“The house is gone.” I’ll never forget those words – my father’s initial reaction after Hurricane Wilma tore across the Sunshine State in 2005. Our South Florida home was technically still standing, but we lost eight house windows, two glass doors, eight car windows and an arbor that collapsed onto our roof after being ripped from the patio. Plus, the interior of our newly windowless home was water-damaged by eight hours of exposure to the Atlantic Basin’s most intense storm on record.
We had insurance, so we would be covered. Right? It turned out, we did have basic wind coverage, but my family’s insurance policy did not pay for the bulk of our damages.
Real estate is a huge investment, so homeowners insurance is a must. To prevent paying heavy repair fees out-of-pocket, get familiar with your homeowners insurance policy.
Typically, homeowners insurance covers basic disasters such as wind storms, hail storms and fires. However, since insurance policies vary based on location, consult with a local agent to determine what options are best for your region.
“Where you live, and the type of home you live in, all can shape what your real needs are,” says Scott Mallasee, property and casualty staff product director of Nationwide Insurance.
For example, the Midwest has become especially susceptible to hail storms, so many local insurance companies are placing separate deductibles on wind and hail coverage, says Robert Jackson, president and producer of the insurance agency Jackson Dieken & Associates, Westlake, Ohio.
Homes in southern states such as Florida and Louisiana have undergone extensive roof damage from hurricanes in the past years, says Rocco English, State Farm Insurance Agent based in Orlando, Fla. And fire is the most common disaster claim in California, according to Allstate’s website. Typically, basic policies will cover these disasters in those specific regions.
Based on their needs, homeowners can also purchase additional coverage for disasters such as floods and earthquakes. Insurance for these disasters is typically not covered in a basic policy but can be added for an additional fee.
Flood insurance is sold through the National Flood Insurance Program, but it is often administered through private companies, Mallasee says.
However, don’t wait until a major storm is days away to buy flood insurance, as there is a 30-day mandatory wait period. Agencies don’t want people buying the additional insurance only if a storm is coming, Jackson says.
The amount homeowners pay for flood insurance is determined by the “flood zone” they live in. Zones are defined by the Federal Emergency Management Agency based on an area’s level of flood risk: “moderate to low risk areas,” “high risk areas” and “undefined areas.” The higher the risk, the more expensive the insurance policy will be.
“Up by Hobe Sound [Fla.] and different places that are right on the ocean and very low to the ground, that is astronomical to get flood insurance,” Jackson says.
Similarly, damage from water backup or earthquakes is not covered in basic policies. Water backup can happen from sewers, drains or an overflowing sump pump, according to Allstate’s website. Insurers usually offer coverage for both as separate add-ons, and deductibles and other provisions vary based on location, Mallasee says.
Finally, consider contents coverage if you store valuables in the basement or other areas prone to disasters, Jackson says. Basic policies include a small amount of coverage, but homeowners can also endorse the policy to cover more expensive valuables.
Be sure to read your insurance policy carefully, paying special attention to any exemption clauses.