Insurance Questions You Need to Ask
““The best we can do is size up the chances, calculate the risks involved, estimate our ability to deal with them, and then make our plans with confidence.””
In recent years, natural disasters like hurricanes have become more frequent and devastating.
For those living in areas prone to such events, the risk of having to repair or even replace your home, personal property, vehicles, etc. (and the costs associated with doing so) can be quite high. Insurance is a financial product that allows you to transfer some of your own risk to an insurance company, in exchange for a monthly premium.
Navigating the complexities of insurance—both when shopping for a policy and filing a claim—can be overwhelming. Below you’ll find a list of key considerations and best practices that can help you protect yourself and your property before disaster strikes and in the aftermath.
Before Disaster Strikes: Choose Your (Insurance) Fighter
🧮 Know Your Risk(s)
To know what your risks are, you must first know what risk is. Simply put, risk is:
“The possibility of harm, damage or financial loss”
Questions to ask in order to identify your risks include:
🤔 What are the worst-case scenarios?
Make a list of all natural disasters common (or even possible) in your area that could lead to significant harm or financial loss.
🤔 What are the potential financial consequences?
Assess how these risks could impact your home(s) and personal property (including vehicles and recreational/business equipment)
🤔 What is my exposure to the risk?
Determine how threatening these events could be to your financial health and stability, based on your current financial position, lifestyle, and decisions
🤔 Do I have a plan in place to mitigate these risks?
Evaluate whether you already have insurance in place to cover some or all of these risks
🤔 How much risk am I willing and able to tolerate?
Consider your personal risk tolerance and cash savings, and whether you can afford to pay out of pocket for the potential losses associated with certain risks
🤔 Are there any controllable factors?
Identify any actions you can take to reduce or eliminate the risks, such as moving away from a flood-prone area
🛡️ Understand What Is and Isn’t Covered
One of my favorite writers in the financial space is Kyla Scanlon. In her latest piece on why “Home Insurance is a Really Big Problem,” she references a quote from another source (shown below), and goes on to share her own thoughts about what insurance is and is not, and the crisis that we are likely facing in the days ahead.
TL; DR - An insurance contract isn’t a blank check.
For example -
⚠️ Homeowners' policies often do not cover flood damage, which is a major risk in hurricanes. Flood insurance is usually purchased separately through the National Flood Insurance Program (NFIP) or private providers.
⚠️ Wind damage may require an additional rider or a separate policy.
⚠️ Exclusions are often outlined in the policy for things such as mold, storm surge, power outage or other specific types of damage that the insurer is not willing to provide coverage for.
☑️Check Deductibles for Natural Disasters
Many insurers have separate, higher deductibles for natural disasters like hurricanes.
This could be based on a percentage of the home’s insured value, rather than a flat dollar amount. For example, if you have a 2% deductible on a $300,000 policy, you would be responsible for $6,000 before insurance kicks in.
This can dramatically affect your out-of-pocket expenses after a disaster-related emergency.
🤑Replacement Cost vs. Actual Cash Value
Understanding the difference between replacement cost and actual cash value is crucial.
👉 Replacement cost covers the cost to repair or replace your home and belongings without depreciation.
👉 Actual cash value, on the other hand, pays what your property is worth at the time of the loss, factoring in depreciation.
🤳 Pro Tip: Use your phone to take pictures and videos of the condition of your home and personal property BEFORE damages occur and to keep detailed receipts of all expenses associated with repairs and displacement.
🌐 Store these in a digital (cloud-based) file along with copies of your insurance policy documents, for easy retrieval after an event.
🖺 Having a comprehensive inventory of belongings—with details like the purchase date, model number, and cost—will also be incredibly helpful to reference.
Replacement cost coverage is usually more expensive but offers better protection in the long run.
🧐 Review Additional Living Expenses (ALE) Coverage
After a disaster, you may not be able to live in your home during repairs. Additional Living Expenses (ALE) coverage helps with the cost of temporary housing, meals, and other essential expenses. Unless you plan to cover these costs with your emergency savings, you will want to ensure that your policy has adequate ALE coverage, and understand its limits.
In many cases, these expenses are reimbursed based on submitted receipts, which means you will NEED to have funds available to front the costs in the short-term.
After a Loss: Filing a Claim
📋 CYA - Document Everything
Immediately after the disaster, take photos and videos of the damage to your home and property.
Be prepared to provide a list of items that were damaged, along with dates purchased, model numbers, and the cost of those items.
Keep digital backups of all documentation, and don't discard any damaged property until an adjuster assesses it.
⏰ File Your Claim Promptly
After a hurricane, the volume of claims skyrockets, which can lead to delays in processing. The sooner you file, the quicker your claim will be reviewed.
Notify your insurance company immediately, even if you don’t have all the information yet. Some policies have time limits for filing, so don’t wait.
💡 Be Aware of Policy Limits and Deductibles
When filing a claim, double-check the limits of your policy and any deductibles specific to hurricanes or other natural disasters.
You don’t want surprises when you discover certain damages aren’t covered, or when facing a hefty deductible before your insurance payout kicks in.
🛠️ Get Multiple Repair Estimates
Insurance companies will often send their own adjusters to assess the damage and provide you with a payout offer (the amount of money your insurance company will give you to repair your home and/or replace your personal belongings).
This can cause delays with repairs needed in order for your home to be safely accessible and/or inhabitable (one more reason to have emergency funds set aside for relocation, meals and other temporary expenses).
It’s wise to get multiple repair estimates from licensed contractors. This gives you leverage if you need to dispute the insurance company’s payout offer. Having detailed estimates will help you understand the true cost of repairs and advocate for fair compensation.
🕵️ Work with a Public Adjuster if Needed
If your claim is complex or if the insurance company's offer is much lower than you expected, you might consider hiring a public adjuster. A public adjuster works on your behalf to negotiate with the insurance company, ensuring you get the maximum payout.
Keep in mind they typically charge a percentage of the final settlement, so weigh the cost against the benefit.
💼 Stay Organized and Persistent
Dealing with an insurance claim after a hurricane can be a long process
Keep detailed records of every communication with your insurer, adjusters, and contractors. Document phone calls, emails, and any in-person meetings.
Staying organized and persistent will help ensure that your claim is processed in a timely and fair manner.
Preparing for the Unexpected
🤝 Insurance is a vital tool in protecting your financial well-being in the face of a natural disaster. However, not all policies are created equal.
Take time this week to review your coverage, understand what you need based on your risk profile, and stay informed about the claims process. Having a well-thought-out insurance plan in place can make all the difference in recovering after a hurricane.
💁🏻♀️ Pro Tip: Set up a meeting with your financial advisor to review and discuss your insurance policies and determine whether you have adequate coverage and enough emergency savings to cover deductible and up-front cash needs in the event of a widespread event such as Hurricane Helene.
By planning ahead and understanding both the shopping and claims process, you can minimize the financial impact of a hurricane or other natural disasters.
~Jess
P.S. Have you ever had to file an insurance claim related to property damage? What was your experience? Did you learn something new that wasn't mentioned above? I'd love to hear it! Reach out and let's talk. 🙏
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