AN excellent USA Today summary of how Hurricane Andrew in 1992 and the Northridge earthquake in 1994 changed the homeowner’s insurance landscape in many states. Take a look.
•Florida. Companies now sell many policies in which homeowners must pay deductibles of between 2% and 5% of their home’s insured to value before insurance for windstorm damage kicks in.
•California. After the Northridge earthquake ripped through the Los Angeles area and caused $15.5 billion in insured losses (2003 dollars), the state created the California Earthquake Authority, a public-private insurer. Policies have deductibles ranging from 10% to 15% of a home’s insured value.
•Alabama. Created a state-sanctioned insurer for coastal and beach homeowners that can assess all insurance companies in the state for losses that exceed premiums. Hurricane Ivan prompted a $20 million assessment.
•Arkansas. Recently created the Arkansas Earthquake Authority, which would offer earthquake insurance and be funded, initially, by insurers.
•Louisiana. Created the Louisiana Citizens Property Insurance Corp. as the insurer of “last resort” for coastal homeowners vulnerable to hurricanes. The agency can pass extraordinary costs to policyholders through a surcharge.
•Maryland. Required insurance agents to learn more about the National Flood Insurance Program. The action came after Hurricane Isabel ravaged the state in 2003. Many homeowners complained that they were unaware that their policies did not cover flood damage.
•Mississippi. Studying whether insurance is needed to protect state and local governments if the casinos and hotels suffer catastrophic losses that interrupt $300 million in annual tax revenue.
•North Carolina. Launched a public information campaign to inform residents of coastal and mountain areas of the need to purchase flood insurance in addition to traditional homeowner’s insurance.
•Texas. Texas Windstorm Insurance Association manages a disaster fund of about $310 million, paid for by policyholder premiums. Created a plan to help homeowners in hail-prone areas and other regions where insurance is not readily available. Insurance companies can offer discounts to homeowners who build roofs with hail-resistant roofing materials.
1. Spend your insurance dollars wisely.
2. Don’t just look at your total liability — also look at your coverage per person.
3. Consider buying an umbrella policy.
4. Seek out good advice.
5. Keep a good credit rating.
6. Make your insurance company pay for a rental after an accident.
7. Shop around.
8. Take advantage of every discount.
9. If your teen is away at college, change the policy or take him off it.
10. If you drive an older car, consider dropping collision insurance.
11. Shop service, as well as price.
12. Understand the claims process when you buy your policy.
13. Ask about “diminished value.”
14. Call your agent as soon as you can after an accident.
15. If you have a claim, start a diary.
16. Do what you can to further the claims process.
17. Include everything in your loss estimates.
18. Give an adjuster the benefit of the doubt — but press on for what you need.
19. If you switch insurance companies, notify your old company.