Why Insurance Reviews Matter

The recent hurricanes in the Southeast and the current wildfires in Los Angeles have been devastating, leaving a trail of destruction that has touched countless lives. These events serve as a reminder of the importance of reviewing our homeowner’s insurance policies to ensure we’re adequately protected. While these disasters may feel distant to some, the reality is that unexpected events can happen anywhere, and being prepared is crucial for your family’s long-term security.

A friend of mine shared a devastating story about one of his friends who had just lost their home in the Los Angeles wildfires. Their home was valued at $2,000,000 but was insured for only $1,000,000, leaving them underinsured by half. To make matters worse, their policy only covers rebuilding in the exact same location, offering no coverage for loss of use or any contents within the home. Complicating their situation further, local zoning regulations may not even permit rebuilding on the same spot. This family’s situation highlights the importance of understanding the nuances of your insurance policy—from coverage limits to exclusions that could significantly impact your ability to recover after a loss.

It’s also critical to be aware of specific language in policies that might exclude certain types of damage. For example, some policies explicitly exclude damage from fires that originate outside the insured property, such as wildfires. This exclusion could leave homeowners facing catastrophic losses without any recourse from their insurance provider.

In the Southeast, property insurance policies present their own challenges, particularly for those who live along the coast. Many of these policies include hurricane coverage but explicitly exclude flood damage. The distinction between hurricane and flood damage may seem clear on paper, but it can become murky when dealing with claims. Imagine a scenario where water damage occurs during a hurricane—is it attributed to heavy rains or rising floodwaters? This question can lead to disputes and delays in receiving claim payments if you don’t have a flood insurance rider.

Helene, the recent hurricane that made landfall in Florida and swept through Georgia, South Carolina, North Carolina, and Tennessee, caused significant flooding in the lower Appalachian Mountains. Many homeowners in these regions discovered too late that their policies didn’t include flood riders. This oversight left them to bear the financial burden of repairs and replacements entirely on their own. The cost of flood insurance may seem like an unnecessary expense until you find yourself facing tens or hundreds of thousands of dollars in uninsured damages.

It’s more important than ever to stay on top of your insurance policies. Consider these steps to ensure you’re adequately protected

Review Your Coverage Limits

Make sure your policy covers the full replacement value of your home, not just its market value or a depreciated amount. Consider any recent home improvements or rising construction costs that might necessitate higher coverage.
Understand Your Policy’s Exclusions

Take the time to read the fine print and ask your insurance agent about exclusions. Whether it’s wildfires, hurricanes, or floods, understanding what isn’t covered will help you make informed decisions about additional riders or policies you may need.
Assess Your Contents and Loss of Use Coverage

Ensure your policy includes coverage for personal belongings and temporary living expenses if your home becomes uninhabitable. Documenting your possessions with photos or videos can simplify the claims process.
Check Zoning and Rebuilding Restrictions

If rebuilding on your property is subject to local zoning laws, discuss these potential hurdles with your agent. Some policies may offer additional endorsements to cover rebuilding elsewhere if necessary.
Consider Flood Insurance

Even if you don’t live in a designated flood zone, flooding can occur almost anywhere. The additional cost of a flood rider or separate flood policy could be invaluable in protecting your home and assets.
Schedule Regular Reviews

Life changes, and so do your insurance needs. Schedule an annual review of your policy with your insurance agent to ensure your coverage keeps pace with your circumstances.

While reviewing insurance policies may not be the most exciting task, it is vital.

Disasters like hurricanes and wildfires remind us that the unexpected can and does happen. Taking the time to confirm the details of your policy now can save you from significant financial and emotional stress down the road. No matter where you live, it’s a good idea to ensure you know what is and is not covered. Nobody likes to pay for insurance they don’t need, but not having what you do need could be devastating.

Why Insurance Reviews Matter