September is National Preparedness Month - Put Insurance on Your Checklist

Residents also need a strategy for dealing with property damage to their homes. Natural disasters are not selective in their destruction. Single an multi-family homes, condominiums and apartments are all at risk. Victims of tornado, hail, straight line wind, flood or earthquake often face financial hardship as they rebuild or repair homes and replace belongings. People buy insurance to offset these types of expenses, but problems can arise unless adequate coverage is in place before the loss occurs.

Companies offer property insurance products for single and multi-family homes, condominiums, town homes, renters and more. Insurance policies cover certain types of losses, called perils. Traditional homeowners policies cover natural disasters like tornado, windstorm and hail. Damage from flood and earthquake are typically excluded, but coverage may be available for an extra cost.

An insurance policy is a legal contract that outlines what is and is not covered. It also describes how claims are settled, lists your duties when a loss occurs, defines certain insurance terms and more. Be familiar with the specifics of your policy. Compare this to your insurance needs. Look for coverage gaps and talk to a local homeowners insurance agent about options to address them.

Traditional homeowners insurance is a package policy combining coverage for the dwelling, outbuildings, personal property, adjusted living expense and personal liability protection. Covered losses to the dwelling are covered on a replacement cost basis, which is the amount to repair or rebuild without subtracting for depreciation. In turn, each policy has an insure-to-value clause stipulating how much coverage you need on the dwelling. This is known as the co-insurance requirement. Ask your homeowners insurance agent to help you determine the replacement ost of your home. It is best to insure your home for its full replacement cost. Be sure the dwelling limit listed on the policy's declaration page is in line with the co-insurance requirement. Insuring below this amount could result in a claim settlement that is far less than the cost of repairing damages or rebuilding your home.

Most people invest more in furniture, clothes, decor and other belongings than they realize. The best way to understand your personal property insurance needs is to inventory these items. Use the personal property inventory to secure adequate contents coverage. It is also an invaluable tool if you need to prepare a list of damaged items following a loss. Insurance contracts place coverage restrictions on high value items like jewelry, computers, artwork, antiques and more. Policies typically cover personal belongings on a named peril, actual cash value basis (depreciation affects claim settlement). Most insurers offer buy-back endorsements to overcome contents coverage restrictions and remove depreciation as a loss settlement factor. Ask your homeowners agent for cost and coverage details.