Do You Have Adequate How Much Homeowners Insurance?

Courtesy of iii.org

If disaster strikes, you’ll want enough homeowners insurance to rebuild the structure of your home, to help replace your belongings, to defray costs if you’re unable to live in your home and to protect your financial assets in the event of liability to others. Use these guidelines to help determine the coverage and amounts you need.


Determine how much insurance you need for your home’s structure

Standard homeowners policies provide coverage for disasters such as damage due to fire, lightning, hail and explosions. Those who live in areas where there is risk of flood or earthquake will need coverage for those disasters, as well. In every case, you’ll want the limits on your policy to be high enough to cover the cost of rebuilding your home.

The price you paid for your home—or the current market price—may be more or less than the cost to rebuild. And if the limit of your insurance policy is based on your mortgage (as some banks require), it may not adequately cover the cost of rebuilding.

While your insurer will provide a recommended coverage limit for the structure of your home, it’s a good idea to educate yourself as well. To make sure your home has the right amount of structural coverage, consider:

Major factors that will impact home rebuilding costs

  • Local construction costs
  • The square footage of the structure

For a quick estimate of the amount of insurance you need, multiply the total square footage of your home by local, per-square-foot building costs. (Note that the land is not factored into rebuilding estimates.) To find out construction costs in your community, call your local real estate agent, builders association or insurance agent.

Details that can impact home rebuilding costs

  • The type of exterior wall construction—frame, masonry (brick or stone) or veneer
  • The style of the house, for example, ranch or colonial
  • The number of bathrooms and other rooms
  • The type of roof and materials used
  • Other structures on the premises such as garages, sheds
  • Special features such as fireplaces, exterior trim or arched windows
  • Whether the house—or a part of it—was custom built
  • Improvements you’ve made that have added value to your home, such as the addition of second bathroom, or a kitchen renovation

 

Other considerations

Whether or not your home is up to code

Building codes are updated periodically and may have changed significantly since your home was built. In the event of damage, you may be required to rebuild your home to the new codes and homeowners insurance policies (even a guaranteed replacement cost policy—see below) generally won’t pay for that extra expense. If you suspect that elements of your home are not up to current building codes, consider getting an endorsement to your policy called an Ordinance or Law, which pays a specified amount toward bringing a house up to code during a covered repair.

Whether your home is older with hard-to-replace features

Lovely, special features on older homes—like wall and ceiling moldings and carvings—are expensive to recreate and some insurance companies may not offer replacement policies for that reason.

If you own an older home, you may have to buy a modified replacement cost policy. This means that instead of repairing or replacing features typical of older homes—like plaster walls—with like materials, the policy will pay for repairs using today’s standard building materials and construction techniques.

Allowing for possible increased cost of building materials

Inflation can impact rebuilding costs. If you plan on owning your home for a while, consider adding an inflation guard clause to your policy. An inflation guard automatically adjusts the dwelling limit to reflect current construction costs in your area when you renew your insurance.

After a major catastrophe such as a hurricane or tornado, construction costs may rise suddenly because the price of building materials and construction workers increase due to the widespread demand. This price bump may push rebuilding costs above your homeowners policy limits and leave you short. To protect against this possibility, a guaranteed replacement cost policy will pay whatever it costs to rebuild your home as it was before the disaster. Similarly, an extended replacement cost policy will pay an extra 20 percent above the limits (possibly more, depending on the insurance company).

Determine how much insurance you need for your possessions

Most homeowners insurance policies provide coverage for your belongings at about 50 to 70 percent of the insurance on your dwelling. However, that standard amount may or may not be enough. To learn if you have enough coverage:

Conduct a home inventory of your personal possessions

In order to accurately assess the value of what you own, it’s highly advisable to conduct a home inventory. A detailed list of your belongings will not only help you figure out how much insurance you need, but it will also serve as a convenient record. In the event any or all of your stuff is stolen or damaged by a disaster an inventory will make filing a claim much easier.

There are several apps available to help you take a home inventory, and our article on how to create a home inventory can help, as well.

While you’re reviewing your possessions, think about whether you want to insure them for actual cash value (where the policy would pay less money for older items than you paid for them new) or for replacement cost (which would cover to replace the items). The price of replacement cost coverage for homeowners is about 10 percent more but is generally a worthwhile investment in the long run. (Note that flood insurance for belongings is only available on an actual cash value basis.)

If you think you need more coverage, contact your insurance professional and ask about higher limits for your personal possessions.

Take stock of your expensive items

There are limits on how much a standard homeowners insurance policy will cover for items such as jewelry, silverware, collectibles and furs. For example, jewelry coverage may be limited to under $2,000. Some insurance companies may also place a limit on what they will pay for computers.

Check your policy (or ask your insurance professional) for the limits of your coverage for any expensive items. If your home inventory includes items for which the limits are too low, consider buying a special personal property floater or an endorsement. This will allow you to insure valuables individually or as a collection, with significantly higher coverage limits.

Determine how much additional living expense insurance you need

Additional Living Expenses (ALE) is a very important feature of a standard homeowners insurance policy. If you can’t live in your home due to a fire, severe storm or other insured disaster, ALE pays the additional costs of temporarily living elsewhere. It covers hotel bills, restaurant meals and other living expenses incurred while your home is being rebuilt.

If you rent out part of your house, this coverage also reimburses you for the rent that you would have collected from your tenant if your home had not been destroyed.

Many policies provide coverage for about 20 percent of the insurance on your house. But ALE coverage limits vary from company to company. For example, there are policies that provide an unlimited amount of coverage, for a limited amount of time, while others may only set limits on the amount of coverage. In most cases, you can increase ALE coverage for an additional premium.

Determine how much liability insurance you need

The liability portion of homeowners insurance covers you against lawsuits for bodily injury or property damage that you or family members or pets cause to other people, as well as court costs incurred and damages awarded.

You should have enough liability insurance to protect your assets. Most homeowners insurance policies provide a minimum of $100,000 worth of liability insurance, but higher amounts are available and, increasingly, it is recommended that homeowners consider purchasing at least $300,000 to $500,000 worth of liability coverage.

If you own property and or have investments and savings that are worth more than the liability limits in your policy, consider purchasing a separate excess liability or umbrella policy.

Consider an umbrella or excess liability policy

Umbrella or excess liability policies provide coverage over and above your standard home (or auto) liability policy limits. These policies start to pay after you have used up the liability insurance in your underlying policy. In addition to providing additional dollar amount coverage, umbrella or excess liability often offers broader coverage than standard policies.

The cost of an umbrella policy depends on how much underlying insurance you have and the kind of risk you represent. The greater the underlying liability coverage you have, the cheaper the umbrella or excess policy. To write an umbrella or excess policy, most companies will require a minimum of $300,000 underlying liability insurance on your standard homeowners policy.

2018 No-Fault Insurance in Florida

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The Florida Legislature is again looking at ending no-fault auto insurance in Florida. Sound familiar? Tweaking no-fault (also known as personal injury protection ? PIP) is a frequent topic for legislative debate.

You may recall a fix to fight no-fault fraud came in 2012. Regulators issued a report in 2015 that said the fix appeared to be working. Regardless, it seems the desire to do something about rising auto insurance rates may be driving the desire to abolish no-fault. Florida is one of 12 states with a no-fault law. Proponents say it allows those injured in a car crash to recover costs for medical treatment under their own insurance policy, without needing to determine who is at fault for the accident. Among the proponents are hospitals, which say about one-third of the people they treat for auto injuries only have no-fault coverage. Critics discount that view, saying no-fault duplicates coverage that most people already have with medical insurance.

What will replace no-fault/PIP if the legislation becomes law? A requirement for bodily injury coverage, which applies to injuries you as a driver cause to someone else. This may cost more than no-fault coverage for some people. With this change, the Legislature is also considering raising the compulsory financial responsibility limits. Any time most people hear the word “raising” they think it might cost more money, and it might ? but here’s the other side of that:

Florida has the lowest financial responsibility requirement of any U.S. state. That means we set the bar very low for the responsibility drivers have if they cause a car crash with injuries. And, the end result is that too many people are not fully compensated, so while they are trying to recover physically from injuries caused by another, they may also be suffering financially. Raising that bar is about accountability.

A reminder: Insurance of any type (auto, home, health, business) is about protecting your assets. Always, always (always!) make sure you have insurance equal to the total value of the assets you own.

The Holidays & Car Theft

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The FBI includes the theft or attempted theft of automobiles, trucks, buses, motorcycles, scooters, snowmobiles and other vehicles in its definition of motor vehicle theft. About $5.9 billion was lost to motor vehicle theft in 2016. The average dollar loss per theft was $7,680. Motor vehicles were stolen at a rate of 236.9 per 100,000 people in 2016, up 7.6 percent from 2015 but down 35.1 percent from 2007.

Vehicle thefts have been trending downward in the 23 years since they peaked at 1,661,738 in 1991, falling 58 percent to 699,594 in 2013, according to a 2014 report from the National Insurance Crime Bureau (NICB). As a result, 56 percent of Americans rarely or never worry that their car will be stolen, according to a 2014 Gallop poll. The NICB credits law enforcement efforts, along with the creation of specific antitheft programs, technology and insurance company-supported organizations such as the NICB for contributing to the theft reduction.

Despite the reduction in vehicle thefts over the past two decades, industry observers caution that thieves constantly devise new and sophisticated means of stealing autos. Tactics include acquiring smart keys, which eliminated hot-wiring to steal cars; switching vehicle identification numbers; and using stolen identities to secure loans for expensive vehicles. The number of vehicles stolen with the key or keyless entry device left inside by the owner climbed 22 percent in 2015 to 57,096, according to the NICB.

Motor Vehicle Theft In The United States, 2007-2016

Year Vehicles stolen Percent change
2007 1,100,472 -8.2%
2008 959,059 -12.9
2009 795,652 -17.0
2010 739,565 -7.0
2011 716,508 -3.1
2012 723,186 0.9
2013 700,288 -3.2
2014 686,803 -1.9
2015 713,063 3.8
2016 765,484 7.4

Source: U.S. Department of Justice, Federal Bureau of Investigation, Uniform Crime Reports.

View Archived Tables

  • Motor vehicles were stolen at a rate of 236.9 per 100,000 people in 2016, up 7.6 percent from 2015 but down 35.1 percent from 2007.
  • About $5.9 billion was lost to motor vehicle theft in 2016. The average dollar loss per theft was $7,680.

Top 10 U.S. Metropolitan Statistical Areas By Motor Vehicle Theft Rate, 2016

 

Rank Metropolitan statistical area (1) Vehicles stolen Rate (2)
1 Albuquerque, NM 10,011 1,114.01
2 Pueblo, CO 1,325 899.43
3 Bakersfield, CA 7,176 854.66
4 Modesto, CA 3,820 767.69
5 Riverside-San Bernardino-Ontario, CA 25,708 679.05
6 Anchorage, AK 2,273 669.38
7 Merced, CA 1,622 660.65
8 San Francisco-Oakland-Hayward, CA 29,414 640.26
9 Fresno, CA 5,682 631.79
10 Billings, MT 877 625.38

(1) Metropolitan Statistical Areas are designated by the federal Office of Management and Budget and usually include areas much larger than the cities for which they are named.
(2) Rate of vehicle thefts reported per 100,000 people based on the 2016 U.S. Census Population Estimates.

Source: National Insurance Crime Bureau.

What is Umbrella Liability Insurance?

Courtesy of iii.org

Your standard auto insurance or homeowners insurance will provide you with some liability coverage. If you are sued, those policies will pay up to your policy limits for legal judgments against you, as well as the related attorney’s fees.

However, in our litigious society when a lawsuit settlement could very well wipe out your financial assets, you may want the extra protection for your assets that a personal umbrella liability policy provides.

An umbrella policy kicks in when you reach the limit on the underlying liability coverage in an auto, homeowners, renters or co-op / condo policy. It will also cover you for additional types of claims, such as libel and slander.

You can buy a $1 million personal umbrella liability policy for about $150 to $300 per year. The amount you pay decreases for each million dollars of coverage beyond that. Because the personal umbrella policy pays out after the underlying coverage is exhausted, most insurers will want you to have about $250,000 of liability insurance on your auto policy and $300,000 of liability insurance on your homeowners policy before they will sell you an umbrella policy.

Get the Most From Travel Insurance

Courtesy of iii.org

Before leaving on vacation, make sure you have adequate insurance. Vacations can sometimes cost thousands of dollars, so it is important to have the proper insurance protection in case the cruise or tour operator goes bankrupt or you need to cancel the trip due to illness or other unforeseen events.

There are four major types of travel insurance, although you can also purchase packages that offer several options, including Trip Cancellation, Lost Baggage, Medical, Dental, Emergency Evacuation, 24 Hour Traveler Assistance, Baggage Delay, Travel Delay, and Accidental Death Coverages. Some policies also have options for Collision/Damage coverage for rented cars.

1. Trip cancellation insurance

This would reimburse you if the cruise line or tour operator goes out of business. It would also provide coverage if you have to cancel the trip due to sickness, a death in the family or another calamity listed in the policy.

In addition, if you or an immediate family member becomes seriously ill or is injured during the trip most policies would reimburse you for the unused portion of the vacation.

The cost is generally five to seven percent of the price of the vacation, so a $5,000 trip would cost roughly $250 to $350 to insure.

Trip cancellation is very different from a Cancellation Waiver that many cruise and tour operators offer. Waivers are relatively inexpensive, costing approximately $40 to $60. They provide coverage if you have to cancel the trip, but they have many restrictions. They must be purchased when you book the trip and will usually not cover you immediately before departure (the time period most people cancel) or after the trip has begun. Most importantly, waivers are not insurance. Cancellation Waivers are not regulated by the state department of insurance, so if your tour or cruise operator gets into financial difficulty, you may not be able to collect.

2. Baggage insurance or personal effects coverage

This would provide coverage if your personal belongings are lost, stolen or damaged during the trip.

To insure $1,000 worth of personal belongings for a week, it would cost roughly $50 per year.

Before purchasing this type of coverage, find out how much insurance the airline or trip operator provides for your belongings.

Also, check your homeowners or renters policy. It will usually provide coverage for off-premises theft. Therefore, if your luggage is stolen, your insurer will pay to replace it, less the deductible.

If you are traveling with expensive electronic equipment, jewelry or sporting gear, it might be more cost-effective to purchase a floater or endorsement to your homeowners or renters policy. The cost to insure a $1,000 ring would be between $10 and $40 annually. This would provide full coverage for the item, anywhere in the world, usually for one year.

3. Emergency medical assistance

This provides insurance and medical assistance for travelers. It would cover you if you had to be airlifted off a mountain due to a skiing or hiking accident, or if you had to stay for a prolonged period of time in a foreign hospital. It would also provide coverage if you got seriously sick or were injured and needed to be flown home. Some commercial airlines require very sick passengers to travel on a stretcher with a doctor. This means that you might have to purchase 10 or more seats on a plane at a possible cost of over $10,000.

Before purchasing this type of coverage, check with your own health insurance carrier. Find out what type of coverage you have when traveling abroad and if there are any limits. Also, ask if the policy will pay to fly you home or to a country with first-rate medical care.

4. Accidental death

This provides a variety of coverages if you or a family member die on the trip. If you have a good life insurance plan or made other financial provisions for your loved ones, this may be duplicate insurance.

Your credit card company may provide travel-related services and coverage. You can also purchase travel insurance from either a travel agent or you can buy directly from an insurer that specializes in this type of coverage.

Drunk Driving Holiday Risks

Courtesy of iii.org

Alcohol is a major factor in traffic accidents. Based on data from the U.S. Department of Transportation, National Highway Traffic Safety Administration (NHTSA), there was an alcohol-impaired traffic fatality every 51 minutes in 2015.

Alcohol-impaired crashes are those that involve at least one driver or a motorcycle operator with a blood alcohol concentration (BAC) of 0.08 percent or above, the legal definition of drunk driving. According to NHTSA 10,265 people died in alcohol-impaired crashes in 2015, up 3.2 percent from 9,943 in 2014. In 2015 alcohol-impaired crash fatalities accounted for 29 percent of all crash fatalities.

The definition of drunk driving had been consistent throughout the United States until March 2017. All states and the District of Columbia defined impairment as driving with a BAC (blood alcohol concentration) at or above 0.08 percent. In addition, they all have zero tolerance laws prohibiting drivers under the age of 21 from drinking and driving. Generally the BAC limit in these cases is 0.02 percent. In March 2017, the governor of Utah signed a bill, effective December 30, 2018, that lowered the limit defining impaired driving for most drivers to 0.05 percent BAC, the lowest in the nation.

Anti-drunk-driving campaigns especially target drivers under the age of 21, repeat offenders and 21-to 34-year-olds, the age group that is responsible for more alcohol-related fatal crashes than any other. Young drivers are those least responsive to arguments against drunk driving, according to NHTSA.

To make sellers and servers of liquor more careful about to whom and how they serve drinks, 42 states and the District of Columbia have enacted laws or have case law holding commercial liquor servers legally liable for the damage, injuries and deaths a drunk driver causes. Thirty-nine states have enacted laws or have case law that permit social hosts who serve liquor to people who subsequently are involved in crashes to be held liable for any injury or death. (See chart below and Background.)

Recent developments

  • Latest data from the National Highway Traffic Safety Administration (NHTSA) indicates that the 10,265 alcohol-impaired fatalities in 2015 accounted for about one out of three highway deaths (29 percent) on U.S. roads. There were 9,943 such fatalities in 2014.
  • Ignition interlock systems require drivers to blow into a breathalyzer-like device to ensure the individual is sober before allowing the vehicle to start. According to a report released in January 2017 by the Johns Hopkins Bloomberg School of Public Health, traffic fatalities have declined by 7 percent in states that mandate ignition interlocks for first-time drunken-driving offenders. The researchers studied traffic fatalities for about five years before states began passing interlock laws in the late 1980s through 2013, when all states required them under some circumstances. See Background, Repeat Offenders.
  • Drunk Driving by Gender: Latest NHTSA data show that 14 percent of women drivers involved in fatal crashes in 2015 (1,761 drivers) were alcohol-impaired, only 1 percentage point lower than in 2006. In comparison, 21 percent of male drivers involved in fatal crashed were alcohol impaired in 2015, down from 24 percent in 2006.
  • Drunk Driving by Age: According to data from NHTSA, in 2015 the percentage of drivers in fatal crashes who were alcohol impaired was highest for 21 to 24 year old drivers, at 28 percent, followed by 25 to 34 year old drivers, at 27 percent, and 35 to 44 year old drivers, at 23 percent. The percentage of alcohol-impaired drivers in fatal crashes was 19 percent for 45 to 54 year olds, 16 percent of 16 to 20 year olds, 14 percent for 55 to 64 year olds, 9 percent for 65 to 74 year olds and 6 percent for drivers over the age of 74.
  • Drunk Driving by Vehicle Type: NHTSA data for 2015 show that 27 percent of motorcycle drivers involved in fatal crashes were alcohol impaired, compared with 21 percent of passenger car drivers and 20 percent of light truck drivers. Only 2 percent of large-truck drivers involved in fatal crashes in 2015 were alcohol impaired.
  • Social Host Liability: The Massachusetts Supreme Court ruled in February 2012 that social hosts could be held liable for off-premise injury to people caused by the drunk driving of a guest only if the host served alcohol or made it available. People who host “bring your own” parties are free from liability, even if the guest is underage. The court rejected an attempt by the parents of an injured 16-year-old to sue a party’s 18-year old host. The younger person suffered injuries in a crash in a car driven by someone who brought his own alcohol to the party. At issue was the fact that the driver, not the party host, supplied the liquor. Although the lawsuit contended that the host should be found negligent for allowing the driver to drink at her home, the court said that earlier rulings showed that hosts can’t be responsible for their guests’ drinking if they don’t control the supply of alcohol. Massachusetts law and court cases have held social hosts liable if they supply alcohol (See chart: STATUTES OR COURT CASES HOLDING ALCOHOLIC BEVERAGE SERVERS LIABLE).
  • Also in February 2012 the New Mexico Supreme Court said that circumstantial evidence of a driver’s intoxication was sufficient to support a jury finding that the driver was intoxicated, overruling a decision in a 2004 case. Evidence presented in the earlier trial showed that a driver who struck and killed a motorcyclist had a 0.09 percent blood alcohol content five hours after the crash. The owners of the gas station where the driver worked and consumed a number of beers bought at the gas station pleaded ignorance of the driver’s condition. The court ruled that the blood test results were enough to prove that the driver was intoxicated. The ruling holds liquor sellers responsible for liability where evidence is available under the existing dram shop law.

FAQ FEMA & Insurance

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For those who do not have the right insurance, or who need help beyond their coverage, government programs can sometimes step in to help with post-disaster recovery. Here is a round-up of the most frequently asked questions about the disaster assistance offered by FEMA.


Q. How do I apply for FEMA disaster assistance?

A. You can apply at www.DisasterAssistance.gov or m.fema.gov, or call the FEMA Helpline at 800-621-3362. If you have a speech disability or hearing impairment and use a TTY, call 800-462-7585 directly. If you use 711 or Video Relay Service (VRS), call 800-621-3362.

Q. What happens after I apply for disaster assistance?

A. FEMA will mail you a copy of your application and a copy of Help After a Disaster: Applicant’s Guide to the Individuals and Households Program that will answer many of your questions.

  • If you do not have insurance: An inspector will contact you after you apply to schedule a time to meet you at your damaged home.
  • If you have insurance: You need to file your insurance claim and provide FEMA with a decision letter (settlement or denial) from your insurance company before FEMA issues an inspection.
    • There is an exception for damages caused by flooding; if you have flood insurance, FEMA will issue an inspection before receiving a copy of your flood insurance decision letter to evaluate your eligibility for temporary living expenses since these are not covered by flood insurance.
  • About 10 days after the inspection FEMA will decide if you qualify for assistance. If so, FEMA will send you a check by mail (or direct deposit) with an explanation of what the money covers (i.e. rent or home repair).
  • If FEMA determines that you are ineligible for any reason, you will receive a letter and be given a chance to appeal. Appeals must be in writing and mailed within 60 days of the determination. Read the letter carefully for the reason of ineligibility before filing your appeal.
  • If you get a Small Business Administration (SBA) Disaster Loan application in the mail, you must complete and return it to be considered for a loan or certain types of grant assistance, such as transportation, personal property, and moving and storage.

Q. Why didn’t I receive rental assistance when my home can’t be lived in?

A. If you cannot live in your home because of disaster damage and you did not receive rental assistance, please contact FEMA to check on your status. It could be that during the inspection you indicated that you were unwilling to relocate. If so, FEMA would not move forward to issuing a rental assistance check for you to move to another location.

Q. I received a rental assistance check, how do I find a new place to rent?

A. The FEMA Housing Portal is intended to help individuals and families, who have been displaced by a disaster, find a place to live. The portal consolidates rental resources to help individuals and families find available rental units in their area. This information can be accessed by visiting www.fema.gov and searching “Housing Portal,” or by calling 800-621-3362.

Q. Will my family get assistance faster if we each apply separately?

A. No. If two members of the same household apply for the same damaged home, FEMA assistance could actually be delayed. If more than one member of a household has applied, the additional registrants should call the FEMA Helpline, 800-621-3362 to withdraw their applications. Once this occurs, the original registration for the household can be processed for assistance.

Q. If I received a settlement from my insurance but still have additional needs, what can I do?

A. As soon as you receive an insurance settlement, you should provide a copy to FEMA and identify any unmet needs you have. Although FEMA cannot duplicate benefits that your insurance provided, FEMA may be able to assist you with lost essential items not covered by insurance and can also help you find resources through other recovery partners.

Q. Why did I get a different amount of home repair assistance than my neighbor?

A. Each survivor’s case is unique. There are several factors involved, including insurance status and the extent and type of damage found during the home inspection. If you feel that the assistance you received does not cover your needs ? for example, the funding you received for repairs are less than the estimates you’ve received from contractors and you have not yet met the FEMA maximum grant ? you can appeal.

Q. Will FEMA provide additional rental assistance beyond the initial assistance period if I still cannot return to my home?

A. Rental assistance can be provided for up to 18 months from the date of declaration while you are setting up your permanent housing plan. After your initial period of assistance, you will be sent a letter on how to “recertify” if you need additional rental assistance.

Q. Could FEMA assistance affect my Social Security benefits, federal taxes, food stamp (SNAP) eligibility, or Medicaid?

A. No. FEMA assistance does not affect benefits from other federal programs and is not considered taxable income.

Q. I’ve already cleaned up the damage to my home and made repairs. Is it too late to register once the work is done?

A. No. You may be eligible for reimbursement of your cleanup and repair costs, even if repairs are complete. The important thing is to document the expenses you incur. It is a good idea to take before-and-after photos for your records.

Q. If I received disaster assistance last year, could I get it again this year?

A. Assistance may be available if you also suffered damages from a previously federally declared disaster.

Q. My child is a U.S. citizen, but I am not. Can I apply for FEMA disaster assistance?

A. If anyone in an affected household is a U.S. citizen, non-citizen national or qualified alien (a “Green Card” holder), they are eligible to apply for FEMA disaster assistance. If a minor child is eligible by these criteria, even when other members of the family are not, the family can file an application on the child’s behalf.

In this case, all identification documents have to be in the child’s name and Social Security number. The copy of the child’s Social Security card and birth certificate are acceptable verification. This information can be mailed to FEMA or brought to a Disaster Recovery Center.

Additional resources

For more information, visit the FEMA website.

What You Need to Know About Claims

Courtesy of iii.org

After a disaster, you want to get back to normal as soon as possible, and your insurance company wants that too! You may get multiple checks from your insurer as you make temporary repairs, permanent repairs and replace damaged belongings. Here’s what you need to know about claims payments.


The initial payment isn’t final

In most instances, an adjuster will inspect the damage to your home and offer you a certain sum of money for repairs, based on the terms and limits of your homeowners policy. The first check you get from your insurance company is often an advance against the total settlement amount, not the final payment.

If you’re offered an on-the-spot settlement, you can accept the check right away. Later, if you find other damage, you can reopen the claim and file for an additional amount. Most policies require claims to be filed within one year from the date of disaster; check with your state insurance department for the laws that apply to your area.

You may receive multiple checks

When both the structure of your home and your personal belongings are damaged, you generally receive two separate checks from your insurance company, one for each category of damage. If your home is uninhabitable, you’ll also receive a check for the additional living expenses (ALE) you incur if you can?t live in your home while it is being repaired. If you have flood insurance and experienced flood damage, that means a separate check as well.

Your lender or management company might have control over your payment

If you have a mortgage on your house, the check for repairs will generally be made out to both you and the mortgage lender. As a condition of granting a mortgage, lenders usually require that they are named in the homeowners policy and that they are a party to any insurance payments related to the structure. Similarly, if you live in a coop or condominium, your management company may have required that the building’s financial entity be named as a co-insured.

This is so the lender (and/or, in the case of a coop or condo, the overall building), who has a financial interest in your property, can ensure that the necessary repairs are made.

When a financial backer is a co-insured, they will have to endorse the claims payment check before you can cash it.

Depending on the circumstances, lenders may also put the money in an escrow account and pay for the repairs as the work is completed. Show the mortgage lender your contractor’s bid and let the lender know how much the contractor wants upfront to start the job. Your mortgage company may want to inspect the finished job before releasing the funds for payment to the contractor.

If your home has been destroyed, the amount of the settlement and who gets it is driven by your policy type, its specific limits and the terms of your mortgage. For example, part of the insurance proceeds may be used to pay off the balance due on the mortgage. And, how the remaining proceeds are spent depend on your own decisions, such as if you want to rebuild on the same lot, in a different location or not rebuild at all. Tthese decisions are also driven by state law.

Your insurance company may pay your contractor directly

Some contractors may ask you to sign a “direction to pay” form that allows your insurance company to pay the firm directly. This form is a legal document, so you should read it carefully to be sure you are not also assigning your entire claim over to the contractor. When in doubt, call your insurance professional before you sign. Assigning your entire insurance claim to a third party takes you out of the process and gives control of your claim to the contractor.

When work is completed to restore your property, make certain the job has been completed to your satisfaction before you let your insurer make the final payment to the contractor.

Your ALE check should be made out to you

Your check for additional living expenses (ALE) has nothing to do with repairs to your home. So, ensure that this check is made out to you alone and not your lender. The ALE check covers your expenses for hotels, car rental, meals out and other expenses you may incur while your home is being fixed.

Your personal belongings will be calculated on cash value, first

You’ll have to submit a list of your damaged belongings to your insurance company (having a home inventory will make this a lot easier). Even if you have a replacement value policy, the first check you receive from your insurer will be based on the cash value of the items, which is the depreciated amount based on the age of the item. Why do insurance companies do this? It is to match the remaining claim payment to the exact replacement cost. If you decide not to replace an item, you?ll be paid the actual cash value (depreciated) amount for it.

To get replacement value for your items, you must actually replace them

To get fully reimbursed for damaged items, most insurance companies will require you to purchase replacements. Your company will ask for copies of receipts as proof of purchase, then pay the difference between the cash value you initially received and the full cost of the replacement with an item of similar size and quality. You’ll generally have several months from the date of the cash value payment to purchase replacements; consult with your agent regarding the timeframe.

In the case of a total loss, where the entire house and its contents are damaged beyond repair, insurers generally pay the policy limits, according to the laws in your state. That means you can receive a check for what the home and contents were insured for at the time of the disaster.

Next steps: We can’t reinforce it enough – claims are easier to make when you have a home inventory ready!

Boats, Insurance & You

Insurance can provide limited coverage for property damage for small boats such as canoes and small sail boats or small power boats with less than 25 mile per hour horse power under a homeowners or renters insurance policy. Coverage is usually about $1,000 or 10 percent of the home’s insured value and generally includes the boat, motor and trailer combined. Liability coverage is typically not included?but it can be added as an endorsement to a homeowners policy. Check with your insurance representative to find out if your boat is covered and what the limits are.

Larger and faster boats such as yachts, and personal watercraft such as jet skis and wave runners require a separate boat insurance policy. The size, type and value of the craft and the water in which you use it factor into how much you will pay for insurance coverage.

For physical loss or damage, coverage includes the hull, machinery, fittings, furnishings and permanently attached equipment as part of either an actual cash value policy or on an agreed amount value basis. These policies also provide broader liability protection than a homeowners policy. But there are distinct differences between the two types of policies.

Actual Cash Value policies pay for replacement costs less depreciation at the time of the loss. In the event of a total loss, used boat pricing guides and other resources are used to determine the vessel’s approximate market value. Partial losses are settled by taking the total cost of the repair less a percentage for depreciation.

Agreed Amount Value basis policies mean that you and your insurer have agreed on the value of your vessel and in the event of a total loss you will be paid that amount. Agreed Amount Value policies also replace old items for new in the event of a partial loss, without any deduction for depreciation.

Physical damage exclusions might include normal wear and tear, damage from insects, mold, animals (such as sharks), zebra mussels, defective machinery or machinery damage.

Boat insurance also covers:

  • Bodily injury?for injuries caused to another person
  • Property damage?for damage caused to someone else’s property
  • Guest passenger liability?for any legal expenses incurred by someone using the boat with the owner’s permission
  • Medical payments?for injuries to the boat owner and other passengers
  • Theft

Most companies offer liability limits that start at $15,000 and can be increased to $300,000. Typical policies include deductibles of $250 for property damage, $500 for theft and $1000 for medical payments. Higher limits may be available. Additional coverage can be purchased for trailers and other accessories. Boat owners may also consider purchasing an umbrella liability policy which will provide additional protection for their boat, home and car.

Boaters should also inquire about special equipment kept on the boat, such as fishing gear, to make sure it is covered and verify that towing coverage is included in the policy.

Boat owners should also inquire about discounts for the following:

  • Diesel powered craft, which are less hazardous than gasoline powered boats as they are less likely to explode
  • Coast Guard approved fire extinguishers
  • Ship-to-shore radios
  • Two years of claims-free experience
  • Multi-policies with the same insurer, such as a car, home or umbrella policy
  • Safety education courses, such as those offered by the Coast Guard Auxiliary, U.S. Power Squadrons, or the American Red Cross.

Boat Safety

There are thousands of recreational boating accidents per year. Contributing factors to these accidents include traveling too fast for water or weather conditions, driving under the influence of drugs or alcohol, failing to follow boating rules and regulations, carelessness and inexperience.

To prevent boating accidents, we offer these safety suggestions:

Care and protection of vessel

  1. Check weather forecasts before heading out.
  2. Let someone know where you’re going and when you expect to return.
  3. Check engine, fuel, electrical and steering systems, especially for exhaust-system leaks.
  4. Carry one or more fire extinguishers, matched to the size and type of boat. Keep them readily accessible and in condition for immediate use.
  5. Equip the vessel with required navigation lights and with a whistle, horn or bell.
  6. Consider additional safety devices, such as a paddle or oars, a first-aid kit, a supply of fresh water, a tool kit and spare parts, a flashlight, flares and a radio.

Care and protection of crew and guests

  1. Make sure that every person on board the boat wears a life-jacket.
  2. Know and obey marine traffic laws, the “Rules-of-the-Road.” Learn various distress signals.
  3. Keep an alert lookout for other watercraft, swimmers, floating debris and shallow waters.
  4. Pay attention to loading. Don’t overload; distribute the load evenly; don’t stand up or shift weight suddenly in a small boat; and don’t permit riding on the bow, seatbacks or gunwales.
  5. Don’t operate a boat while under the influence of alcohol or drugs.

Skippers can obtain free advice and boating-safety courses from the U.S. Coast Guard Auxiliary. Upon request, the auxiliary will conduct a Courtesy Marine Examination (CME) on your boat, checking electrical and safety equipment and fuel hoses. Boats meeting safety standards are awarded the CME decal “Seal of Safety.”

Business Income & Severe Weather Events

Courtesy of iii.org

With predictions of an above-average hurricane season issued by Colorado State University this week, businesses need to take measures to prepare and increase their chance of surviving, according to the Insurance Information Institute (I.I.I.).

Forty percent of businesses do not reopen after a disaster and another 25 percent fail within one year, according to the Federal Emergency Management Agency (FEMA). But by taking action now to prepare, businesses can increase their chance of getting back on their feet financially and keeping their doors open.

The I.I.I. and the Insurance Institute for Business & Home Safety (IBHS) recommend the following steps:

Develop a Business Continuity Plan

Having a business continuity plan is vital for companies to prepare for, survive and recover from a hurricane. Use IBHS? free OFB-EZ® (Open for Business) business continuity planning tool to create a plan that focuses on recovering after the initial emergency response. Share your plan with employees, assign responsibilities and offer training so your workforce can collaborate in the recovery of your business. Conduct regular drills to assess and improve response.

Maintain Key Information Offsite

To get your business up and operating as quickly as possible after a disaster, you?ll need to be able to access critical business information. In addition to backing up computer data, keep other critical information offsite such as your insurance policies, banking information and phone numbers of employees, key customers, vendors and suppliers, your insurance professional and others. If you have a back-up site, make sure it?s sufficiently far away so as not to be affected by the same risks that threaten the primary location. Use IBHS? free EZ-PREPTM severe weather emergency preparedness and response planning toolkit with checklists that can be customized for your company to be sure you have a well-organized plan and are ready to respond when disasters occur.

Create a Business Inventory

Include all business equipment, supplies and merchandise?and don?t forget commercial vehicles.

Review Your Insurance Coverage

The time to review your insurance policy is before disaster strikes and you have to file a claim. It is important that your business have both the right amount and type of insurance for its needs and risk profile. There are two types of policies you can buy as a business owner:

A Business Owner Policy (BOP) is commonly used by small businesses. BOP policies combine property and liability coverage in one policy and are usually less comprehensive than a commercial policy.

A Commercial Multi-peril (CMP) policy combines several coverages?such as commercial property, liability, inland marine and commercial auto?into a single policy. It is typically less expensive to buy a CMP policy than to buy the coverages individually.

Opt for Replacement Cost Coverage

Most commercial property policies provide either replacement cost coverage, actual cash value coverage, or a combination of both. Replacement cost coverage will pay to rebuild or repair property, based on current construction costs. Actual cash value coverage will pay to rebuild or replace the property minus depreciation. Depreciation is a decrease in value due to wear and tear or age. If your business is destroyed and you only have actual cash value coverage, you may not be in a position to completely rebuild.

Consider Tenant Coverage

If you rent or lease a building, consider tenant coverage, which will insure your on-premises property, including machinery, furniture and merchandise. The building owner?s policy will not cover your contents.

Don?t Forget About Flood Insurance

Flooding is not covered by standard commercial insurance policies, so consider buying a separate flood policy. If you?re located in a high- to moderate-risk flood zone, you could be protecting your business from devastating financial loss. Commercial flood coverage is available from the National Flood Insurance Program (NFIP) and provides up to $500,000 in building coverage and $500,000 for contents. You can also get coverage through private insurers.

Visit the Business Insurance section of the I.I.I. website for more information.

RELATED LINKS

Facts and Statistics: Catastrophes

Articles: When Disaster Strikes: Preparation, Response and Recovery; Does My Business Need Flood Insurance?

SOURCES:

Colorado State University

Insurance Institute for Business & Home Safety

National Flood Insurance Program

National Hurricane Center

Seasonal Hurricane Predictions

Small Business Administration