Insurance is easy to forget about until a disaster strikes and often people find themselves without the coverage they need. The tornado that came through Little Rock last month brought this to light for many residents. Our house was damaged (not destroyed thankfully), and over the past few weeks, I have gotten a real life education in the insurance claims process. Fortunately, we were well prepared with our coverage and have had a great experience so far with the claims process.  

Here are some of the key coverages we had in place that have helped us in this process:

• Replacement cost coverage for both dwelling and personal property – Without replacement cost coverage, a loss will be reimbursed only up to actual cash value (depreciated for the age of the property) and not the amount actually required to replace or repair. Our roof is 14 years old and with replacement cost coverage we would be paying the majority of the cost out of pocket. 
• Mold Remediation endorsement – With water damage, mold will begin growing quickly if you are unable to dry out the structure quickly. In the aftermath of a disaster, the restoration companies providing this service will be booked up. We had enhanced coverage for mold remediation, and it was needed.
• Tree and Debris Removal – Tree removal is typically covered (up to a limit) if it is due to a covered peril and damages your home (or other covered property). Adding additional limits here is helpful, especially in an area with a lot of large, mature trees.
• Non–building Structures Replacement Cost – While “Other Structures” coverage includes certain non-building structures (fence, driveway, patio, etc.) at actual cash value, and endorsement for replacement cost of these items is allowing us to replace our fence and repair a newly poured driveway.
• Loss of Use – While this is common coverage in policies, I recommend making sure it is adequate.  We were very fortunate to be left with a livable home that was not destroyed, but we have already needed to stay in a hotel for two weeks and anticipate more expenses over time as repairs continue.

There are many other packages and endorsements available to ensure your coverage is sufficient for your specific situation (for example, enhanced water coverage, scheduled personal property and flood/earthquake endorsements). For a tornado event, these coverages above were very helpful. We recommend reviewing your coverage regularly and making sure the coverage levels are still in line with current costs. We are happy to review these policies as well as auto and umbrella to identify gaps in coverage, but we also recommend having a trusted insurance agent to guide you through the coverage options. When pricing different policies and talking with your agent, keep in mind that less expensive is not always better. 

A real test of an insurance company is how they handle claims. Specifically, how do they handle catastrophic or disaster claims? Are you forced to deal with a call center or will you have an actual person dedicated to your claim? This is where our company has impressed us; within a week an adjuster was in Little Rock inspecting our home and guiding us through the process. He has been available by phone, text and email whenever we have had a question. That personal touch has helped lessen the stress as we have navigated the process.

Mary McCraw, CFP®

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