The recent wildfires that swept through San Diego County and destroyed at least 65 homes can serve as a wake-up call to the rest of us to be prepared if and when a natural disaster strikes. To protect against worst-case scenarios, it’s important to make sure that your house and personal property are covered by the right kind of insurance and that you know where your key documents are. Here is a checklist that can help you prepare for a disaster:
Photograph and videotape each room, as well as the outside of your house. Write down all the major items that you own along with any model or serial numbers. Keep receipts with this list. It’s best to keep copies of your insurance policies and personal property inventory, including receipts, in a safety deposit box. To help you catalogue your belongings, the Insurance Information Institute offers free home inventory software called Know Your Stuff. Having a room-to-room inventory of your belongings can help you determine how much insurance to purchase to replace what you own. An inventory can also help you obtain your insurance claims faster and substantiate losses for your income tax return.
Check your homeowner policy to determine what kind of coverage you have. There are three main types of insurance for a home: Actual Cash Value. This insurance covers the cost of replacing your home, up to the limit of the policy, minus the depreciation costs for age and use. Replacement value. This policy will cover the cost of fixing or rebuilding the home up to policy limits without deducting for depreciation. Extended Replacement Cost. This policy covers the cost of replacing the damaged property without subtracting for depreciation up to a certain percentage over the policy limit. It’s usually between 20% and 25%. It’s best to contact your insurance agent or insurer to make sure you understand your coverage and deductibles and if they make sense for your family. You should also check your coverage because of rising prices in material and labor that could make your policy inadequate if your home is damaged or destroyed.
When reviewing your insurance policy, find out if the following expenses are covered:
If you live in California or other quake-prone areas, it’s a good idea to explore purchasing earthquake insurance. This advice, however, is usually ignored. According to the California Department of Insurance, nearly 90% of homeowners and renters do not possess this insurance.
Homeowner policies don’t cover flood damage. Depending on the location of your home, you may qualify for flood insurance through the National Flood Insurance Program or through a private insurer.
You should also consider purchasing extra coverage for valuables such as jewelry, antiques and silverware. By taking such precautions, you will be in a better position if a disaster were to strike.