No matter which direction you turn, something disturbing is happening regarding extreme weather. Tales of droughts, hurricanes, heat waves, wildfires, earthquakes, and tornadoes headline the news. The damage from these disasters is impossible to ignore.
Realtor’s Margaret Heidenry reports that according to the National Oceanic and Atmospheric Administration, the United States experienced 22 separate billion-dollar weather and climate disasters in 2020, totaling around $95 billion in damages, without even beginning to add up what has been taking place in 2021. Companies writing and considering claims on homeowner insurance policies are no doubt busier than ever before. How well do you know your policy?
Heidenry speaks of how realtor.com teamed up with HarrisX to conduct a poll of 3,026 adults on their extreme weather concerns and homeowners insurance know-how. The results? We are more vulnerable than we may ever imagine. Here are highlights taken from the report:
The natural disasters homeowners are most worried about are tornadoes (39%), severe winter storms and cold weather (38%), floods (35%), and hurricanes (29%). To a lesser degree, they’re also concerned with earthquakes (21%), wildfires (17%), and droughts (11%).
All that said, only 52% of American homeowners took natural disasters into account when choosing the location of their current home.
Just over half (56%) of homeowners knew what to look for in their homeowners insurance policy when buying their home, with 15% admitting they had no clue what to check. Meanwhile, almost one-third (29%) said they thought they knew what to look for, but learned a lot they didn’t know while buying insurance.
The youngest generation is the least likely to understand homeowners insurance: only 39% of Gen Z said they knew what to look for in their policy when buying a home, compared with 58% of Millennials, 58% of Gen X, and 57% of baby boomers.
Bottom line: make NO assumptions about your homeowners insurance. Call your agent and ask questions about flooding, tornadoes, hurricanes, windstorms, earthquakes, wildfires, and even extreme heat or snow damage. “The goal of your homeowners insurance policy and additional coverage is to make sure you’re covered not only for minor damage, but also in case your home is completely destroyed and needs to be rebuilt. This is known as ‘actual total loss’ or ‘total loss,’” explains Heidenry. “Total loss coverage varies from area to area as well as from home to home, but it basically boils down to an estimate of how much it would cost to rebuild your home” She goes on to say that that could cost more than you paid for your house, or less—depending on the construction costs in your area. “Total loss coverage is pricier, but if you don’t have it, you’ll be on the hook for all the building costs not covered by your policy.”
For instance, even though all home insurance policies include fire as a covered peril, if you live in an area with a particularly high risk for wildfires, be warned that the increase of wildfires has prompted some insurance companies to forgo renewing even loyal policyholders because of the risk. “Even if your insurer does offer wildfire coverage, it may not cover the total cost of rebuilding a home,” says Heidenry. “Instead, it may cover just the loss of your personal property, some of the costs of rebuilding a home, and living expenses while your home is being repaired.”