Does your insurance policy cover “acts of God?” (image via google)

If you own a car, own a house, or have a family, it’s a good bet you have some kind of insurance.  Odds are you have at least some kind of coverage for the car you drive and the place you live.  If you have personal insurance, you understand the importance of protecting yourself, your financial future, and your property.  But even savvy insurance consumers don’t always know all the ins and outs of their policies.  Here are 4 things customers commonly do not know about their personal insurance policies.

1.     Your Car Insurance Won’t Buy You a New Phone

If you have car insurance and your car is stolen, you know your policy will replace your car or reimburse you for its loss.  But, most car insurance policies will not replace or reimburse you for any personal property that was in the car at the time it was taken.  This also holds true for items stolen from your car.  Let’s say you leave your laptop under the backseat and your cell phone in the center console and someone breaks the window and steals both.  Your car insurance will cover the cost of repairing the window, but you are on your own for the loss of your laptop and phone.

2.     Losing Your Home Won’t Make You Homeless

One thing many people don’t realize about their homeowner’s policy is that it provides for the payment of expenses you incur if you have to live somewhere other than your home for a period of time while repairs are made.  For example, there is a fire in your house that causes significant enough damage that you will have to live somewhere else for 6 months; your policy will pay for the initial stay in a hotel as well as your rent and some other expenses.

3.     Life Insurance Benefits are Not Automatically Tax Free

If you die, the proceeds of any and all life insurance policies go to your beneficiaries’ tax free, right?  Not always.  Whether or not your life insurance payout will be subject to taxes completely depends on the details of your policy.  If you have a term policy where you are the policy owner and your spouse is the beneficiary, if you die during the policy term, the payout will likely be tax free.  However, if someone else, like your parent is the policy owner, there may be tax implications.  Talk to your insurance agent and an accountant to ensure you have a complete understanding of any tax implications.

4.     Natural Disasters are Not Generally Covered

An unfortunate truth in the world is that Mother Nature is unpredictable and sometimes leaves devastation in her wake.  Another unfortunate truth is that many of these disasters are excluded from standard personal insurance policies.  While most people know that flooding is not covered by their homeowners policy, they don’t realize that damage caused by tornados, earthquakes, and other “acts of god” is not covered without purchasing additional coverage.

The best protection you have is to read your policy all the way through and make sure you understand all its provisions and exclusions.  If you are unsure about whether or not something is covered, ask your insurance agent for clarification.

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Evacuation Plan

Do you have an evacuation plan in the event of a natural disaster? Image via YardSale on Flickr

No matter where you live, there is always the possibility that an emergency can arise and that disaster can strike.  The most important thing in any emergency is to preserve life, but after that, there are things that every homeowner should know that can help protect and preserve their home and property.  There is a reason that school children practice what they would do if there was a fire at the school.  Planning what to do in the event of a crisis and practicing carrying out that plan builds up muscle memory that can make all the difference when stress hormones and adrenaline make it difficult to think clearly.

Make sure you are prepared for whatever comes your way; here are four things to get you started.

1.     How to Shut Off Utilities

According to FEMA, homeowners may need to shut off the utilities following a disaster.  Ruptured gas lines and electrical sparks can cause fires or explosions and broken water mains can pollute the water stored in your house.  It is important that everyone in your household knows where the shut-off valves for all utilities are located and how to shut them off.  Make sure you also understand the proper procedure for turning utilities back on as things like propane and natural gas must be turned on by a professional.

2.     How You Will Be Notified if You Must Evacuate

The order for a community to evacuate comes from local government officials.  FEMA states that the first and most common method for notification of the public is the media.  Officials may also use sirens, phone calls, and door to door sweeps to alert homeowners in the evacuation zone.  If there is an emergency situation and your family does not feel safe remaining at home, you don’t have to wait for the order to leave, you can choose to evacuate on your own.  In the event that you have to evacuate, the time you have can vary.  Depending on the situation you may have as long as a day or two or as little as minutes.  In addition to knowing how you will be notified, you should have an evacuation plan that includes more than one way to leave your area.  This ensures you won’t be trying to figure out another way out of the city if your primary route is blocked.

3.    How to Get Out of the House if There is a Fire

According to the National Fire Protection Association, there were more than 350,000 house fires in 2010 resulting in almost 3,000 deaths.  Many homeowners don’t realize that they may have less than 2 minutes to escape.  When time is that short and the house is filling with smoke, you want every member in your family to know exactly what to do without having to think about it.  Your fire evacuation plan should include two ways to get out of every room.   Take a lesson from those school children and practice your home evacuation plan at least twice a year.

4.     How to Deal with Natural Threats
Where you live will determine which natural threats you need to be prepared for and in order to be ready for an emergency, you need to know what threats can happen where you live.  The plans and preparations you need to have in place vary depending on which natural threats are likely in your area.  Once you have identified the natural threats, take time to learn what to do in the event a natural threat becomes a reality.

With a little thought and planning, homeowners may be able to minimize the damage to their home and loss of their possessions when an emergency arises.

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