For homeowners in coastal states, the 2020 hurricane season could mean financial disaster. Those who live on the west coast are experiencing the worst forest fires ever. Lousiana hasn’t recovered from hurricane Laura. Now Hurricane Sally will dump up to 24 inches of rain on the saturated land.
On the West Coast, whole towns have been wiped out by the wildfires, which occur during several months of the year known as fire season. But due to environmental changes or forest mismanagement, the fire season now stretches from late spring through the end of the calendar year, lasting six to eight months.
Nebraska and the neighboring states have suffered through floods that have wiped out houses and delayed planting corn, soybeans, and wheat.
Even if you think you prepare, you may discover that your homeowner’s insurance doesn’t fully cover damage from a disaster.
According to the Omaha World-Herald, “Flood insurance is optional, and only 15% of American households buy it, says Mark Friedlander, spokesperson for the Insurance Information Institute.”
But when a hurricane or storm hits, flooding causes more residential losses than high winds, according to a 2019 report from the U.S. Congressional Budget Office. That means most homeowners, even those with hurricane or wind coverage, aren’t insured for the most severe storm threat they face.”
Flooding has affected 99% of U.S. counties since 1996, according to the Federal Emergency Management Agency. And even a little floodwater can be highly destructive; FEMA says an inch can cause as much as $25,000 in damage.
You’ll typically need to buy flood insurance from the National Flood Insurance Program at least 30 days in advance. Coverage is sold separately for the structure and contents of the home. Some states may also impose a waiting period if you purchase a policy for wind damage. Although most standard homeowners’ policies cover windstorm damage, owners without a mortgage can sometimes opt-out.
Many homeowners don’t pay a flat dollar amount per hurricane insurance claim as they would for a fire or theft. Instead, they pay a percentage of their home’s insured value before the insurer kicks in. The amount can range from 1% to 10%.
If your home is insured for $300,000 and you chose a 5% hurricane deductible, you could be responsible for up to $15,000 before the insurance company starts paying.
Since a large deductible generally means a lower insurance premium, you may be tempted to accept a high percentage and hope you never need to file a claim. That can be a mistake.
People should never take a higher deductible than they can afford. The amount you save in premiums is insignificant compared to the amount you would get at claim time.
The purpose of insurance is to ensure you can cover your costs after a disaster
“One big issue is underinsurance,” says Jessica Hanna, spokesperson for the American Property Casualty Insurance Association. “That only seems to come to light after a major storm.”
You may need to extend your coverage to account for high construction costs and demand for contractors after a flooding disaster. Consider whether you have enough coverage to replace your personal belongings and pay the costs of living elsewhere while rebuilding. In addition, make sure you ensure the replacement cost of the house. There may be a significant increase from your purchase cost.
As investors, we are in business to make a modest profit on any deal. However, we can help homeowners out of just about any situation, no matter what! There are no fees, upfront costs, commissions, or anything else. We offer the simple truth about your home and how we can help you sell it fast.
Give us a ring. We would love to help you understand the process and to answer all of your questions. You can reach us at 402 999.0577.