Spring is here and spring in Oklahoma means storms! Living in tornado alley, social media feeds are full of references to our legendary weather – the Gary England Drinking Game, Mike Morgan’s weather ties and Rick’s tornado circles. Rick likes to draw one of those circle over my house in Piedmont and yell “take cover” at least once a year. All of this crazy spring weather often leads to lots of questions about insurance. What do I have? What do I need? What do I do?
Whether you own or rent a home, you need insurance. If you are a renter, you need renter’s insurance. That will cover your personal contents in the event of a weather disaster that causes loss or damage to your rented home or apartment. If you are a homeowner and there is a mortgage on your home, then you will be required to maintain home owner’s insurance which covers both the structures of the home and the contents within the home. If there is no mortgage on the home the requirement for homeowner’s insurance goes away but the need for it does not.
Many people learned this lesson the hard way after Piedmont was hit with a devastating F5 tornado in 2011. I’m not the kind of girl you want out swinging a hammer or picking up debris post storm, not because I can’t, but because I’m a klutz and likely to injury myself or someone else in the process. Therefore, I volunteered to help the community in the best way that I could which was helping people interpret their insurance documents, make claims, and get their reimbursements. One of the things that I universally found was that many older folks were either uninsured or underinsured. Uninsured meaning that they had let their coverage lapse because they no longer paid the mortgage and/or thought that insurance wasn’t necessary or could no longer afford insurance. Underinsured meaning they had some coverage but not nearly enough coverage for what they owned and what needed to be repaired or replaced. While its impossible to value a lifetime of memories and stuff, it is very possible to value the buildings we live in and the household goods we accumulate. A good insurance agent will help you review this on a regular basis to find the right mix of coverage and affordability.
As we get older, incomes tend to decrease and become ‘fixed’ as we rely on social security and pensions to live out our twilight years. Often expenses have to be cut and homeowner’s insurance is viewed as a luxury or unnecessary expense once the home is paid off because its no longer required, but that is when insurance is needed the most. After years of scrimping and saving to pay off your mortgage, insurance is still needed to protect your investment. Your home is an asset that should appreciate from year to year rather than depreciate, meaning the dollars you invested in it continue to grow so its value increases rather than decreases. Further, when your income is fixed you need that investment protected because you likely do not have the income or the savings to repair or replace a home and/or contents due to storm damage or other destruction.
Homeowner’s insurance covers more than just the structure of your home or other buildings on your property. It also covers the contents of your home and your belongings, alternate living expenses and liability protection. Policies need to be reviewed closely though to ensure that you have the proper level of coverage for structures, contents and belongings. Most standard policies only provide up to a certain dollar amount of protection for things like electronics, jewelry, furs, and firearms. In today’s consumer focused society with gadgets especially, the standard policy is often not enough to cover you in the event of major home damage or theft. The value of the contents of the home is also a calculation based off the value of the home itself rather than the actual value of your contents. Most people really do not know the value of the cost of their ‘stuff.’ Spring is a good time to make a list of all of then contents of your home with models, serial numbers, and the like. This lets you know what is in your home in the event of a tragedy but also helps you evaluate your coverage. Additionally, it’s a good idea to keep this list in electronic format and stored off site or in a secure cloud file so that if your technology is ever damaged you can get the list back.
If you have to move out of your home during repairs or if your home is completely lost due to storm, fire or other damage, your policy provides funds to cover alternative living arrangements while the home is being repaired. Alternate living usually covers up to a year but may be shorter or longer depending on the loss event or the terms of the policy. Liability protection is also an invaluable asset to have. If a friend or family member gets hurt while visiting you, if your dog bites someone, or if you do something negligent and it causes harm to someone your liability protection is available to pay the cost of a lawyer to defend you in court and then if you are liable to pay for the damages up to the amounts of your coverage. An umbrella policy can also be purchased to cover liability for auto accidents or other damage. April showers have arrived and storm season is upon us. Make sure you have prepared financially for the storms so that when its time to take cover, you know you are protected.