Homeowners Insurance Lowdown

Homeowners Insurance may see a rise aftermath Katrina

The Hurricane Katrina has inflicted a widespread damage in the coastal areas, Louisiana, Mississippi and Alabama. Residents of coastal regions may see the homeowner insurance rising further. It has been reported that Insurance firms are considering a hike in policy rates and it will be announced soon. However, they have refused to make any predictions on this matter. The risk-assessment firm Risk Management Solutions predicted that the economic losses from Katrina would surpass $125 billion, including $40 billion to $60 billion of insured losses.

If the cost of capital climbs because of any natural disaster, it is obvious for the insurer to increase the rate. In the late 1990s, several insurers limited the amounts of homeowners insurance. Several insurers increased their policy rates in 2001 and 2002. hamptonroads.com reports:

The devastation that Hurricane Andrew inflicted in southern Florida in 1992 crippled several insurers and prompted others to scale back their exposure in coastal areas of the Southeast. Today, however, the nation’s property-and-casualty insurers are much better prepared to deal with the losses from Katrina.

Read More: Coastal residents may see homeowners insurance rise

Homeowners should know about Flood Insurance

It was reported that more than 28,000 flood-insurance claims were made during the 2004 hurricane season. Around $1.4 billion were paid to the claimants. As floods have been more frequent in the United States in the past few years, homeowners should think about it seriously. Many homeowners do not carry separate flood insurance as they think that it is covered under their homeowner policy. But such misconception arises, as they do not read their policies carefully.

Homeowner insurance only covers win-blown rain or water damage caused by plumbing malfunctions. They should read the term and conditions mentioned in the homeowners insurance policy to avoid any confusion. Homeowners can take the benefits of flood insurance even though they have homeowners insurance policy. investors.com reports:

Many homeowners also mistakenly believe that flood damage will be covered by federal disaster assistance, but these monies normally take the form of loans (not grants) and are only available if the president formally declares a disaster. Less than 10% of all weather emergencies in the U.S. are declared federal disasters.

Read More: What all homeowners need to know about flood insurance

Need to update Homeowners Insurance

The need of the homeowners insurance is felt aftermath the Hurricane Katrina, which left behind a widespread devastation. If you do not have sufficient homeowners coverage, it would be difficult to rebuild your home after a natural disaster. Costs for building materials and construction increase manifold after such incidents. Many homeowners have failed to notice that their coverage needs adjusting. It was found in a survey that 59 percent of American homes are undervalued for insurance purposes.

It is necessary for the homeowners to ensure that they have enough insurance to rebuild their home in case it gets destroyed. Reviewing the insurance policy annually is very much important in this context. It is also essential for every individual to go through their policies to know what are covered under the policy and what are not. msn.com reports:

Making sure your home has sufficient insurance coverage should be a periodic exercise. Jeanne Salvatore, senior vice president of public affairs for the Insurance Information Institute in New York, recommends that homeowners contact their insurance agent at least once a year.

Read More: Do you have enough homeowners insurance?