Despite meteorological early-warning systems, hurricanes, flood-producing storms and wind events are unpredictable and often change course, leaving little time for homeowners to prepare. What if the worst happened and your home was destroyed?
“One of the biggest mistakes homeowners make is failing to record the contents of their home,” says Michael Gigliotti, president, HRH Gulf Coast Tampa and Sarasota.
“The other major mistake is failing to keep these documents and crucial insurance agent contact information in a safe, reachable place in the event of a disaster,” adds Wendy Bryant, ACSR, Private Client Group manager, HRH Tampa.
Smart Business spoke with Gigliotti and Bryant about the importance of documenting your possessions and purchasing insurance coverage to best weather any storm.
Why is it crucial that homeowners document their contents?
Bryant: After a catastrophic loss, depending on the age of the item, the insurance companies will usually require receipts. We recommend that homeowners videotape their belongings, jewelry and fine arts, and keep the tape off site. Because of the devastation, confusion and trauma after a catastrophe, homeowners may not remember everything they own. And once the claim is closed, there’s usually no getting any reimbursement for what was omitted.
Gigliotti: The more documentation you have ahead of time, the better off you’ll be at time of loss and the quicker you’ll get paid. It’s important to remember that jewelry, watches and antiques are probably not adequately covered in a normal insurance policy so those items specifically should be scheduled onto the policy. Antique vehicles should also be valued and covered specifically at a stated value.
What’s the difference between hurricane and wind deductibles?
Gigliotti: It’s a big difference. In coastal areas, wind and hurricane coverage is written with a higher deductible. So on a standard homeowner’s policy you’ll have two different types of deductibles. One is your normal homeowner’s deductible, with a second deductible specifically for either wind damage or named hurricane damage. That second deductible ranges from approximately 2 percent to 10 percent of the structure’s value. For example, a $750,000 house with a 5 percent wind deductible is liable for a $38,000 deductible for any type of wind loss.
Bryant: If a homeowner with wind damage has the hurricane deductible, then only the normal policy deductible would apply. It basically means the smaller homeowner’s deductible will apply to every loss except hurricane damage, and this is a tremendous difference. Additionally, if there are multiple hurricanes during the season, the hurricane deductible will apply only once.
How does flood, water and sewer backup coverage come into play?
Bryant: One of the most under-purchased and overlooked type of coverage is the flood insurance for Floridians. The entire state is in a flood zone divided into two categories. There is a 100-year flood area and a 500-year flood area. The 500-year zone is considered the low-risk zone, which in our eyes means nothing, because 30 percent of the floods that happened in the last eight years happened in that area.
Gigliotti: The first issue is purchasing coverage through the National Flood Insurance Program (NFIP), which is in play for the first $250,000 of the home’s valuation. We tell people that if they’ve elected not to buy the NFIP coverage they are basically electing to take a $250,000 deductible on their home. Over that threshold there is very affordable excess flood insurance available to insure the full value of a home. Most people are not aware that flood coverage and water and sewer backup coverage is not provided in the normal homeowners policy. Water and sewer coverage is another important endorsement to your homeowner’s policy.
How can homeowners compare the available insurance carriers?
Gigliotti: Affluent homeowners with combined premiums over $10,000 have access to AM Best Rated carriers like AIG, Chubb, Firemen’s Fund and a newer carrier called Pure Insurance. Homeowners who don’t meet their requirements are left with Citizens, the state insurance program, or a number of Demo Tech rated carriers which are not recognized or rated by AM Best.
How often should homeowner’s policies be reviewed?
Gigliotti: A thorough review should be performed once each year. Due to the higher costs in Florida, it’s important for affluent homeowners to have a broker involved for the purchase of their insurance.
Bryant: A good broker also can assist with the documentation process and offer advice with respect to the right limits for the value of the house. These limits should be kept up to date due to the increased costs of construction that rise dramatically in the wake of a major catastrophe.
MICHAEL GIGLIOTTI is president, HRH Gulf Coast Tampa and Sarasota. Reach him at (813) 261-7969 or Michael.firstname.lastname@example.org.
WENDY BRYANT, ACSR, is Private Client Group manager, HRH Tampa. Reach her at (813) 864-2746 or email@example.com.