As the adage goes"Prepare for the worst and hope for the best." Claim time is the worst time to find out what coverage you haveor don't have. Knowing a few important details about your policy before the storm hits can be the difference between a satisfactory claims experience and an unpleasant surprise.
* Know your policy limits. Everyone understands that insufficient limits will result in an inadequate settlement if you suffer a total loss. Did you know the Co-Insurance Clause in your policy allows the insurer to reduce the claim in a partial loss as well? If your home or business is not insured to at least 80% of its replacement cost (sometimes 90% or 100% on commercial buildings) the insurer can reduce your settlement.
* Know your deductibles. Policies covering Wind/Hurricane apply a deductible equal to a percentage of the Dwelling or Building limit. For Citizens Homeowner policies the Hurricane deductible is usually 2% of the Dwelling limit but can be as high as 10%. Citizens Commercial policies usually have a 3% or 5% Hurricane deductible.
* Know your coverage. This year Citizens has removed coverage for screen enclosures and there is no option to buy that coverage back. If your wind insurance is with Citizens, your screen enclosure is not covered.
* Is your Ordinance or Law Coverage adequate? If your home is more than 50% damaged the entire structure must be brought up to current code. For example, if you own a ground-level home you would have to completely re-build and elevate your home above Base Flood Elevation. Without Ordinance or Law limits equal to 50% of your Dwelling limit it is unlikely that your claim proceeds will be sufficient in this example.
* Don't forget Flood. The maximum building limits offered by the National Flood Insurance Program is $250,000 for a home and $500,000 for a commercial building. Excess Flood Insurance is available from private insurers. Also, remember that you have two deductibles on flood policiesone applying to the building and one applying to contents.
* Remember the 30-Day Wait. Both wind and flood policies impose a mandatory 30 day waiting period if your home is not currently insured. This waiting period may also apply to requests to increase existing coverage.
Christopher W. Heidrick, CPCU, CFP
is an island resident and the Principal of Heidrick & Co. Insurance based on Sanibel.