Record-setting rains are pounding Texas, tornadoes are rolling through the Midwest, and other major weather events are sweeping the country. And, while some people may be scratching their heads wondering what\u2019s going on? \u2013 many more are realizing that, in spite of homeowners insurance, it\u2019s meant huge unanticipated expenses.<\/p>\n
The slew of storms and subsequent ones, whether wind or rain related, are not only likely to cause extensive destruction to property, but they\u2019re also certain to bring sad stories to the surface from homeowners discovering that their insurance policies didn\u2019t cover them for as much of the damage as they had expected.<\/p>\n
So before the next big one hits, why not spend a few minutes to review your homeowners policy to make sure you can take Mother Nature head-on by knowing that you\u2019re adequately protected? You may not be able to escape her wrath, but you can repair or rebuild more easily if you have the proper coverage.<\/p>\n
By reading though your homeowners insurance policy, you\u2019ll see whether you\u2019re making any of these four mistakes that could prove costly should you not take the appropriate steps to fix them.<\/p>\n
According to insurance experts<\/a>, failing to have enough insurance to cover the cost of rebuilding your house, if it\u2019s destroyed in a storm, is the biggest mistake homeowners make. Though recent data was not available, one 2009 study found that two-thirds of U.S. homes are underinsured.<\/p>\n One of the main reasons for this is that many homeowners buy only enough insurance to cover the amount of their mortgage. But, depending on the initial down payment, the mortgage may be, at most, 80 or 90 percent of the value of the house, if the home has appreciated over the years.<\/p>\n Another reason is some policyholders insure an amount equal to the current value of their homes. Unfortunately, that figure may be far less than the actual cost of rebuilding the house, including labor and supplies. Keep in mind that both could rise sharply after a storm when there\u2019s bigger demand and short supply.<\/p>\n If you aren\u2019t sure how to go about getting a value \u2013 check with your insurer as some offer the service for free. Otherwise, you could ask a local real-estate agent, builder, contractor or building association for the average rebuilding cost per square foot in your area. But, when using an outside source, you may have to pay for the estimate.<\/p>\n You may also want to consult your insurer about buying extra coverage, known as floaters or riders, for jewelry, electronics or art \u2013 since policies ordinarily limit protection for valuables.<\/p>\n Not part of a standard homeowners contract, if you live near a lake, river, flood plain or the ocean, you should definitely consider buying it. In certain places, you may be required to have flood insurance in order to get a mortgage. The good news here is flood insurance isn\u2019t hard to get because it\u2019s a federal program that accepts everybody who wants the coverage.<\/p>\n Coastal homes aren\u2019t always the only ones that need flood insurance. A perfect example of this was the serious damage incurred in Hurricane Sandy by inland areas, such as parts of New Jersey, Albany, New York and even Vermont \u2013 not to mention what\u2019s been going on in Texas. If you find your home is at risk, ask your insurance company if it will sell you flood insurance.<\/p>\n Don\u2019t assume your maximum out-of-pocket cost would be $500, $1,000 or whatever deductible amount you agreed to when you bought your policy.<\/p>\n In the matter of named storms, like hurricanes or major weather events, such as windstorms and earthquakes, the deductible often becomes a percentage of your coverage. In other words, it could end up being 1 to 5 percent of the insured value for a flood or as much as 10 to 15 percent of coverage for an earthquake.<\/p>\n So, if your house is insured for $300,000, but you sustain damage in a windstorm or tornado, you could be stuck with a $15,000 deductible when you file your claim. You can ask your agent or insurer if your policy has different deductibles, depending on the cause of damage. By making a quick call you\u2019ll know if you need to change your policy to one that has the same flat-rate deductible no matter what happens. Be aware this may be hard to find depending on where you live \u2013 and will be more expensive.<\/p>\nMistake No. 2: Assuming you have flood insurance<\/h2>\n
Mistake No. 3: Assuming you have a single, flat deductible<\/h2>\n
Mistake No. 4: Believing your policy covers you for mold or sewage backup<\/h2>\n