Home Ownership - Preparing for emergencies

From hurricanes to floods to fires, Mother Nature, accidents, and unforeseen circumstances all pose a threat to your home. That’s why taking steps now to safeguard your property from these and other home disasters are important.

Step 1: Review and improve your standard insurance policy

Homeowners insurance can provide coverage to reimburse you if you suffer losses caused by many home disasters. But it’s crucial to ensure that you have proper coverage limits in place. FEMA reports that over half of all American homeowners lack adequate homeowners insurance to replace their home and its contents if a disaster loss happens.

Your standard homeowner’s policy should at least cover the cost to rebuild your home. But note that the amount you paid for your home may not match the rebuild cost. That’s why you should choose a policy with guaranteed replacement cost over actual cash value.

The former reimburse you for the actual cost of the damaged property if you were to replace it brand new. The latter is equal to the replacement cost minus any depreciation based on age, wear and tear.

Talk with your insurance agent and check that your property has enough structural coverage. In addition, the Insurance Information Institute recommends considering rebuild cost factors like:

• Your square footage
• Number of bedrooms, bathrooms and other spaces
• Architectural style (for instance, split-level or ranch)
• Prized features like a fireplace or home theater
• Area construction costs
• Exterior materials (brick/stone, veneer, or frame)
• Roofing type/materials
• Garages, sheds and other structures
• Home upgrades you’ve made since your purchase

Step 2: Get extra coverage

Per the Insurance Information Institute, standard homeowners policies provide coverage for home disasters like damage caused by lightning, hail, fire and explosions. But if you live in an area at risk of earthquake or flood, you’ll need extra coverage for those threats. That’s why it’s smart to ask your insurance agent about your risks and the costs to add flood or earthquake coverage.

Flood insurance is available through the National Flood Insurance Program in participating areas. Also, a separate earthquake policy can be bought from a private insurance company or possibly a state-backed plan.

Step 3: Document your home

It’s smart to maintain a detailed inventory of your home’s contents. This comes in handy if, for instance, your possessions are burned in a fire or swept away in a tornado. An inventory can prove the value of what you owned. Plus, it could speed up your claim processing.

To properly document your stuff, take photos and/or videos. Also, write down descriptions, including year, make and model. Get and keep a written appraisal on valuable items. Furthermore, keep these important records in a water- and fireproof box, safe, or safe deposit box. Give copies to trusted friends or family. Keep digital copies backed up in cloud storage, too.

For more tips, read the Consumer Financial Protection Bureau’s checklist.