Consider the following tips to confirm adequate insurance protection.
- Check the dwelling coverage limit. Homeowners insurance is based on replacement cost, which is the amount it takes to rebuild the structure with similar materials. Insuring the home for less than its replacement cost is a problem if there is a claim. The settlement may be reduced to a figure far less than the cost of repairs.
- Renters need insurance too. Most people own more personal belongings than they realize. Homeowners and renters insurance policies cover these items for specific losses outlined in the contract. This includes tornado damage. Create a room-by-room personal property inventory to assess how much contents coverage you need. Include make, model, serial number, photos, receipts, and appraisals whenever possible. Store this record in a safe deposit box, and update as necessary.
- Know the difference between replacement cost and actual cash value. Replacement cost does not consider depreciation. Actual cash value is replacement cost minus depreciation. Dwelling claims are typically settled on a replacement cost basis. However, insurers often pay actual cash value initially. The balance is paid when repairs are complete. Personal property losses are settled on an actual cash value basis unless contents replacement cost coverage has been added to the policy. There is an added cost for this endorsement.
- Flooding sometimes accompanies severe weather. Be aware that homeowners insurance policies do not cover flood-related damage. Flood insurance is available, but must be purchase as a separate, stand-alone policy. Buy flood insurance in advance as there is a 30-day wait period before coverage begins. Those with finished basements should consider sump pump/sewer back-up coverage. Most insurers offer this as an add-on endorsement. Look for restrictions that limit the amount of damage payable in a claim.
- Report storm damage to the insurance company as soon as possible. Take photos or video to document the loss, and make a list of damages. Do not throw anything away without the adjuster's approval. Take reasonable steps to protect property and belongings from further damage. This may include temporary repairs like tarping the roof, covering broken windows, etc. Keep receipts or these expenses, and submit them as part of the claim.