A homeowners insurance policy is an essential for every homeowner in case of a disaster. However, in cases of major and total losses, the majority of insurance policies fall short in getting your home back to its pre-disaster condition.
insurancepublicadjustersofgeorgia.com outlines below how homeowners insurance alone may not be enough to fully restore your home after a major disaster.
Homeowners Insurance and Underinsured Homes
While homeowners insurance policies protect your home and are intended to help you restore it to pre-disaster conditions, many factors cause damages and restoration to exceed the dollar amounts established in your policy. Some of those factors include:
Underinsured Property – Over time, property values fluctuate, as do the prices of materials and construction labor, causing your property to be underinsured if your coverage is not adjusted to compensate.
Relying on coverage for a home’s estimated value often creates a disaster after a disaster. If your home was leveled, chances are that the home’s insured value will not cover the cost of rebuilding the home.
One way to avoid being underinsured is to insure your home for its full replacement cost instead of its cash value. This option is about 10 to 20 percent more expensive, but it is coverage that will pay to rebuild your home as it was pre-disaster, even if the rebuild cost exceeds the home’s estimated value.
Every two to three years, your home’s replacement cost should be evaluated by a professional appraiser, and your coverage should be adjusted accordingly.
Adjuster Miscalculation – Another reason a home may end up underinsured is when an insurance adjuster incorrectly appraises it, assigning a lower value than it is worth.
This can be avoided by hiring an public insurance adjuster to make an independent appraisal, then comparing the two.
To learn more ways that a public adjuster can fight on your behalf and in your interest with the insurance company, visit insurancepublicadjustersofgeorgia.com/questions/what-is-a-public-adjuster/
Building Material Costs – In cases where entire neighborhoods are affected, there may be a shortage of building materials. In response to these shortages, suppliers and/or retailers raise their prices (supply and demand).
When prices for building materials go up, they may cause the repair or rebuild estimate to fall short, creating an out-of-pocket situation for the homeowner.
Lack of Construction Labor – After a natural disaster, contractors can experience a lack of employees to carry out repairs and rebuilds. This creates a waiting list which can result in the worsening of damages to homes by their continuous exposure to the elements.
As more damages are incurred, the less likely the insurance payout will cover needed repairs.
Natural Disasters and Insurance Coverage
Depending on the type of disaster that has ravaged your home, your homeowners policy may only cover a portion of the damages or may not be activated at all.
Some of the causes of natural disasters and insurance details are:
Earthquakes – Homeowners insurance coverage does not cover earthquakes. Some insurance carriers allow coverage for earthquakes to be added to plans for a fee or purchased as a separate policy.
If you live in the state of California, a separate policy may be purchased from the California Earthquake Authority, visit earthquakeauthority.com for more information and to calculate a free quote.
To evaluate the earthquake hazard level and necessity of coverage for your current location, visit fema.gov/earthquake-hazard-maps If you find yourself in an at-risk area, contact your insurance professional or state insurance department for guidance.
Floods – Your homeowners insurance will not cover damages caused by rising flood waters or sewage backup due to flooding conditions.
Like earthquakes, any coverage for flood damage is considered a plan addition or rider policy.
Unlike earthquakes, FEMA has the National Flood Insurance Program (NFIP) which provides affordable flood insurance to property owners, renters and businesses through agents and insurers participating in the NFIP. If your insurance agent doesn’t sell flood insurance, call 1-800-427-4661 for an agent referral in your area.
Note: After a flood, do not try to clean the premises on your own. The handling of sewage and its removal should only be performed by trained and experienced technicians equipped with full protective equipment.
Wildfires – Among the deadliest and most destructive of natural disasters, wildfires cause massive amounts of damage and will activate your homeowners insurance policy.
Due to the widespread aftermath of wildfires, insurance providers may struggle to assess and begin paying out claims.
Learn what you can do to help expedite your claim by visiting insurancepublicadjustersofgeorgia.com/wildfire-property-insurance-claim/
Hurricanes – Your homeowners insurance may cover some damages incurred during a hurricane.
If your homeowners policy includes coverage for wind damage and a tree falls on your roof, the policy can be activated to restore the roof, and repair any damages caused by flooding through the hole in the roof caused by the tree.
Your homeowners policy will not cover damages from rising waters or sewage backup caused by the hurricane. Policies for this type of damage are issued by FEMA’s NFIP.
Tornadoes – When tornadoes strike, they are capable of inconceivable damages in a very short time. After a tornado, the following insurance policies may be individually or collectively activated:
• Homeowners Insurance covers damages to your home caused by a tornado.
• Flood Insurance covers flood or storm surge damages caused by a tornado.
• Landlords Property Insurance covers structural damages to a rental property.
• Auto Insurance covers damages to your vehicle.
Specifically for homeowners insurance, coverage for wind damage must be included in your policy to receive a maximum payout in a worst-case scenario.
Learn more about tornadoes, survival tips, and insurance claims by visiting insurancepublicadjustersofgeorgia.com/tornadoes-survival-tips-insurance-claims/
In any case, where you believe the insurance adjuster is shorting you or trying to reduce the payout you deserve, consider hiring an independent insurance public adjuster to evaluate your policy and fight to maximize your claim payout.
Recovering from Natural Disasters
Do you have enough insurance coverage to restore or rebuild your home after a natural disaster fully? Your underinsured home could be “the disaster after a disaster.”
In this article, you discovered how a homeowners insurance policy can fall short of fully restoring your home post-disaster, and how insurance policies are activated after different types of disasters.
If you allow your home to go underinsured, be prepared for massive out-of-pocket expenses when the insurance claim payout runs dry.
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