and compensation. A deductible of $500 means you pay for the first $500 worth of damage. A catastrophic peril deductible (eg. hurricane) is usually 3% of your property’s rebuilding value. As a rule of thumb, a higher deductible should equate with a lower insurance premium. Also, make sure you understand where deductibles apply.
While you check your insurance cover, check out your property too. Installing or renovating storm shutters can help limit damage. Check the roof. Generally, a well maintained property will stand up to a storm more effectively.
What about possessions?
Do not assume that your claim will pay you the same sum as the purchase price. New-for-old cover is quite specific. Items are replaced at their current market value, up to the insured amount, without any deduction for wear and tear and depreciation. Make sure you understand if or where new-for-old applies to your cover.
Make an inventory of your possessions with photos or a video. Keep the paperwork safe too. A home inventory will help speed up the claims process.
Understanding your cover and what it will or will not pay, helps you make decisions about your insurance cover, or even shopping for a quote.
Talk to your insurance provider: ask questions
It is important to know and understand your cover. Talk to your insurance company and ask questions. They will be more than willing to help. If you are not happy, ask for quotes from other companies compare the cover. Not all insurance companies are the same.
Five questions to ask your insurance company
- For how much is my home insured (sum insured)?
- What deductibles apply to my policy (and how much)?
- Are my valuables covered by my policy?
- Do I have new-for-old cover?
- Do I have coverage for additional living expenses (following a storm)?