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Disasters Happen: Are You Prepared

Natural disasters happen and Minnesotans have experienced their fair share. You never know when you could suffer property damage or loss from a flood, tornado, wind, hailstorm, or fire.

There are many things in life you cannot control, but you can influence your ability to recover from unforeseen events by having adequate insurance coverage.

Government assistance becomes a reality in only 10% of all disasters. Therefore, relying on the government for recovery assistance is not a reliable plan for protecting you and your family from financial loss. Federal disaster declarations are only awarded in large-scale disasters, and when they are awarded, assistance is usually in the form of low-interest loans, not grants.

Plan Ahead

Insurance: Manage Your Risks

Meet with your insurance agent annually or as needed to ensure your insurance coverage is adequate to protect you and your family against loss. Take into account any recent changes or additions to your property or surrounding area. 

Read and understand your insurance policies

Many people wait until after they experience a loss to understand their coverage. Unfortunately, these decisions cannot be undone and they will directly affect your ability to recover from a loss. Review your existing insurance coverage and figure out where your “gaps” are. 

Actual cash value vs. replacement cost coverage 

Imagine that your roof is damaged in a storm and all the shingles need to be replaced. The cost to replace them is $10,000. The shingles are 10 years old, but they should have lasted for 20 years under normal conditions. Therefore, they have depreciated by one-half of their full value. 

Under an actual cash value policy, you would only be paid $5,000 for a loss, minus any deductible. Under a replacement cost policy, you would initially receive $5,000 for the loss of the roof. Then, after having it repaired or replaced, you would submit the bill to the insurance company for the balance, not to exceed the amount determined by the insurance company to return your roof to its original condition.

Plan for a Future Claim

No one ever knows for sure when a natural disaster will strike. There are several steps you can take to ensure that you will be fully compensated for your loss as well as make the insurance claim filing process easier and faster after a disaster. For example, establish an on-going system to document major household item information. Written documentation may include the following: Manufacturer, model, serial numbers, age, value when new. Documentation may assist in any future claims for property loss and income tax deductions. 

Home Inventory

One of the best ways to make sure your possessions are fully protected is to document them with a home inventory. Creating a home inventory is easier than ever thanks to myHOME, a new iPhone and Android application from the National Association of Insurance Commissioners (NAIC). The free myHOME app lets you quickly photograph and capture images, descriptions, bar codes and serial numbers, and then stores them electronically for safekeeping. The app organizes information room by room, and even creates a back-up file for e-mail sharing.

If you prefer the low-tech way, download our Home Inventory Checklist which provides a room-by-room guide for your home inventory. You can fill it out, update it, and keep it as an on-going record of your possessions.

When a Disaster Occurs

There are many resources available to help families recover after a natural disaster--financially, cleaning-up, managing stress, finding housing, and others.

After a disaster, once the dust settles and everyone is safe, homeowners and renters should immediately call their insurance company and their mortgage servicer. They will be your partners in rebuilding your home.

As soon as the insurance claim process is underway, you should immediately contact the customer service center or claims center for your mortgage servicer. Most mortgage service companies have a packet of information ready with instructions on what to do with your insurance settlement check and how to manage the repair and reconstruction of your home. 

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