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Houston’s subtropical climate and location near the Gulf of Mexico means the threat of storms and hurricanes is a distinct possibility during the summer and early fall. Many Houstonians recall 2008’s Ike as a storm that, according to the University of Houston, wrought billions in damage.
With peak hurricane season approaching, it’s a good time to check off your disaster preparedness list, which should include an understanding of how much home insurance disaster coverage you have – and how much you really need.
Coverage for rebuilding
The Insurance Information Institute (I.I.I.) suggests your homeowners insurance policy should cover the rebuilding of your home at current construction costs (which have spiked in recent years) versus the minimum coverage your mortgage lender requires, or the real estate value of your home.
- Keep in mind, that during a disaster, materials and labor may become scarce, pushing up costs. A policy with an extended replacement cost offers coverage of about 20 percent over the standard – this might be critical to rebuilding your home properly after a disaster, when resources may be scarce.
- You might also be required to rebuild your home to new, stricter building codes; in this case, ordinance or law coverage can insure you against costlier rebuilding or repairs.
- Finally, because they’re typically not included in most homeowners insurance policies, consider purchasing water back-up and flood insurance as add-ons to your policy (be sure to insure both your home and its contents). Harris County provides flood insurance rate maps which can help you assess your risk and respective cost.
Coverage for your possessions
Your possessions may be just as valuable as your home, so keep a detailed inventory of all your personal property (stored in a safe place) with receipts and, where it makes sense, model and serial numbers. The I.I.I. says most home insurance policies will typically cover your belongings up to about 50 to 70 percent of the insurance value of your home. Two options are available for personal property coverage:
- Cash-value policies cover you only up to the depreciated value of your belongings. Older items may thus be compensated at less than what you originally paid for them.
- Replacement cost policies, cover the cost of replacing your items with new ones of similar make and quality.
Coverage for living expenses & liability
Many homeowners insurance policies provide coverage for additional living expenses such as restaurant meals, hotels, and transportation while your home is being rebuilt. Although this coverage is usually limited to about 20 percent of your total home policy value, the I.I.I. mentions it can be increased for an additional premium. You should note that some insurers may also place a time limit on the usage of such coverage.
Finally, while not a key part of hurricane preparedness, liability coverage can be useful if you are sued for causing injury or damage to others, or their property. The I.I.I. says most policies provide a minimum of about $100,000 in liability coverage, but, of course, you should check your specific policy for details.
In the event that you are impacted by a hurricane or another disaster, make sure to contact your insurance agent to start a claim as soon as possible. The I.I.I. also suggests contacting FEMA to see if you qualify for any additional help. With a little planning, some of life’s worst upheavals can hurt a little less.
Allstate Agent Matt Roll and the 1st Texas Agency are based in Friendswood. Address: 907 S Friendswood Dr Ste 105, Friendswood, TX 77546. Phone: (281) 993-5900
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