Protect Yourself from the Unexpected

By Alanna McCargo

Over the past year, the number of natural disasters and unexpected events have been frequent and extremely severe. The visuals of the destruction provide a clear reminder of how quickly life can change. Hurricane Sandy hit the Northeast, wildfires burning in California, record-breaking tornadoes in Oklahoma and 100-year flooding in parts of the Midwest. The list of events goes on and on. These disasters have been catastrophic for some, with many people facing total loss of their personal property, including homes, furnishings and cars. Everything is gone. Hearing about natural or unexpected disasters that cost billions of dollars in destruction of personal property is a reminder of the importance of a critical personal finance tool—insurance.


Insurance is the one thing we buy in the hopes of never having to use, but we are certainly grateful it’s there when we need it. We typically set it up and rarely look back to ensure coverage keeps pace with changes over time. Maintaining and managing the insurance policy on your home and other personal assets is a critical part of financial planning. It requires thoughtful, periodic review and, if insufficiently managed, could cause significant financial setbacks should something unexpected happen – like a hurricane, earthquake, tornado or wildfire.

According to a J.D. Power study released last year, one in five homeowners do not have enough home insurance to rebuild their homes if destroyed in a disaster.

Are you protected?

Insurance policies are designed to protect assets from unexpected accidents and disasters. When it comes to your home, insurance is a critical consideration and requirement whether you own or rent. Before you sign your mortgage or lease, you typically need to purchase an insurance policy. For homeowners, this can be one master policy or, depending on where you live, multiple policies to cover potential threats and risks in the part of the country you reside (ex. hurricane, flood, and earthquake). Be sure you are informed and conduct research before you move into a home. You should find out about history of flooding at the property, age of expensive structural items like roof, water heater and HVAC systems, and any history of issues with plumbing, pipes or gas lines. Before you seal any deal on a home, you should be sure your insurance plan is in-tact and that you are fully protected in the event of an unexpected event or natural disaster.

Key Considerations for Home Owners and Renters

Check your value regularly – insurance plans are often purchased and forgotten about. Be sure you are regularly reviewing your policy renewal statements and coverage amounts. Some questions to ask yourself about your homeowners insurance:

  • Has your home’s market value declined or increased significantly and has the insurance value been adjusted accordingly? Remember that you want to cover your home for replacement value of the structure. Call your insurance agent and ask them if you have too much or too little coverage given your home’s current market value.

Renters need extra protection – renters insurance is a fairly inexpensive coverage that every single renter should have to cover their personal belongings. Many apartment and condominium dwellings have coverage for the overall structure and common areas that may be damaged. This coverage is not going to pay for the replacement of your personal items like furniture that may be lost in a disaster. It is critical that you cover this replacement value so that you can get back on your feet quickly in the event of a loss.

Age matters – if you are living in or purchasing an older home, be sure to take that into consideration in your coverage. If you are buying a home, have a thorough home inspection done prior to finalizing the contract. Older properties are more prone to issues related to aging, particularly in older plumbing or structural areas. There are home protection warranties that you can purchase very inexpensively to cover older appliances and mechanical systems that may need replacement. These can be huge expenses, so being prepared and having coverage to help pay for repair or replacement could save you from tapping into savings reserves or having to borrow. If you are buying, ask the seller of the home to buy the home warranty for you as part of the deal.

Pick a reputable insurance company – be sure to do your homework on the company you choose to insure your property. Check into their statistics around how timely they pay claims, how responsive their adjusters are, and how accessible they are to you in your time of need. You can check the Insurance Rating Agencies and the Better Business Bureau. Do your homework before starting a policy with any company and remember that cheaper doesn’t mean better.

Your insurance policy is a critical part of your overall financial plan. It’s imperative that serious consideration be given to insurance coverage amounts and that home warranties and policies are regularly updated as circumstances change in your home. Insurance isn’t something to cut corners on. The cheapest plans with unknown companies are not your best option. Get enough to cover what you need if the worst happen. Pray you never need to use it but always protect yourself and your family in the event disaster strikes.

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