BLOG: SC floods should prompt you to check insurance coverage

Published: Nov. 3, 2015 at 3:44 PM EST
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By all accounts, thus far, the 2015 hurricane season has been pretty average.  With just under a month to go, there have been a total of 11 named storms and three hurricanes, two of which reach major status (category three or above).

The biggest newsmaker was Hurricane Joaquin, which was the strongest Atlantic hurricane since 2010.  Joaquin was the early October storm that indirectly helped produce record rain and a 1,000 year flood for the South Carolina low country.  When the skies finally cleared, 17 South Carolinians had lost their lives and potential exposure to home insurers was estimated at a staggering $18 billion.

With the above in mind, even as we near the close of this season, it may be a good idea to assess your financial readiness for "the next one".

I would always caution everyone when it comes to "near or below-average predictions."  It only takes one bad storm to derail your wedding, disrupt your vacation or damage your home.

I think back to another "below-normal" season when I was a forecaster in South Florida.  In 1992, there was only one hurricane that struck the United Stated, and it was the first storm of the year.  Andrew turned into a Category 5 hurricane, slamming both South Florida and Louisiana and remains the second costliest hurricane on record.

In short, it only takes one storm.  And if that "one" happens to impact you, it's a busy year.

Looking ahead to next season, here's what homeowners can do to prepare.

It's worth checking for natural disaster gaps in coverage annually, whether you live in an area at risk for hurricanes or for other disasters.  Sadly, in a region prone to flash flooding, one of the most common policy problems is a lack of flood insurance. Most policies cover wind damage from hurricanes and other storms, but water damage from storm surges and floodwaters is typically excluded.

Check with your insurer to make sure you have the coverage needed for your location.  Most people flooded in South Carolina – miles inland from the coast – lacked flood insurance and are paying a heavy price for it now.

"That's a separate policy," said Peter Kochenburger, executive director of the University of Connecticut's Center for Insurance Law. Coverage can be purchased from the National Flood Insurance Program or several private providers, but you'll need to have planned ahead — it takes 30 days to go into effect.

That's why I suggest you check now, during the off-season, as you cannot call for instant coverage when a storm is bearing down!

It's also important to make sure you have adequate coverage based on your home's value and estimated cost to rebuild. You might not, especially if you've made improvements; the cost of building materials have increased.  Be mindful, if your coverage is less than 80 percent of the home's replacement value, many insurers will reimburse you only for a portion of damages.

Check too to see if your homeowner's policy has a separate deductible for hurricane and windstorm damage. It's often much higher than the deductible for other types of damage, and can amount to 1 to 5 percent of your home's value.

Ask yourself, "do you have something like that and if so, are you comfortable with it?" It may be worth shopping competitors, or stashing a bit more in an emergency fund to bridge that gap. Not doing so could turn a natural disaster into a financial one that's difficult to recover from.

Unfortunately, these are hard lessons being learned in South Carolina right now.

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