Major Disasters and Insurance

In all our preparations for major natural disasters, we have discussed food, water and generators in some detail.  The one big area that we have missed is insurance.  I know if the government collapses or the economy fails, insurance won’t be there.  But in situations like hurricanes Sandy and Katrina, earthquakes and floods it can sure help.

Your basis preps and state of mind will help you survive the initial disaster, but rebuilding is always a problem.  This is where good insurance can help.  Because of my past employment in both fire and law enforcement I have seen firsthand the difference a good insurance policy can make.

Like I said in an earlier blog location is important, know that if you live in a low-lying area you are taking a chance, have good flood insurance.  Now I am not saying go crazy and buy every policy in sight, but make sure you have the coverage you need.

When buying homeowners or renters insurance there are two types, Actual cash value and full replacement value.  Unless your policy specifically states otherwise most homeowners policies only cover the contents for actual cash value.

This means that when you file a homeowners claim for contents, the insurance company determines  how much to pay you by finding the cost to replace your property with new property of the same kind and quality.  But here’s where the problem starts: If your policy covers your personal property (your home’s contents) for its actual cash value, the insurance company deducts depreciation from your personal property’s overall value before arriving at a figure to pay you.  This means that your ten-year-old TV which still works great is worth next to nothing.  You are only being paid what your property is worth on the market not what it costs to replace it.

Your check will usually be less, than the amount you will have to pay  to repair or replace your property. However, if you have replacement cost coverage, the insurance company will pay what it costs to repair or replace your damaged possessions at current prices without deducting for depreciation.

While actual cash value language is standard, most insurance companies offer replacement cost coverage as an option.

Remember, that if you are renting, the home or apartments owners insurance does not cover your property.  A tenants insurance package is not overly expensive. In my experience, the less you can afford insurance the more you need it.  This is just another step towards being self-reliant.


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4 Responses to Major Disasters and Insurance

  1. While insurance is a definite must-have for prepping, homeowners insurance is getting worse and worse (it seems) with what they will not cover and/or weasel out of… just like medical insurance.

  2. Sharon says:

    In buying any insurance you need to read the policy and ask lots of questions. Know your rights and be willing to fight if necessary. Many years ago I had a medical consulting business that included helping doctors and patients collect insurance from insurance companies. I was pretty good at it. Just about any company will attempt to weasel if they think they can. However, if you have coverage on your house that hasn’t increased in the amount of coverage since you bought your house in 1960, I promise you will be disappointed in what they give you when the house is totaled. Likewise understand the exclusions, such as flood damage, from the standard homeowners policy. In my experience people often have expectations that are not in line with the reality of the policy they bought.

  3. Art says:

    Wish every homeowner would read this article concerning insurance before buying their policy. A lot of people buy insurance on what it cost only and are later disappointed that they don’t have the coverage they want. Most homeowners policies exclude flood and earthquakes. You can buy coverage for these but it cost extra. Be sure to either video or take lots of pictures of the contents in your home, every drawer, closet, garage, workshop etc and store the pictures/video tape in either a safe deposit box or someone elses house you trust. A contents claim must be documented for the company to pay off. Great explanation on the difference between replacement cost and ACV coverage, replacement cost does not cost very much more but provides a lot better coverage. Check American Collectors Insurance website for very inexpensive coverage for specific items you may want to insure. Great company and good customer service. I don’t have any affilation with the company other than a policy through them.

  4. Matt in Oklahoma says:

    I would carry this on and say to make sure and document everything you have as well. I tok the camera and just walked around taking pictures of everything. I have vaulable cataloged and then everything went on 2 thumb drives as well as my laptop. The thumbdrives, one went to my sons house in case fire/tornado gets us and one went in to the storm shelter in case we both get wiped out.

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