Hurricane season is just now starting to ramp up, with the threat of a major rain-producing event facing the greater New Orleans area this weekend. Whether your home is in the path of that storm or you might have to deal with the consequences of other natural disasters in the future, it's important to understand what kind of protection you can expect from your insurance company if the worst happens and your home is destroyed.
It's all too easy to assume that the homeowners or renters insurance that you pay premiums for month after month will protect you from any and all damages from catastrophic loss events like hurricanes. Unfortunately, as many people find out the hard way, the reality of insurance coverage following hurricanes can be quite different.
Below, you'll learn about three things that you'll need to do in order to make sure you have the coverage you need when a natural disaster looms.
1. The ins and outs of what's covered and what's not
It would be nice if there were a one-size-fits-all guide to understanding what's actually covered in a homeowners insurance policy. Unfortunately, there isn't, because different insurance companies don't always have the same provisions in their policy language. Given that the typical insurance policy these days runs dozens of pages and has plenty of confusing legal language, it's not surprising that most people have never fully read through their insurance policies -- let alone understand them well enough to know what's covered and what's not.
Even without good general rules, there are a couple of things that many homeowners have found out only through experience. First, what actually causes the damage to your home can make a huge difference to whether you're covered or not. Most of the time, homeowners insurance will cover damage from high winds, including those in a typical hurricane or tropical storm. However, most policies specifically do not cover damage from flooding, requiring homeowners to purchase separate flood insurance policies from the federal government in order to get complete coverage.
Where things get especially confusing is when there's a combination of factors that cause damage. If winds blow the roof off your home and then rain causes water damage that's later exacerbated by flooding, it's far from clear whether you're completely covered or not. Often, the only thing you can do is make a claim and hope for the best.
2. Know what will happen after the storm
Many people who've never faced a major loss before don't know how the claims process works. You'll typically get a visit from a claims adjuster, whose job it is to assess the damage and come up with a payout that matches up with the damages you've suffered. However, even though typical homeowners in this situation are desperate to keep the process moving forward to get their lives back to normal, it's still important to protect yourself against unfairly low estimates of what it'll take to cover all the damage to your property.
Once the adjuster examines the property and sends a report to the insurer, you'll find out whether your insurance company will pay the claim or try to count on a policy exclusion to reduce or eliminate any payment to you. Usually, there's a procedure you can follow if you disagree with the conclusion the insurance company reaches.
It usually starts with an internal review by the insurance company itself, but many states also have consumer protection mechanisms to have an independent entity look at your case to see if it was handled fairly. At some point, you might need to get legal help if your insurance company simply won't cooperate with you. Staying organized and keeping records of the damage to your home, as well as all your contacts with your insurer, will be helpful in documenting your work if you end up fighting a denied claim.
3. Improve your coverage -- but don't expect it to kick in right away
After a storm hits is the worst time to find out that you didn't have enough insurance coverage on your home. Unfortunately, once a storm is brewing, it's too late to make changes to your insurance coverage that will cover you from that particular event. Typically, insurers will make you wait out a 30-day period before coverage kicks in.
If you're not yet in the path of a storm, though, making changes is smart if you realize you need more coverage. You might still be unlucky enough to take a hit during the 30-day waiting period, but if you can dodge that bullet, you'll be better prepared for the next storm to hit.
Be smart about your home
The threat of a hurricane or other catastrophic event is one of the toughest things homeowners have to deal with. But if you get more familiar with these key elements of what happens with insurance in a natural disaster, you'll be better able to get through the ordeal if the worst does happen to you and your home.