About the author

Sean A first hand witness to thousands of homes and businesses damaged or destroyed by disasters, Sean Scott, a second generation building contractor specializing in disaster restoration, became aware that survivors were ill equipped to take the steps to recovery. Unaided, or misguided, disaster survivors struggle to successfully navigate the complex process, and so, The Red Guide to Recovery – Resource Handbook for Disaster Survivors was born. Used by fire departments, relief organizations, government agencies, and communities across the U.S., The Red Guide to Recovery helps countless people prepare for and recover from disaster events.

Category: Insurance, Preparedness Tips

Make Sure You Have Enough Insurance!

July 15th, 2012

Glenwood Springs, CO, June 8, 2002 -- An ambulance passes a long line of residents evacuating West Glenwood after the Coal Seam fire jumped the Colorado River. Photo by Bryan Dahlberg/FEMA News Photo

After the Southern California wildfires of 2003 and 2007, numerous families found themselves under-insured and unable to rebuild their homes for the amounts they were insured for.   This was due in large part to agents selling policies with cheap premiums that were based on undervalued replacement cost values and/or policies that had limited coverage.

In these cases, there were a number of issues working against the homeowner.  One was the simple fact that they didn’t have enough coverage to rebuild the home anywhere close to the size or quality of what existed prior to the loss.  Another issue involved the additional living expense (ALE) allowance which pays for a homeowner to live in a temporary home for a limited amount of time while the home is being rebuilt.

Many homeowners were forced to dispute with their insurance companies about being under-insured, which ran down the clock on their ALE and caused these people to be forced to pay their mortgage on the home, which at the time was only six inches of ash, and pay the rental costs of the temporary residence.  These homeowners were faced with a double whammy of paying for their mortgage on a home they couldn’t live in and the rent on a temporary home.  Couple this with the reduction of proceeds due to deductibles and depreciation, these people were in bad shape.

To avoid this kind of pitfall, take the time to read your policy and ask your agent to answer any questions you may have regarding what you have coverage for and your limit amounts.  You may also want to ask some local contractors what it would cost to rebuild your home exactly the way it is to see if you have enough current coverage.

Some of the insurance coverage you may want to consider includes the following:

  1. Dwelling – This covers the structure of the house.
  2. Other Structures – This usually covers structures that are separate from the house, or connected to the house by a fence, wire or other form of connection, but not otherwise attached to the dwelling, such as a tool shed or detached garage.
  3. Personal Property – This covers the contents of your home that are your personal property. This includes furniture, appliances, clothing, etc.
  4. Additional living expenses – This pays the additional costs of living away from home if you can’t live there due to damage from a fire, storm or other insured disaster. It covers hotel bills, restaurant meals and other living expenses incurred while your home is being rebuilt.
  5. Building Code Upgrades – This provides coverage for upgrades that the community requires for building codes when a home is being repaired or rebuilt as a result of a covered loss.
  6. Debris Removal – This covers the cost of removing debris after a covered loss.
  7. Landscaping – This covers trees, shrubs, grass, irrigation systems, etc.
  8. Personal Liability Protection – This covers you in the event that a lawsuit is presented against you or covered family members for bodily injury or property damage.

About the author

Sean A first hand witness to thousands of homes and businesses damaged or destroyed by disasters, Sean Scott, a second generation building contractor specializing in disaster restoration, became aware that survivors were ill equipped to take the steps to recovery. Unaided, or misguided, disaster survivors struggle to successfully navigate the complex process, and so, The Red Guide to Recovery – Resource Handbook for Disaster Survivors was born. Used by fire departments, relief organizations, government agencies, and communities across the U.S., The Red Guide to Recovery helps countless people prepare for and recover from disaster events.


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