Insurance World

Homeowners Insurance is supposed to protect us in case of disasters. That is what we have come to expect from our homeowners insurance over the years. But what if the disaster is the costliest in U.S. History? What if your insurance agent’s home and office were destroyed in the disaster also?

That is what happened to many customers and homeowners insurance agents and companies after Katrina hit the Gulf coast. Many agents’ homes, offices and insurance Companies’ claims centers were in the same situation as their clients due to the storms. So what did they do? They set up “office” in tents and mobile trailers. Then Hurricane Rita blew away these temporary offices and the agents and companies set them up again. These temporary shelters acted as a communications center for all people in the surrounding areas. Local people would come by to ask questions, meet with their claims adjustors and just catch up on the news with their neighbors. Extreme circumstances dictated unconventional responses: some agents even filed claims for their clients without even talking to the clients just so they could get the claim “in the queue.” Allstate allowed customers to submit claims through any agent in the country and set up a priority line to assist. They sent email to agents in the areas surrounding the disaster areas to act as messengers by “word of mouth” to their fellow agents in the effected areas. The larger companies such as State Farm & Allstate that service claims for the national flood Insurance Program even used satellite imagery to determine damage in some neighborhoods that were entirely flooded.
Lessons Learned: Those of us not effected by these disasters can learn a few lessons about coping with future disasters from the thousands of policyholders that are still waiting to get their claims paid. As soon as possible, take steps to prevent further damage to your home if possible: such as covering the roof with a tarp if possible. You can hire a contractor if you can find one, as that would be safer for most of us than climbing on our roofs. Hold off making any repairs until you see or talk to an adjuster first. Plus, keep your receipts, as you’ll need them to prove expenses that can be re-imbursed later.

What Does Homeowners Insurance Cover?

You can generally expect your homeowners insurance to help pay for additional living expenses for up to 12-24 months while your home is being repaired. But, homeowners insurance usually pays only after they verify you have a legitimate claim. After Katrina, many insurers made an exception, automatically distributing enough to cover two weeks’ worth of additional living expense to anyone in an area subject to mandatory evacuation. Some companies even gave small advances on contents under the personal property part of their homeowners insurance policies.
If you have to wait to get your check, it helps to have cash that is easily accessible in a bank account or money market fund. Stashing cash at home isn’t a great idea because if your home burns down and you weren’t able to get to your cash, most homeowners insurance policies only cover $100-$200 in cash whether it is stolen or burned up in a fire. Your goal should be to have an emergency fund available to take care of your family for 2-4 weeks (minimum)if possible. In a disaster it might be hard to even find a local bank to get cash. Debit/credit cards with a statewide or national bank would perhaps be better.
Your biggest problem in getting your claim handled may be in either not having the proper homeowners insurance coverage or not having enough coverage. Most good homeowners insurance policies today cover up to 120% of your dwelling coverage limit. It is important that you review the dwelling limit with your agent every couple of year’s at a minimum. Homeowners insurance policies do not cover Flooding, but you should again see your agent for this coverage.
If your homeowners insurance falls short, you may qualify for money from the Federal Emergency Management Agency (FEMA) or a disaster-assistance loan from the Small Business Administration (SBA). Homeowners can borrow up to $200,000 for rebuilding and $40,000 to replace personal property at very low interest rates for up to 30 years.
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When you take out a loan, it is likely that you will be offered loan insurance to protect your payments should you be unable to keep up with them due to illness or unemployment. However, many of the loan insurance policies on offer cover you for very little and are extremely expensive. If you want to find out what you should be paying for loan insurance and what to avoid then this article can help you to decide.

What is loan insurance?

Loan insurance is often known as payment protection insurance or PPI. This type of insurance covers you if you cannot make your loan payments because of an accident, illness or involuntary unemployment.

How much does it cost?

The price of loan insurance can vary greatly, but is usually added as an extra to your payments each month. Although the payment figure might look small, if you add it to the total loan amount and then add interest the number can seem much more.

Hidden costs

Although a loan might seem cheap, when payment protection is added the loan price can increase significantly. For instance, the amount you pay back on a Ј5000 loan over 5 years can increase by over Ј1,500 when loan insurance is added. Often, loan insurance is added without you knowing about it, which means you are paying for something you didn’t even ask for.

The benefits

Despite its high cost, there are some benefits to loan insurance. It can give you the peace of mind that if something should happen to you then your payments are covered for up to a year. This means that you won’t be in financial difficulty or risk default if you are ill or injured. If this sort of security is important to you then loan insurance is probably a good idea.

Lack of cover

Although it can give you peace of mind that you will be covered, loan insurance has extremely limited coverage. For example, if you are self employed it is unlikely that the unemployment clauses will cover you unless your business has ceased trading. Before getting any loan insurance you should check that you are covered for the things that are important to you, otherwise the policy is not worthwhile.

Alternatives

There are some alternatives to loan insurance that are usually cheaper. Firstly, you can usually get the same sort of loan insurance cover independently from your loan provider. The price of this insurance is usually much lower than the price offered by your insurance company. Also, some of the clauses of the loan insurance may already be covered under other insurance policies that you have. Loan insurance can be worthwhile, but unless you are covered and can get the insurance for a good price then it is usually not worth having. However, if you shop around and know exactly what you need to be covered for, you can find insurance that will cover you in the event that you cannot keep up with your loan repayments.