Are you prepared in the event of an emergency? (image via flickr)

Today’s newspapers and internet sites seem to highlight some new catastrophe almost every day.  Whether it is a drought in the U.S., flooding caused by a typhoon in the Philippines, or an earthquake that destroys most of an island nation, emergency situations are all around us.  Now, more than ever, families need to take steps to be ready in case one of these catastrophic events comes to call.

September is National Preparedness Month and organizations like FEMA and the Red Cross will be working with communities and families to raise awareness about the need for emergency preparedness and to offer advice and information on what kind of preparations need to be made.  The primary goal of National Preparedness Month is to get people to understand the importance of preparing before disaster strikes.  To help increase awareness, here are 4 things every household should do in order to be ready and be able to respond.

1.     Fire Evacuation Plan

In 2010, statistics show there were more than 360,000 house fires in the U.S.  and 2,640 people lost their lives as a result.   Unlike some other natural disasters that only impact certain areas, house fires can happen to anyone.  Make sure your family has a fire evacuation plan that includes at least two ways out of every room.

2.     Emergency Contact Information

One of the scariest things family members encounter when there is a crisis is not being able to find loved ones.  Establishing an emergency communication plan that includes meeting places, important contact numbers, and how to use an out of town relay to locate and communicate with each other is your best defense.

3.     Evacuation Plan

If the time ever comes that it is no longer safe to remain in your home, you won’t likely have time to formulate the best evacuation plan either.  In order to be ready if that order ever comes, you need to know where the closest shelter is in your town as well as where emergency shelters can be found in neighboring towns or cities.  You need to have an emergency kit that contains everything your family will need for 72 hours already packed and ready to go with you in the car.

4.     Sheltering in Place

Just like there are times when you must leave your home, there are times when leaving is the last thing you want to do.  Every family should have a plan for remaining in their home for several weeks without access to outside resources like the grocery store or essential services like electricity.   By stocking enough food, water, medicine, and other critical supplies ahead of time, you can feel confident that if there is a reason not to go out, you won’t have to just to survive.

You don’t need to stockpile several years of food, learn to spin your own wool thread, or spend thousands of dollars on tools and equipment it is unlikely you will ever use in order to be prepared.  It only takes a little time, a little effort, and a trip or two to the grocery store to make sure your family is ready to weather whatever storms come your way.


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Are you adequately insured? (image via wikipedia)

Most of the time when people talk about specialty insurance, they are talking about insurance coverage that provides companies with specialized protection based on their industry or on specific risks they are face.  However, there is also a side of specialty insurance that is all about covering personal interests.  Many people believe that their auto, renter, or homeowner’s policy provides coverage for these specialty risks and depending on the policy, it might.  But in many cases these specialty items actually indicate a gap in coverage that leaves them open to liability claims and property loss.  To help you understand if you have any of these specialty risks, here is information on some of the most common types of specialty personal coverage.

Boat/Watercraft Insurance

If you own a boat, you may have some coverage under your existing homeowner’s or renter’s policy.  Many companies will provide limited coverage for small boats like canoes as part of their base homeowner’s protection but it would be a mistake to assume any and all watercraft related risks are covered this way.  Even if minimal property coverage is included in your homeowner’s policy, it is unlikely that liability protection will be included.  Additionally, if you have a boat with an engine that can go more than 25 mile per hour, you may need to obtain additional coverage.

Flood Insurance

While most homeowner’s know that damage caused by floods is not covered by their homeowner’s insurance policy, there are still many homes that remain unprotected against this specialized risk.  Additionally, flood damage is also excluded from most renters insurance policies which means that even renters need to secure this specialty protection, especially if they are in a flood zone.

Earthquake Insurance

Damage from earthquakes and other natural disasters is generally excluded from personal insurance coverage which means it must be purchased separately in order for you to be protected.  Most earthquake policies or riders carry a much larger deductible than other personal policies.  If you live in an area where earthquakes happen often, having this insurance is critical to protecting your financial future.  But remember, earthquakes can happen almost everywhere and in areas with low risk, the cost of adding this coverage is often minimal.

Motorcycle Insurance

Riding a motorcycle, just like driving a car, carries certain risks and responsibilities and most states require drivers to carry a certain amount of insurance.  However, your motorcycle is not always automatically covered under your existing auto policy.   A motorcycle insurance policy protects you from property loss or damage if something happens to your bike and with liability coverage in the event you are responsible for causing damage to something or someone else.   In addition to this base coverage, you may also need to add coverage for accessories or specialized equipment.

Recreational Vehicle Insurance

Like other types of specialty coverage, recreational vehicle insurance provides additional protection from risks specific to your RV.   This type of insurance goes beyond what is covered by auto policies, property damage and liability coverage, and often offers additional protection from breakdowns and travel related risks.

If you are concerned that you have a specialty risk that may not be covered by your existing policies, talk to your insurance agent.  They can walk through the details of your policies and help you determine if you need additional coverage and which type you need.

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Are you protected in the event of an earthquake? image via martinluff on Flickr

No matter where in the U.S. you live, there is a chance that there could be an earthquake in your area.  Of the 50 states, there are only 8 that haven’t experienced a single earthquake in the last 30 years according to the United State Geological Survey (USGS).  But even those states that have been safe the past thirty years are not immune from quakes or from damage caused by quakes occurring in adjoining states.  The simple fact is, if you live in the U.S., you run the risk that an earthquake will cause damage to your home.   If that happens, the only way that your insurance company will pay for the damage is if you have purchased additional coverage specific to earthquakes.

For those living in Hawaii, Alaska, and California, the three most seismically active states, earthquake insurance may seem to be a requirement.  However, even in those states, many homeowners haven’t purchased the extra coverage that would protect them from large losses.  According to the California Earthquake Authority (CEA), which provides the majority of earthquake coverage to California homeowners, only 12% have purchased earthquake coverage.   In Alaska, which is one of the most seismically active areas in the entire world, this number is only a little higher at about 33%.

Why Don’t Homeowners in High Risk Areas Buy Coverage

There are several reasons that even homeowners in Alaska and California don’t have earthquake insurance.  Unfortunately, one of the main reasons is that there are still people who believe that their homeowner’s policy will cover any losses resulting from an earthquake.  In almost every case, this simply isn’t true.  Other homeowners have made the conscious decision not to purchase this additional coverage because they feel the cost of the coverage plus the high deductible that is standard on earthquake policies makes the coverage unaffordable.  Still others believe that if there is a disaster, the government will be there to help make them whole and help them rebuild their house.

So, Why Do I Need it?

There are four reasons that every homeowner should look into purchasing an earthquake policy, even those who live in states that are not high on the earthquake risk list.

1.     If you live outside the big three, coverage is likely much less expensive than you think.

2.     Houses outside of the big three are rarely built with earthquake resilience in mind.  This means that if there is an earthquake, there is likely to be more damage to structures and property than there would be in California, Alaska, or Hawaii.

3.     It doesn’t take a catastrophic quake to cause catastrophic losses.

4.     Between 2001 and 2011, the USGS reports that there were more than 40,000 earthquakes in the U.S., almost 5,000 of which did not occur in the big three states.

5.     FEMA estimates that a major earthquake in a city with a large population could result in damages exceeding $200B.  Without insurance, you will be completely reliant on federal and state disaster relief for any assistance.  As the average award individual/family falls between $2,000 and $4,000 per family and the maximum grant is less than $15,000, you will be hard pressed to rebuild and recover.

Earthquake insurance is the kind of thing that it is easy to convince yourself you don’t need… until you do.  Then, it’s too late.

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Flood Insurance

Does your insurance cover you in the event of a flood? Image via freefotouk on Flickr

The majority of homeowner’s policies written today provide three types of coverage: damage to or loss of your house, damage to or loss of your possessions, and protection from liability claims.  These standard coverages protect you from losses resulting from most natural causes including fire, wind storms which includes hurricanes and tornados, lightning, hail, and the weight of ice and snow.  It also covers losses that are not caused by Mother Nature like riots, civil unrest, aircraft collision or other falling objects, theft, and vandalism.  The personal liability coverage included in most standard policies is enough to protect against small to medium sized liabilityclaims against you.

Most homeowner’s policies are fairly comprehensive in the type of protection they provide, which leads many homeowner’s to assume that any loss to their house or property and any lawsuit against them will be covered by the insurance company.  However, a quick review of the list of natural disasters above makes it clear that this is a bad assumption since floods and earthquakes are not covered by a standard policy.

The best way to make sure you know exactly what your policy covers and what it does not, is to read your policy from cover to cover.  If you find anything that you thought was covered that is not, you may be able to increase your coverage by adding a rider or extension to your existing policy or by purchasing an additional policy.

Here are some of the most common types of extra coverage homeowners add to their policies.

1.     Scheduled Items

One of the misconceptions about property replacement under a homeowner’s policy is that there are no limits on individual items. You assume that if everything you own is worth less than your policy limit, everything will be covered and replaced.  However, most policies include specific limits on high value items like jewelry, furs, expensive collections, and even computer equipment.  If the value of your property in one of the specified areas is higher than the limit listed in your policy, you need to add a higher limit or schedule those items for additional coverage.

2.     Special Coverage for Specific Threats

As mentioned above, there are two specific natural threats that are almost always excluded from a standard homeowner’s policy, floodsand earthquakes.

If you live in a flood zone, you will need to secure flood insurance from the National Flood Insurance Program separately from your standard homeowner’s policy.

When it comes to earthquakes, many homeowners’ don’t feel they need extra coverage because it is unlikely that an earthquake would damage their home.  This is especially true if they live outside of the most seismically active states, Alaska, Hawaii, and California.  If you think it will never happen to you, consider this.  There were 43,458 earthquakes in the U.S. between 2001 and 2011 according to theUnited States Geological Survey (USGS).  Even if you take out the quakes in the three states above, roughly 90% based on earthquake data for the last 40 years, 4,348 quakes remain.  This equates to more than one quake for each day of the 10 year timeframe from 2001 to 2011.   If you believe that earthquakes never happen where you live, you may want to take a look at the stats; there are only 8 states that have not experienced a single earthquake since 1974.

3.     Umbrella Coverage

Umbrella coverage is a separate policy that goes over your homeowner’s policy and provides an extra layer of protection in the event of a substantial loss.  For homeowners, this type of coverage can protect your assets, including your house, if someone sues you.  There is a limit, indicated in your policy, on how much your homeowner’s policy will pay out for personal liability losses.  If someone is hurt or killed on your property and you are found liable, that standard limit may not be enough to cover any judgment or settlement resulting from a lawsuit.  This type of coverage is one of the most important things you can add to your existing homeowner’s policy because of the broad protection it provides.

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