Review Homeowners Insurance As Part Of Severe Weather Preparedness

Illinois residents will be exposed to severe weather in the coming weeks. Unfortunately, some will have to deal with storm-related property loss. People often turn to a homeowners insurance company for help when wind, hail, tornado, heavy rain, lightning and other storm-related weather causes unexpected damage. The Illinois Insurance Hotline, an industry-sponsored outreach, reminds residents to confirm adequate insurance is in place before severe weather rolls through the area. Consider the following points to avoid a coverage surprise.

If you own your home, confirm it has the right coverage limit. Homeowners insurance is based on replacement cost. Replacement cost is the amount to rebuild the structure with materials of like kind and quality, without subtracting for age or wear and tear. It is best if the coverage limit matches the home's replacement cost. Check the co-insurance requirement outlined in your homeowners insurance policy if you insure the house for less than its replacement cost. Underinsuring your home could result in a claim settlement below the cost to rebuild or make repairs.

Owners and renters alike should evaluate personal property insurance needs. A home inventory is the best way to get a handle on this. An inventory is a room-by-room list of belongings and their value. Identify brand names, model information, serial numbers and receipts when possible. Photographs, videos and appraisals are also useful. Use the inventory total to verify how much contents insurance is necessary. Most people invest more in their belongings than they realize.

Thoroughly review your insurance policy. An insurance policy is a legal contract that outlines what is and what is not covered. Check coverages, limitations, exclusions and loss settlement provisions. Be familiar with policy terms; identify gaps in coverage; know what to expect when a loss occurs; verify the policy deductible.

The Illinois Insurance Hotline outlined some basic points for policyholders:

n Homeowners insurance typically covers dwelling losses on a replacement cost basis. The initial payment may be depreciated, and the balance paid when repairs are complete.

n The policy's dwelling limit is the maximum payout if the house is totally destroyed. This may not be enough to rebuild the structure. Guaranteed replacement cost or modified guaranteed replacement cost coverage are optional endorsements that raise this ceiling. Contact your homeowners insurance agent for details.

n Personal belongings are insured for specific losses identified in the policy. Claims are typically settled on an actual cash value (depreciated) basis. Many insurers offer contents replacement cost coverage for an additional fee.

n Payout limitations apply to certain personal property losses. Review the policy for coverage gaps. Ask about increasing limits or adding a personal articles floater for expensive jewelry, coins, antiques, business equipment and more. Electrical storms and lightning strikes can seriously damage electronic equipment. Check for restrictions on losses related to power surges and power outages and explore buy back coverage.

n Homeowners insurance policies exclude damage caused by flooding. Flood insurance is available, but must be purchased as a separate, standalone policy.

n Water damage from a storm is covered only if the house has exterior damage. Consider adding sewer back up/sump pump overflow coverage if you have a finished basement.

n The cost to remove fallen limbs is covered by insurance if branches are on top of an insured structure.

n Homeowners policies include adjusted living expense coverage. This pays increased living costs for rent, food, etc. if a covered loss forces you out of your home temporarily.

n Review policy loss provisions for specifics about the claim settlement process and policyholder duties when damage occurs.

It is important to take a close look at your property following a severe weather event. Report storm damage to the insurance company as soon as possible. Make temporary repairs to prevent additional loss. Save receipts for these materials and submit them to the insurance company for reimbursement. Be prepared to turn in a list of damaged personal property. Do not throw anything away until the adjuster has seen the damage and given approval.

This information is provided by the Illinois Insurance Hotline. Consumers are encouraged to contact the Illinois Insurance Hotline with general insurance questions or for educational materials on insurance topics. Consultants are available Monday through Friday from 9 a.m. to 4 p.m. at 1-800-444-3338 or [email protected].