Millions of people and billions of dollars of property face summer risks from hurricanes, wildfires, and flash floods. Insurance is intended to reduce losses when homes burn or flood, but coverage details are often learned only after a catastrophe. Preparation includes checking how much insurance would pay if a home is destroyed and comparing that amount to current rebuilding costs, since many homeowners are underinsured. Reviewing the deductible is also important because higher deductibles lower premiums while shifting more financial risk to the homeowner. Verifying coverage for living expenses during displacement helps plan for costs if a household must stay elsewhere for weeks or months. Renters should also confirm that landlord insurance covers relevant risks.
"Ideally, it's enough to cover the cost of rebuilding. However, underinsurance is a chronic problem in the U.S., according to United Policyholders, a national consumer advocate. The group says its surveys routinely show that half of homeowners don't have enough coverage to replace their homes after a disaster. "So check, not just with your insurance company, but if you know somebody in the building industry that can tell you what it costs per square foot these days to rebuild a house, do the math and check if you have enough coverage, because a lot of people don't," says Douglas Heller, insurance director at the Consumer Federation of America."
"You should also check your deductible. That's how much money you would have to pay out of pocket if your home is damaged. "When you increase your deductible, you can get some savings" on home insurance, Heller says. "But you are transferring the risk of a devastating storm back into your bank account and away from the insurance company.""
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