Disaster strikes: Am I covered?

By , Posted on 02 November 2012

I lived in Manhattan for 13 years, first in the East Village on Avenue C, and then in Battery Park City two neighborhoods hit especially hard by superstorm Sandy. While I'll always have a special fondness for New York City, my heart goes out to all the residents along the East Coast corridor who are sufferin,g in the aftermath of this natural disaster. (See: "After Sandy: public insurance adjusters can help streamline big claims.")

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I don't have much in the way of resources to donate to the cause, but I do know a bit about insurance, which  of course is relevant in the aftermath of a natural disaster. Those affected by hurricanes and severe weather events, eventually, will want to know: Will my insurance cover the damage? Well, it's complicated. To help, here are must-know facts for navigating the insurance process after a natural disaster hits:

Flood insurance

Why you need it: You must purchase a separate flood insurance policy to protect your home and belongings from flood damage.  

Where you get it: Through the National Flood Insurance Program, administered by FEMA. You can buy it from companies certified to sell it if your community participates in the NFIP.

Buy in advance: There is a 30-day waiting period before it goes into effect.

There are limits: coverage you can buy through the NFIP is capped at $250,000 for a home's structure and $100,000 for contents. If you want more coverage, you have to buy excess flood insurance, which is sold by private insurance companies.

What's covered in the basement: Central air conditioners, foundation walls, electrical outlets, furnaces and hot water heaters, washers, dryers, freezers.

What's not covered in the basement: carpeting, floor tile, refrigerators, furniture, clothing, electronics

Double up:  Unlike standard homeowner insurance, with flood insurance, you must purchase contents coverage for personal property as well as building coverage to get both.

Personal property:  You get only actual cash value coverage for possessions. That means if your 5-year-old TV is damaged, flood insurance reimburses you for the value of a used TV--not for the cost to buy a new one.

The outdoor stuff isn't covered: Septic systems, hot tubs, pools, decks, landscaping are not covered.

Bling: Valuables, such as furs or fine art, are capped at $2,500.

Hurricane deductibles

What is a hurricane deductible? Wind damage from hurricanes is covered under standard homeowner policies. However, most have a hurricane deductible based on a percentage of the property's insured value -- typically from 1 to 5 percent. For instance, a homeowner with a 5 percent deductible would pay for the first $15,000 of damage on a home insured for $300,000.

Superstorm versus  hurricane: Many states have laws that require a storm to be classified as a hurricane at landfall and to maintain 74 mph winds inland to trigger deductibles. (See: "Controversy over hurricane deductibles may just be beginning.")

My car drowned!

Comprehensive car insurance covers damage to vehicles caused by natural disasters, including flooding.

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Des Toups

Des Toups

Managing editor

Des Toups is a writer, editor and expert on insurance, cars and personal finance. He has written extensively about all three for national publications such as MSN and major newspapers such as the Seattle Times. He has been quoted about insurance issues in The New York Times, USA Today and Kiplinger's.

Email: dtoups@quinstreet.com

Follow him on Twitter @destoups

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