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IDOI Warns Hoosiers to Rethink Insurance Risks

April 18, 2017
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Indiana storms in the spring and summer can produce natural disasters. In 2015, there was a total of $4.20 million dollars in property damage in Indiana caused by weather-related hazards, according to the U.S. Natural Hazard Statistics. Fewer than 22 percent of homeowners view changing weather patterns or natural disasters as an important factor when updating their homeowners insurance policy, according to a new survey from the National Association of Insurance Commissioners (NAIC). With natural disasters on the rise1, the Indiana Department of Insurance urges Hoosiers to consider their insurance risks and understand what is and is not covered in their current policies.

“As Indiana residents, we’ve experienced significant losses as a result of tornado damage and flooding over the years,” said Indiana Department of Insurance Commissioner Stephen W. Robertson. He added, “Consumers need to reconsider the risks disasters pose within our region and how it can impact their home insurance needs. The Department urges Hoosiers to review their insurance policies, including rental insurance, to make sure they understand their coverage before a disaster hits.”

More than 800 emergency or disaster declarations were made in the United States from 2005-20152, resulting in an average of $24 billion in annual insured losses due to natural catastrophes3. However, the NAIC survey revealed 56 percent of homeowners have not reviewed their insurance policies in more than a year and 14 percent are unsure when – if ever – they last reviewed their policies. Research also indicates nearly half of homeowners (44 percent) have a home inventory. But of those who have an inventory, more than 40 percent have not updated it in more than a year. The NAIC has developed the MyHOME Scr.APP.book. application for iPhones and Androids, which provides a convenient way to document the contents of your home and make updates as needed. ..

Before the Storm
Consumers should re-evaluate their risk profile at least once a year to ensure their homeowners policy provides the protection they need. Questions to consider include:

  • Am I now at risk? Are tornadoes, floods and earthquakes now a threat? Do I need a flood insurance policy? In most cases flood policy coverage has a 30-day waiting period after it is initially purchased, thus making advanced planning important.
  • What has changed in my home? Did the number of people (and belongings) increase or decrease? Have I made any major purchases?
  • Have I updated my home with a kitchen renovation, new security system or other improvements?
  • Should I be looking at different coverage? Can I save money by bundling my home and auto insurance?

New Disaster Prep Guides from Insure U can help consumers determine the best course of action before, during and after a disaster strikes. The free guides include information and tips for tornadoes and floods, as well as other natural disasters.

Check Your Insurance Coverage
Once you have prepared your family and your home for the worst, it’s time to review your insurance policy so that you know if you have adequate coverage. Understanding your policy will help you plan for any out-of-pocket expenses you may incur if your home is damaged, such as paying your deductible or for temporary living expenses.

Be sure you understand the difference between replacement cost and actual cash value. Replacement cost is the amount it would take to replace or rebuild your home or repair damages with materials of similar kind and quality, without deducting for depreciation. It is important to insure your home for a least 80 percent of its replacement value. Actual cash value is the amount it would take to repair or replace damage to your home after depreciation.

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