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Good reasons to check homeowners insurance in the spring

Daniel Trumbower was working from home in Monrovia, Maryland, in early February when his wife called: a tornado warning had been issued for their city.

Initially doubtful: a tornado in Monrovia? Yes, right – he looked out to check the sky and saw a large heavy dustbin rising in the air. He ran to his basement, where he remained as the house above him trembled and a roaring wind enveloped her.

When he emerged a few minutes later, he looked incredulously at the destruction outside.

The road in front of Daniel Trumbower’s home in Monrovia, Maryland was blocked by a felled tree after a tornado ripped through the city in early February.

Photo provided by Daniel Trumbower

“It looked like a war zone,” said Trumbower, certified financial planner and senior wealth consultant at Halpern Financial in Ashburn, Virginia. “I dropped a tree in my neighbor’s driveway, our junction was drilled, shingles were everywhere. Debris was everywhere.”

Trumbower was grateful that his home had suffered only external damage from the tornado: a nearby barn had been razed to the ground. He found, however, that his homeowner’s insurance didn’t go beyond what he thought.

While its policy covers the costs of replacing the roof completely, this is not the case with the siding: it will only cover the cost of replacing the specific damaged points, a type of approach that often results in a mosaic of mismatched coatings.

Experience has shown that Trumbower just because you have homeowners insurance doesn’t mean your policy covers what you would expect it to do when your property suffers weather damage.

“I was taken by surprise,” said Trumbower, who is still in the process of complaints. The quote you received to replace the whole fitting? $ 27,000.

With weather events causing havoc in communities across the country – often in places unfamiliar to them – experts recommend reviewing homeowners insurance in case Mother Nature’s fury visits your neighborhood.

“You should meet your agent once a year to review your coverage and make sure there are no gaps,” said Insurance Information Institute spokesman Mark Friedlander.

In early March, parts of Nashville and central Tennessee were hit by a storm that caused the cyclone that killed 25 people and damaged or destroyed hundreds of homes and commercial structures. As the affected communities continue the long process of recovery and reconstruction, the cost of destruction is estimated at over $ 1 billion, according to the proprietary data provider CoreLogic.

And the tornado season is just beginning. States along the Gulf coast – including Alabama, Mississippi and Florida – tend to have more activity in early spring, while for states in the center of the country, such as Texas, Oklahoma and Kansas, it is a little later, according to NOAA. However, tornadoes can erupt practically anywhere if conditions favor their formation.

And then there is the water. A warmer and wetter spring is expected in the eastern half of the country, according to NOAA. After that it is the hurricane season in the Atlantic, which starts on June 1st and lasts until the end of November. At the same time, however, the southwest should have a drier than normal spring, which increases the risk of fire.

Last year was the fifth consecutive year in which the United States experienced 10 or more $ 10 billion in climate and climate disasters, according to the NOAA.

Depending on where you live and the typical weather conditions in that area, homeowners’ policy may provide coverage for some of the venue’s more specific events, and state law often determines what is required by the policies offered in their jurisdiction. Keep in mind that earthquakes – which can also strike anywhere without warning – are not covered by standard homeowners’ policies, even in earthquake-prone California (you should purchase separate insurance). Nor are there generally other types of earth movement (eg landslides, sinkholes).

Of course, insurance is often a balancing act with other expenses and financial obligations. Although your specific coverage should depend on your circumstances, here are a few things to consider when reviewing your policy.

Different damage, different deductibles

While many dangers are covered by the standard part of your policy, some weather events fall under a different part which comes with a different deductible.

If you live in a state along the east coast or the Gulf of Mexico, the homeowners insurance policy is likely to have a hurricane deductible. Likewise, in states most prone to wind-related events – that is, tornadoes – you are likely to have a wind / hail deductible.

In both cases, these amounts typically range from about 1% to 5% (with a minimum of $ 500) depending on the specifications of the insurance contract. Some homeowners may opt for an even higher deductible if it is available. In general, the higher the deductible, the lower the premiums and vice versa.

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It is important to note that for percentage based deductibles, the amount is based on the insured value, not the damage caused.

So if your home is insured for $ 200,000 and you have a 2% hurricane deductible, you would be responsible for covering the first $ 4,000 regardless of the total cost of the damage.

This means that it is wise to have a plan to cover your share following a disaster.

Trumbower, the financial advisor, said that his experience demonstrated the importance of emergency savings.

Although his family could stay indoors because the damage was outside, they had no power. With outside temperatures in the 1920s, Trumbower went to Costco for a generator ($ 700.) In addition, the cost of removing the emergency tree was $ 3,500, but his insurance covered only $ 1,000.

“It shows how important it is to have that emergency money available,” said Trumbower.

Flood risk

Homeowners’ policies generally exclude flooding from coverage. However, just an inch of water in the home can cause damage worth up to $ 25,000, according to the Federal Emergency Management Agency. In addition, 1 in 4 flood insurance claims come from a high risk area.

For coverage, you need to have separate flood insurance through the National Federal Flood Insurance Program or a private insurer. Note, however, that coverage exclusions and limitations exist. And flood policies take 30 days to become effective. The average annual cost is $ 700, although it can vary widely.

While floods are a common feature of natural disasters, less than 15% of homeowners have flood insurance, says Institute Information Insurance’s Friedlander.

Many homeowners have the misconception that floods will be covered by their standard policy.

Mark Friedlander

Insurance Information Institute spokesperson

“Many homeowners have the misconception that floods will be covered by their standard policy,” he said.

When a homeowner faces storm damage that has been discovered but in a federally declared disaster zone, there may be government programs that can provide financial assistance, including FEMA grants and small business administration loans. . However, such help is not guaranteed and will likely not get you back on your feet quickly.

For example, after Hurricane Harvey in 2017, which dumped up to 60 inches of rain in some parts of Texas, the average FEMA grant for individuals was $ 7,000, while the average request through the National Flood Insurance Program it was over $ 100,000.

Even that year, according to CoreLogic, serious domestic mortgage delinquencies tripled in the metropolitan areas of Houston and Cape Coral, Florida, and quadrupled in San Juan, Puerto Rico, all hit hard by hurricanes.

The following year, in 2018, the average flood demand was around $ 43,000, Friedlander said.

“If you don’t have flood coverage, ask yourself how you would pay for it,” he said.

If you are a renter

Even if you don’t own your home, your finances are still at risk if a storm damages your home or building. While the owner’s insurance would cover the property itself, you would be responsible for your property.

Renter insurance is an option to cover your things. It can also cover the cost of living somewhere else if you can’t stay indoors after a storm or any other insured event.

The national average for a policy with coverage of $ 40,000 for personal property, a $ 1,000 deductible and $ 100,000 of liability protection is $ 197 per year (approximately $ 17 per month), according to an interest rate analysis by Insurance.com.

Other probabilities and ends

It is also worth making sure that the amount of coverage for the rebuild reflects the current replacement cost. Construction costs could be higher than when your home was built and local building codes could be stricter.

The bottom line is that even if you think you think the risk of extreme weather reaching you is low, it is worth knowing how you would manage financially.

“I never thought a tornado would come through Monrovia,” said Trumbower. “But it was like that.”

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