"Life, love, and laughter - what priceless gifts to give our children."
- Phyllis Campbell Dryden
"Our brightest blazes are commonly kindled by unexpected sparks."
- Samuel Johnson
"Happiness is a butterfly, which, when pursued, is always just beyond your grasp, but which, if you sit down quietly, may align upon you."
- Nathaniel Hawthorne
Four high school kids afflicted with spring fever skipped morning classes. After lunch they reported to the teacher that they had a flat tire. Much to their relief she smiled and said, "Well, you missed a test today so take seats apart from one another and take out a piece of paper." Still smiling, she waited for them to sit down. Then she said: "First Question: Which tire was flat?"
Imagine how devastating it would be to lose your home in a fire. Now imagine not being able to rebuild it completely because you didn’t have the correct amount of insurance.
Selecting the proper amount of coverage is the single most important decision you can make with your Homeowners policy. Without it, you may not have enough coverage to rebuild after a total loss. This is called “insurance to value.” Below are some explanations and tips to help you make the right choices for your needs — and remember, if you need help, we’re just a phone call away!
What is insurance to value?
Insurance to value is the relationship between the amount of coverage selected (typically listed as “Coverage A” or “Dwelling Coverage” on your policy declarations page) and the amount required to rebuild your home. Insuring your home for anything less than 100% insurance to value could mean you wouldn’t have enough coverage to replace your home in the event of a total loss
Why is the cost to rebuild different from the market value?
A home’s market value reflects current economic conditions, taxes, school districts, the value of the land and location, and other factors unrelated to construction cost. The cost to rebuild your home is based only on the cost of materials and labor in your area. It is important that you insure your home based on its reconstruction cost, NOT its current market value.
Why is reconstruction more expensive than new construction?
New-home builders typically build many homes at once, and solicit bids from various sub-contractors to receive the best pricing. Their business model is based on economies of scale. For example, they may purchase 20 bathtubs at once, securing a lower unit cost. These economies of scale don’t exist when building a single home.
How can I make sure I have the correct amount of insurance?
Work with your agent to provide detailed information at time of purchase to be sure that you receive a thorough and accurate quote.
Ask us about additional coverage options that may be available.
Review your insurance to value calculation on a regular basis with your agent.
Tell your agent about any changes or improvements that you make to your home.
With approximately 1,000 tornadoes touching down each year, the United States leads the world in tornado activity. While the majority of these tornadoes occur in the area known as “Tornado Alley,” they can, and do, happen all over the country. Tornadoes are among the most expensive natural disasters; in fact, about 57% of all U.S. catastrophic losses are tornado-related. You can minimize your risk of financial burden in the aftermath of a tornado with insurance.
Facts About Tornadoes
Tornado wind speeds can reach 250 miles per hour .
Tornadoes can be a mile wide and can travel on the ground for as many as 50 miles .
Approximately 3 out of every 4 of the world’s tornadoes occur in the United States .
Tornadoes have been reported in all 50 states and have happened in all seasons.
On average, tornadoes cause 70 fatalities and 1,500 injuries in the U.S. each year .
What Is Tornado Insurance?
Unlike floods or hurricanes, tornadoes are generally covered under homeowners insurance policies and do not require a separate endorsement, or “rider.” Because of the potential for extensive damage, homeowners are strongly advised to review their policies to make sure their coverage is sufficient if a tornado touchdown occurrs.
If you rent your home or who live in a condominium, you will want to be sure that you have renters or condo insurance to cover your property. While your landlord or condo association will have a policy in place to cover damages to the structure of your home, personal belongings kept inside are not covered under these policies.
To obtain coverage for tornado damage to your vehicle, you will need to have a comprehensive car or truck insurance policy in place. Simply carrying liability insurance will not provide you with reimbursements for potentially extensive repairs following a tornado. Those who live within the boundaries of "Tornado Alley" are strongly encouraged to carry comprehensive auto insurance.
How Much Coverage Is Enough?
Tornadoes can cause peripheral damage from high winds to more extensive damage if your home is directly in the path of the storm. Those whose homes are directly hit by one of these powerful storms could lose most if not all personal belongings.
Consider the contents of your home and how expensive it would be to replace absolutely everything, including clothes, furniture, and tools. Most homeowners policies “cap” certain categories of items based on the total coverage amount of the policy. If you have a lot of expensive electronic equipment, artwork or collectibles or own anything of extraordinary value, you may need additional endorsements to fully cover them.
You may want to consider paying a little extra to get replacement value insurance coverage. Replacement value insurance will provide you with reimbursement for what it would cost to purchase new what was lost or damaged, rather than receiving compensation for the items at their depreciated value. If you find yourself in a position where you need to replace everything in your home, this type of coverage can prove extremely beneficial.
Insurance professionals recommend making a list that inventories all belongings in your home and updating it annually. Walking through your home with a video camera and keeping the recording in a safe place can help prove the value of your belongings during the claims process.
Stay Safe During a Tornado
While securing your personal belongings and valuables is important, protecting yourself and your family should be your top priority when a tornado watch is in effect. Your family should have a plan in place so that you can quickly find shelter, particularly if you live in a vulnerable structure such as a mobile home. You should also pre-designate a place to meet up after the storm in the event that you are separated.
Basements and storm cellars are the safest places to wait out a tornado. If shelter below ground is not available, go to the lowest floor possible and seek protection a bathroom, closet or other interior room far from windows and as close to the center of the house as possible.
Conventional wisdom holds that opening windows helps by equalizing pressure in the house. This is no longer advised, however, as doing so allows damaging debris to enter your home.
If you see a tornado touch down while you are in your car, do not try to out-drive it, particularly if you are in an urban or congested area. Instead exit your vehicle and, if possible, find a sturdy building or storm cellar to take shelter in. If none is available, lie down in a low, flat area, such as a ditch, and cover your head until the tornado passes. Do not go underneath a bridge or overpass as this is extremely dangerous.
Article Courtesy of Trusted Choice