Courtesy of iii.org

Homeowners coverage provides financial protection against loss due to disasters, theft and accidents. Most standard policies include four essential types of coverage: coverage for the structure of your home; coverage for your personal belongings; liability protection; coverage for additional living expenses

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Coverage for the structure of your home

Your homeowners policy pays to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lightning or other disasters listed in your policy. Most policies also cover detached structures such as a garage, tool shed or gazebo—generally for about 10 percent of the amount of insurance you have on the structure of the house.

A standard policy will not pay for damage caused by a flood, earthquake or routine wear and tear.

When purchasing coverage for the structure of your home, remember this simple guideline: Purchase enough coverage to rebuild your home.

Coverage for your personal belongings

Your furniture, clothes, sports equipment and other personal items are covered if they are stolen or destroyed by fire, hurricane or other insured disasters. The coverage is generally 50 to 70 percent of the insurance you have on the structure of the house.

The best way to determine if this is enough coverage is to conduct a home inventory.

Personal belongings coverage includes items stored off-premises—this means you are covered anywhere in the world. Some companies limit the amount to 10 percent of the amount of insurance you have for your possessions. You also have up to $500 of coverage for unauthorized use of your credit cards.

Expensive items like jewelry, furs, art, collectibles and silverware are covered, but there are usually dollar limits if they are stolen. To insure these items to their full value, purchase a special personal property endorsement or floater and insure the item for its officially appraised value.

Trees, plants and shrubs are also covered under standard homeowners insurance—generally for about $500 per item. Trees and plants are not covered for disease, or if they have been poorly maintained.

Liability protection

Liability covers you against lawsuits for bodily injury or property damage that you or family members cause to other people. It also pays for damage caused by your pets. So, if your son, daughter (or even your dog) accidentally ruins a neighbor’s expensive rug, you are covered. (However, if they destroy your rug, you’re out of luck.)

The liability portion of your policy pays for both the cost of defending you in court and any court awards—up to the limit stated in your policy documents.

Liability limits generally start at about $100,000, however, it’s a good idea to discuss whether you should purchase a higher level of protection with your insurance professional. If you have significant assets and want more coverage than is available under your homeowners policy, consider purchasing an umbrella or excess liability policy, which provides broader coverage and higher liability limits.

Your policy also provides no-fault medical coverage, so if a friend or neighbor is injured in your home, he or she can simply submit medical bills to your insurance company. This way, expenses can be paid without a liability claim being filed against you. It does not, however, pay the medical bills for your own family or your pet.

Additional living expenses (ALE)

ALE pays the additional costs of living away from home if you cannot live there due to damage from a an insured disaster. It covers hotel bills, restaurant meals and other costs, over and above your usual living expenses, incurred while your home is being rebuilt.

Keep in mind that the ALE coverage in your homeowners policy has limits—and some policies include a time limitation. However, these limits are separate from the amount available to rebuild or repair your home. Even if you use up your ALE your insurance company will still pay the full cost of rebuilding your home up to the policy limit.

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

Next steps: Purchasing a home? Get the Home Buyers Insurance Checklist.

Courtesy of iii.org

Business interruption insurance can be as vital to your survival as a business as fire insurance. Most people would never consider opening a business without buying insurance to cover damage due to fire and windstorms. But too many small business owners fail to think about how they would manage if a fire or other disaster damaged their business premises so that they were temporarily unusable. Business interruption coverage is not sold separately. It is added to a property insurance policy or included in a package policy.

A business that has to close down completely while the premises are being repaired may lose out to competitors. A quick resumption of business after a disaster is essential.

1. Business interruption insurance compensates you for lost income if your company has to vacate the premises due to disaster-related damage that is covered under your property insurance policy, such as a fire. Business interruption insurance covers the revenue you would have earned, based on your financial records, had the disaster not occurred. The policy also covers operating expenses, like electricity, that continue even though business activities have come to a temporary halt.
2. Make sure the policy limits are sufficient to cover your company for more than a few days. After a major disaster, it can take more time than many people anticipate to get the business back on track. There is generally a 48-hour waiting period before business interruption coverage kicks in.
3. The price of the policy is related to the risk of a fire or other disaster damaging your premises. All other things being equal, the price would probably be higher for a restaurant than a real estate agency, for example, because of the greater risk of fire. Also, a real estate agency can more easily operate out of another location.

Extra expense insurance

Extra expense insurance reimburses your company for a reasonable sum of money that it spends, over and above normal operating expenses, to avoid having to shut down during the restoration period. Usually, extra expenses will be paid if they help to decrease business interruption costs. In some instances, extra expense insurance alone may provide sufficient coverage, without the purchase of business interruption insurance.

Courtesy of iii.org. Homeowners and businesses in California’s Butte, Sutter and Yuba counties who have flood insurance will be covered if the Lake Oroville Dam’s auxiliary spillway fails, according to the Insurance Information Institute (I.I.I.). Revised forecasts call for about 10 inches of rain heading to the area according to the LA Times.

Roughly 50,047 single- and multi-family residential homes could be damaged with an estimated reconstruction cost value of $13.3 billion if the Oroville Dam in California were to fail completely, according to new data analysis from CoreLogic that included the six primary counties in that area.

“The potential for flooding poses a significant threat to life and property in these northern California counties and forced the evacuation of almost 200,000 of residents,” said Janet Ruiz, the I.I.I.’s California Representative. “Standard homeowners, renters and business insurance policies do not cover flood-caused damage. A separate flood insurance policy is needed.” Lake Oroville Dam is in Butte County.

Flood insurance is available from FEMA’s National Flood Insurance Program (NFIP) and a few private insurance companies. NFIP policies have a 30-day waiting period before the coverage is activated. Excess flood insurance policies are also available from some private insurers if additional coverage is needed above and beyond the basic FEMA NFIP policy. To learn more about flood insurance, visit the FloodSmart.gov.

If your home or business is near a river, lake, stream, creek, dam or other body of water, the I.I.I. recommends taking these three steps in order to assess your property’s flood risks.

• Contact your insurance professional. Take the time to ask questions and be sure you understand all of your insurance options. It will help you make informed decisions about your insurance coverage.
• Prepare an emergency plan. The I.I.I.’s free mobile app, Know Your Plan, makes it easy to be ready when disaster strikes. Preparedness information is also available from FEMA’s Ready.gov and the National Oceanic and Atmospheric Administration’s (NOAA) Weather Ready Nation.
• Conduct a home inventory. Documenting your belongings will help you buy the right amount, and type, of insurance. A home inventory also makes claim filing easier and can be used to document financial losses when filing tax returns or applying for post-disaster financial assistance. Using the I.I.I.’s Know Your Stuff app will ensure you have an updated home inventory, accessible anywhere, any time.

Courtesy of iii.org

Before you consider renting out your home, your guest room—or even your couch—first contact your insurance professional so you fully understand the financial risks and can take the proper precautions. Here’s some general information to jumpstart your insurance conversation.

If you are considering renting out your home, your guest room or even your couch your first step should be to contact your insurance professional. Peer-to-peer home sharing opportunities such as Airbnb can be a great way to bring in extra money and are increasingly popular; however, they can also leave you financially vulnerable. If your renter starts a fire and damages your property or is hurt while renting your home, will you be protected?

Courtesy of iii.org

Hurricanes are violent and dangerous to your family and your home. When a hurricane threatens to bear down, make sure that you know how to batten down your hatches and protect yourself, your loved ones and your property.

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When it’s hurricane season

Hurricane season starts June 1 and runs through November 30. But don’t wait until a warning—take steps to prepare in advance for a potential hurricane—it’s the best way to protect your family, your home and your business.

For more preparedness tips, handy checklists (including ones you can personalize yourself) and evacuation planning advice to cover a variety of disasters, get the I.I.I.’s Know Your Plan app. It’s a great tool to help get you and your family—including pets—organized and ready to act more quickly if a hurricane or other emergency strikes.

When a hurricane watch is issued

A hurricane watch is issued when there is a threat of a hurricane within a 24-36 hour period. At that time, you should:

• Purchase any emergency supplies that you don’t already have on hand. Hit the stores early, as items such as batteries, candles and flashlights will get snapped up quickly.

• Prepare your yard by removing all outdoor furniture, lawn items, planters and other materials that could be picked up by high winds. If you haven’t already, remove weak branches on plants and trees. Lower antennas and retractable awnings.

• Prepare for a potential evacuation by reviewing your evacuation plan and, if you have a pet, your pet’s evacuation plan.

• Fully charge your cellphone.

• Fill your car’s gasoline tank.

• Jot down the name and phone number of your insurer and insurance professional and keep this information handy in your wallet or purse.

When a warning is issued

A hurricane warning is issued when hurricane conditions are expected in 24 hours or less, which means a storm is imminent.

• Stay informed of the storm’s progress by listening to the radio or TV. Even better, listen to a NOAA Weather Radio for critical information from the National Weather Service (NWS).

• Install hurricane shutters, board up or otherwise securely shutter large windows and draw drapes across windows and doors.

• Get off the boat—never remain on a boat during a hurricane! Check mooring lines of boats in water.

If evacuation becomes necessary

Hopefully, you’re fully prepared with an evacuation plan. Also remember:

• Don’t wait until the last minute—shelters might be full or the roads might be jammed. If you have pets, consider traveling before an evacuation is ordered—otherwise, you might be ordered by officials to leave your pet home.

• Take along survival supplies from your list.

• Keep important papers with you at all times, including your home inventory and make sure you have the name and phone number of your insurance professional.

• Take warm, protective clothing for the whole family in case you get stuck.

• Lock all windows and doors on your home. Don’t compound hurricane damage with the threat of possible looters.

• Keep all receipts for anything that might be considered to be an additional living expense (ALE) in the event your home is destroyed or damaged and rendered uninhabitable.

If you remain at home during a hurricane

Stay indoors. Don’t go out even during the brief calm when the eye of the storm passes over as wind speeds can increase dramatically in seconds.

• Stay away from windows and glass doors and move furniture away from exposed doors and windows.

• Stay on the downwind side of house. If your home has an “inside” room, stay there during the height of the hurricane.

• Keep the television or radio tuned into information from official sources.

After the hurricane, beware of the dangers that remain

The storm may have passed, but it likely has created new dangers.

• Beware of outdoor hazards like loose or fallen tree limbs, loose signage or awnings that are in danger of breaking off and falling.

• Keep away from loose or dangling power lines, and report them immediately to the proper authority.

• Walk or drive extra cautiously as washouts may weaken road and bridge structures.

• In the event of a power outage, throw out food that may be spoiled.

• Boil municipal water before drinking until you have been told it is safe.

If your home is damaged

Notify your insurance professional as soon as possible of any losses. If you had to relocate, let your representative know where you can be contacted. In addition:

• Make temporary repairs—if they can be made safely—to protect property from further damage or looting; for insurance purposes, keep all receipts for materials used.

• Get written estimates for any proposed repair jobs and use only reputable contractors. Be especially careful of building contractors who want huge deposits up front or encourage you to spend a lot of money on temporary repairs. Ask for their references and check with the Better Business Bureau on complaints.

• Gather any other receipts for expenses that will be covered by insurance or will be tax deductible.