Disaster Insurance Solutions for East Coast Homes
- Nov 4, 2016
Newly married? Thinking about purchasing a home along the east coast to live the white picket fence dream?
From the fresh sea air of New England to Florida’s abundance of sunshine and beaches, the East Coast is tempting millennials to buy a home, start a family and settle down. Especially for the later, now might be a good time.
In Florida, for example, home prices are expected to rise in the upcoming years, according to Forbes contributor, Ingo Winzer. Zillow, a leading real estate and rental marketplace, reports that home values there have increased 9.5 per cent over the past year, predicting a rise of 3.3 per cent in 2017.
So you’ve found the perfect home, but a home on the East Coast, particularly as you begin migrating south, comes with a lot more baggage than the average American home. The area, alongside the Gulf Coast is prone to natural disasters like hurricanes and subsequent flooding.
The top five most vulnerable cities in the country sit along the East and Gulf Coasts, according to Climate Central are: Tampa-St. Petersburg area, Miami, New Orleans, Norfolk-Virginia Beach area and Houston/Galveston. In terms of states, Florida is the worst of them all.
Since the 1800s when the National Weather Service began tracking hurricanes, Florida has fallen victim to over 450 tropical storms, cyclones, and hurricanes. However, until Hurricane Hermine made landfall this month, the Sunshine State had not experienced a hurricane in over a decade since Hurricane Wilma of 2005. Yet it remains to this day, the most natural disaster-prone state in the country. Of the 10 costliest hurricanes in U.S. history, Florida has played host to seven.
Further north, the New Jersey and New York coastlines are not much safer. When Hurricane Sandy hit the region in 2012, the death toll amounted to 72 in the U.S. and $50 billion in preliminary damages. Southern Mississippi and southeastern Louisiana experienced the wrath of Hurricane Isaac that same year. The year before that, Hurricane Irene made landfall in eastern North Carolina. The worst of the lot was Hurricane Katrina in 2005, with 1,833 deaths and $108 billion in damages.
Although the recent Hurricane Hermine is not expected to exceed the Category 3 level, this hurricane has renewed the importance of comprehensive disaster insurance. As we enter the most active month of the Atlantic hurricane season, the irking fear of what-if begins to take over as homeowners contemplate their present insurance policy and future residents start shopping around.
Although it has been 11 years since Hurricane Katrina made landfall, 51 per cent of Americans surveyed felt the country’s vulnerabilities haven’t improved, according to a CNN/ORC poll.
So what can the average homeowner do?
The National Oceanographic and Atmospheric Administration advises homeowners to keep a week’s supply of non-perishable food, water and medicine. Adding a battery-powered flashlight, a radio and a portable crank to your survival package will certainly help should a calamity strike, but without disaster insurance, the aftermath will be just as torturous as the disaster.
When shopping for home insurance on the East Coast, here are some things you need to know:
For starters, like elsewhere in the country, East Coast homeowners’ insurance policies cover two main things: property protection in case of structural damage or other forms of loss; and liability coverage for injuries caused by the homeowner or their family to someone else. When it comes to hurricanes, the former is most important for consideration.
What stifles new homeowners is insurance premiums in hurricane-prone zones. Florida, for example, is home to the highest insurance premiums in the country, whereby Floridians pay an average of $2,115 per year, according to the National Association of Insurance Commissioners. Compare that to the nationwide average of $1,096! The numbers are highly dependent on location however. A beachfront property would cost more to insure than a residence farther inland.
Furthermore, a home in a hurricane zone plays by different insurance rules than the rest of the U.S. For instance, disaster policies consist of two deductibles. There is the hurricane deductible and the standard loss-theft deductible. The latter covers things like tornadoes, fire damage and burglary.
Depending on the state, different insurances made it to the top five list. In a recently released report by reviews.com, two of the top Florida insurance companies for homeowners were State Farm and Tower Hill Insurance Group. For North Carolina, on the other hand, Nationwide and Allstate were recommended, while for New York, State Farm and Allstate received the best reviews.
Case Study: State Farm Home Insurance
The home insurance at State Farm is examined here to give new homeowners an approximate idea of what to expect from a policy. The plan covers damage to property incurred by weather (specifically storms, fire, wind, hail, lightening, freezing, ice, snow or sleet), theft, vandalism, riots, aircraft and vehicles. Additionally, sudden or accidental events like plumbing issues, problems with heating or cooling systems, etc. are covered.
There are a few disclaimers. As every claimant knows, purposely induced events that damage the property or injure a person are not valid for reimbursement. Additionally, coverage is not binding if a domestic property is used in part as a business. Any vehicles, like a car, are excluded from coverage.
Furthermore, floods are not covered by State Farm’s (or any other) plans reviewed by review.com. It needs to be purchased separately from the National Flood Insurance Program. This add-on is highly recommended when considering that virtually all of America is susceptible to flooding. If you don’t want to pay substantial premiums, avoid settling in flood zones like Key West, which is encumbered with an average yearly premium of $779. Places like Miami, on the other hand, have average premiums that are about half that amount.
That being said, State Farm offers tons of discounts to reduce premiums. It does not, however, offer discounts for auto pay, customer loyalty and no added perks to owning a new or remodeled home. On a good note, State Farm processes about 35,000 claims daily. With a high financial security rating by A.M. Best, the company can be reliably used for large hurricane claims.
State Farm’s hurricane deductible, however, is a whooping five per cent, which is high compared to Tower Hill’s two percent.
Preparing for a disaster isn’t just about protecting property of course. Tied into this are grievances like loss of life, funeral expenses and auto coverage. For the latter, the Insurance Information Institute compiled a list of go-to insurance companies with Berkshire Hathaway Inc., State Farm Mutual Automobile Insurance and Progressive Corp making it to the top.
Decrease Your Premium
By now, your dreams of owning a home on the East Coast may have started wilting with the area’s tendency towards disasters and high premiums. But there is some good news. Premiums don’t need to be so high and homeowners can invest in a few trinkets without breaking the wallet to make that happen.
For example, the Hurricane Mitigation Program is tailored to the needs of Florida homeowners. The process is simple: invest in some hardware for your home and watch as your premium shoots down. Fortifying a home can help against disasters as great as a Category 4 hurricane. Review.com’s top five may offer discounts if you add hurricane-proofing features like sealed roof decks, shatterproof glass windows and hurricane-rated garage doors. Having a roof that is up to code will repel winds up to 130 mph. Regions Insurance’s vice president, Jacob Holehouse, told the site that savings can range between $2,000 to $3,000 on premiums when these features are included.
How to expedite your claim:
A survey of 9,905 people by Consumers Reports found that larger claims were often associated with more disputes between insurance companies and claimants. When claims fell under $30,000, only seven per cent of people surveyed experienced disputes with their insurer over payment. When claims exceeded that sum, the percentage rose to 18 per cent. Greater damage also meant that insurance companies took longer to process claims.
But there are things the homeowner can do to expedite their claim.
In the aftermath of a disaster, the catastrophe claims process begins simply by reporting a claim to your insurance representative. Supplementing your claim with evidence is always a good idea. Document any damage on your property by photographing items and retain receipts for home repairs, vehicle towing and repairs, temporary housing, meals, and other living expenses. To complement the photographs, compile a list of anything that’s been damaged and information on quantity, description, and age. Don’t throw out any damaged items until speaking with a claim representative and be sure to keep track of time spent and description of tasks performed during clean-up.
Having a home on the East Coast may seem like more trouble than it is worth, but half the homeowner’s troubles can be eliminated with the relief that comes with a comprehensive disaster insurance.
Advice, Home Insurance