Changing weather patterns leave homeowners underinsured

(BPT) – The U.S. has experienced significant shifts in the frequency, severity and locations of natural disasters — including floods, hurricanes, tornadoes and wildfires — during the past decade.

As a result, more than 800 emergency or disaster declarations were made in the U.S. from 2005–2015, according to FEMA data. The insured losses stemming from natural catastrophes such as these average $24 billion annually.

Homeowners face severe risks from these disasters, yet many have not connected the dots between these shifts and the impact on their home insurance needs. A recent survey commissioned by the National Association of Insurance Commissioners (NAIC) found that fewer than 22 percent of homeowners view weather patterns or disasters as an important factor when updating their homeowners insurance policy. Missing these links can be costly.

“Changing weather patterns can dramatically impact what insurance should be carried on a property,” says Mike Consedine, NAIC chief executive officer. “When homeowners don’t regularly review their policies, important gaps in coverage can be missed. You should re-evaluate your risk profile at least once a year to ensure your existing homeowners policy provides the protection you need.”

Despite Consedine’s recommendation, the survey revealed that 56 percent of homeowners have not reviewed their insurance policies in more than a year. Fourteen percent are unsure when — if ever — they last reviewed their policies.

If it’s been awhile since your last insurance review, there’s no better time than the present. When evaluating your policy, consider the following questions:

1. Am I now at risk? Are earthquakes, wildfires or other disasters now a threat in my state or region? If you live in Oklahoma, for example, the risk of earthquakes has significantly increased in the last decade. Do I need flood insurance? Some incidents such as floods are not covered by a typical homeowners policy, so you’ll need additional coverage.

2. What has changed in my home? If you’ve moved in with your significant other or an adult child has returned home, consider the impact their belongings will have on your coverage. Create a home inventory and update it annually. The NAIC’s MyHome Scr.App.book app (available for iPhone and Android) lets you quickly capture images and descriptions of your possessions. Keep in mind personal items like jewelry, antiques and artwork may require special insurance coverage.

3. Do I save my receipts? Take photos or save receipts from major purchases and store them in a safe place away from your house or apartment. Quick access to these receipts will make filing a claim much easier.

4. What home improvements have I made? Renovations and additions can change the value of your home. Make sure your homeowners insurance policy reflects your home’s current value. Some security or smart home features may qualify you for premium discounts.

5. How can I learn more about being prepared? Get educated about your insurance options now to avoid surprises later. Insure U’s new Disaster Prep Guides can help determine the best course of action before, during and after a disaster strikes. The guides include information and tips for tornadoes, hurricanes, floods, earthquakes and wildfires.

For unbiased information and resources to help you rethink insurance, visit insureuonline.org. For insurance information specific to where you live, contact your state insurance commissioner.

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Family moving due to flood

Flood insurance: Does your excuse hold water?

(BPT) – We know the old saying: when it rains, it pours… and when it pours, it floods. With winter snow storms coming to an end, the threat of flooding increases as the snow begins to melt and the rivers and creeks begin to swell. It’s easy to forget about how powerfully destructive water can be. In fact, nine out of 10 natural disasters include flood, making it the number one disaster in the United States according to the National Flood Insurance Program (NFIP). However, only 15 percent of homeowners have flood insurance. From 2006 to 2015, total flood claims cost more than $1.9 billion per year and the average claim was more than $46,000 during that time.

“Even just a few inches of water can cause thousands of dollars in property damage,” says Corise Morrison, executive director of underwriting at USAA. “While it’s possible to mitigate flood damage, complete prevention is nearly impossible. If you don’t take the proper precautions, it can be devastating to your family finances.”

For most homeowners, that means looking into flood insurance. But does it make sense for everyone? As an insurance professional, Morrison has heard all the explanations. Here are some of the most common misconceptions about flood insurance:

“Flood is covered by my homeowners insurance policy.”

Typically, flooding is not covered by a homeowners insurance policy. Therefore, homeowners must purchase a separate policy through the National Flood Insurance Program (NFIP) from their insurer. If the homeowner does have flood insurance, it’s important to regularly reevaluate it to ensure it provides adequate coverage.

“Flood insurance is too expensive.”

To emphasize an earlier point, the average cost of a flood claim hovered around $46,000 from 2011 to 2015. The average annual premium for flood insurance in the U.S. is $650, according to NFIP. Do the math.

“I don’t live in a flood plain so I don’t need flood insurance.”

The Federal Emergency Management Agency found that as many as 20 percent of flood claims come from moderate-to-low risk areas. These are areas in which lenders don’t require the purchase of flood insurance. However, “less likely” doesn’t equal “no risk.” Complete this quick self-survey: “Does it rain where I am?” If the answer is yes, consider flood insurance because it can flood anywhere it rains.

“Flood insurance won’t provide me with the coverage I need anyway.”

It is true that the NFIP limits coverage of a single residence to $250,000 for the structure and another $100,000 for contents to the home, but they aren’t the only source for coverage. Excess flood coverage can also be purchased above the $250,000 limit.

“I’ll just wait until it rains.”

Sorry to break this to you, but most insurers require a 30-day waiting period before a policy is effective. Unless your own forecasts rival the best science and technology have to offer, it might be wise to stick to the mantra, “better safe than sorry.”

The consequences for being ill prepared for a flood can be long lasting. Research and carefully weigh the risk to you and your property. Chances are that you’ll find that it might be more reasonable than you thought. Visit USAA.com/flood for more tips and information on flood insurance and what to do before, during and after flooding occurs. You can also visit FEMA’s Flood Map Service Center for more information or to determine your flood risk.

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