Survival Checklists and Tools

• Devise Communications Plan
• Stock Up on Food and Water
• Emergency Medical Kit
• Take Stock
• Back Up Computer
• Stock Up On Survival Gadgets
• Bug Out Kit
• Evaluate Insurance
• Disaster-Proof Pet
• Plot Escape Route

Prepare Now

Evaluate Insurance

This may be the area of greatest importance that people know the least about. Some people assume that just having insurance entitles them to coverage no matter what goes wrong. Others hear the horror stories associated with Hurricane Katrina and other recent disasters and think it doesn't matter what they do. In reality, neither view is particularly helpful. An insurance policy isn't a form of entitlement or some capricious instrument of torture; it's a contract with specific language detailing what one party will — or will not — pay under a whole range of circumstances. If you haven't already, you need to pull out the contract you agreed to when you began paying your homeowner's premiums, and read it, preferably in collaboration with your insurance agent. Anything you don't understand you need to ask about. If you don't like the answers you're hearing, you need to consider updating the policy, or maybe even switching to a different carrier. You'll want to focus on the following. Check off the appropriate boxes as you vet your policy on each point.

• 1. “What kind of replacement coverage do I have?” The standard “replacement cost” homeowner's policy isn't what it sounds like. Such a policy will only pay more to repair or replace your house up to a certain dollar amount specified in the policy, usually based on rebuilding costs at the time the policy was written. To make sure you will have enough money to replace your house at current building prices, you can check on your limit each year and pay to raise it, or buy an “inflation guard” that raises it automatically. But even then you might get caught short, because building costs often soar after a major disaster. (In New Orleans, for example, homebuilding costs have gone from an average of $100 per square foot before Katrina to $135.) To keep pace with that kind of hike you need to buy either “extended replacement cost” coverage (which can pay anywhere from 20 to 80 percent above the specified limit) or, better yet, “guaranteed replacement cost,” which guarantees to put your house back together the way it was regardless of how much rebuilding it costs.
  • Reviewed
  • Current policy adequate, limits raised, or coverage changed
• 2. “What kind of contents coverage do I have?” The contents of a house are always insured separately from the structure itself, and always only up to some specified limit. Here again, it's important to check and update your limit. Plus, you should check the formula your policy will use to reimburse you for your possessions: “replacement cost contents” coverage pays to replace items with the same items; “cash value” coverage will only reimburse you for the value of the items less depreciation.
  • Reivewed
  • Current policy adequate or limits raised and/or coverage changed
• 3. “Do I need flood insurance?” Most homeowner's policies typically cover damage from wind, fire, rain, snow, ice, and tornadoes — but not flood. For that you need to buy supplemental flood insurance. If you live in an officially designated flood plain, you'll be required to buy it by your mortgage company. Just because you aren't required to get it, though, doesn't necessarily mean you shouldn't. If you live in any sort of coastal or other area at risk for flooding, you may want to err on the side of caution. There are thousands of people in New Orleans and Mississippi now out hundreds of thousands of dollars because they weren't “required” to buy flood insurance. Offered through your usual insurance agent from the federal flood insurance program, standard flood insurance can run anywhere from $300 to $1,000 per year for up to $250,000 worth of coverage.
  • N/A
  • Reviewed
  • Current policy adequate or flood coverage added
• 4. “Do I need more flood insurance?” You're not required to buy flood insurance on your contents, but anyone at risk for flood would be crazy not to. A max of $100,000 worth of coverage is available from the same federal program for roughly $200 to $800 a year. In addition, if you live in a higher-priced home, you should consider purchasing “excess” flood coverage on both you house and contents over and above what the government offers. A growing number of higher-end private insurers, including AIG, Liberty Mutual, and Chubb, offer such coverage.
  • N/A
  • Reviewed
  • Current policy adequate or more flood coverage added
• 5. “What about earthquake or mudslide insurance?” If you live in area at risk for these hazards, you need to understand that your insurance options are limited. Regular homeowner's polices don't cover earthquake damage. You can buy separate earthquake coverage, and if you live in certain areas, it's a costly but necessary expense you probably need to make. In some of the high-risk areas of California, though, the deductibles have gotten so high and insurers have started imposing so many restrictions that even some people whose homes were destroyed by past earthquakes have begun going without. The situation regarding landslides and mudslides is even trickier. Although landslide insurance is technically available from certain select insurers, it's so expensive and difficult to collect on it's rarely recommended. Your best bet is to buy flood insurance, and then just hope that if a mudslide occurs it contains a high enough percentage of water for the Federal Emergency Management Agency (which, coincidentally, also administers the flood insurance program) to rule that it constitutes a “flood.”
  • N/A
  • Reviewed
  • Current policy adequate or new coverage added
• 6. “Are there any other specific provisions I should consider?” For instance, most people have no idea they can buy “sump pump insurance” (in the event of heavy rains that your sump pump can't handle) and “sewer backup insurance” (to cover damage from sewer backups). People who live in older houses may want to purchase “building ordinance insurance,” which pays the extra costs associated with bringing a damaged older home up to current building codes.
  • Reviewed
  • Current policy adequate or new coverage added
• 7. “How much is all this going to cost?” Insurance companies are in the business of managing their risk, too. Generally, any additional protections will cost you more money. In some cases, like basic flood insurance, the difference may be just a few hundred dollars a year; in others, like trying to buy guaranteed replacement coverage in a particularly high-risk area, it may run into the thousands. In some parts of the country, like along the beaches of South Florida, private insurers won't even write the coverage, and you may be forced into certain government-backed “risk pools,” which may help keep premiums down, but come with unavoidable restrictions.
  • Reviewed
• 8. “So one more time: Do I have enough?” As you're finishing your risk-benefit analysis, keep in mind one last little cruel irony about disaster insurance: If you don't have enough, it's sometimes is like not having any at all. That's because you won't be the only one who has dibs on your insurance settlement. When an insurance company settles a major claim, it typically makes out the check jointly to the policyholder and the mortgage company that has the lien on the house. If your house is destroyed, your mortgage company no longer has the same collateral backing up its loan, and has the right to demand that you use your insurance settlement to pay off your mortgage. In New Orleans, lots of people who tried to save a couple of hundred dollars a year by buying just $100,000 or $150,000 of flood coverage on a $300,000 or $400,000 home now have a paid-off mortgage on an empty lot worth a fraction of what they paid for it. And not a cent of insurance money to put toward rebuilding.
  • Reviewed
  • Current policy adequate or new coverage added