Many of us have contributed funds to help those who suffered great loss from Hurricane Katrina. We may not be thinking, however, about taking care of ourselves in the event a disaster would strike here. This should also be a wake-up call for us to take stock of what we have to help us recover from devastating and unexpected occurrences.
The most important step you can take is to make a complete inventory of what you have. The list should include the item, a description, make, model and when it was purchased. For example: 27-inch color TV, Sony, serial No. 0000, purchased in 2001.
Take photos of special and expensive items and videotape each room. More complete guidelines for completing an inventory can be found at the Rocky Mountain Insurance Information Association non-profit Web site at www.rmiia.org. The RMIIA site also connects you to the Insurance Information Institute’s site that provides free software for documenting your possessions. This inventory will support your claims in the event of a flood, fire, tornado, other natural disasters and theft. Give a copy of your inventory to a family member or friend who lives in another geographical area.
Did you realize that your homeowner’s insurance does not protect you against damage from floods? However, flood insurance was established by the federal government in 1968 in a program administered by the Federal Insurance Administration. The flood insurance program is totally self supported. All dollars paid by the flood insurance program come from policyholder premiums.
To buy flood insurance, your community must be accepted into the flood program (Fort Collins qualifies). Residents – both homeowners and renters – in qualified communities can purchase flood insurance from any licensed insurance agent who is writing flood insurance under arrangements with the Federal Insurance Administration in the United States. All premiums, policy wording and rules are the same nationwide.
With one exception, flood insurance does not provide replacement cost coverage on lost property. This means that, at the time of loss, the value of the property or item will be its current replacement cost minus a certain amount for depreciation. No contents stored in a basement are covered by flood insurance.
For more information about flood insurance, go to the Colorado Division of Insurance Web site at www.dora.state.co.us/Insurance/pb/pb.htm. Numerous publications are available to the public explaining flood insurance and the yearly comparison of premiums from companies that offer homeowner’s insurance in Colorado. The range of premiums for a frame home in Fort Collins ranges from a high of $1,842 to a low of $549.
If you decide this is a good time to shop for homeowner’s insurance coverage, be sure you are comparing similar policies. Ask how much the deductible is, which perils are covered, how much liability insurance is included and if the coverage is for replacement cost value. Ask if you are eligible for any discounts.
Prepare now for the unexpected.
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Judy McKenna, Ph.D., CFP, Family Economics Specialist, Colorado State University Cooperative Extension, firstname.lastname@example.org