The U.S. National Weather Service has designated the first week of May as Hurricane Preparedness Week. Among the many things that homeowners can do to prepare for hurricanes, performing an insurance checkup should be near the top of the list. Insurers can help their customers complete this important task by providing a series of helpful reminders, considering the following themes.
Engage the Customer
Customers should be encouraged to meet with their agent or contact their insurer directly to begin the process. Reviewing coverages is a great place to start, particularly if customers are less familiar with the benefits their policy provides or if a significant time has elapsed since their last checkup. Insurers can use the opportunity to consider not only property coverages, but also review liability and umbrella coverages to ensure their customers have comprehensive protection.
Review Building Features
Building coverage is typically the largest component of the policy, and most insurers have tools available to estimate the replacement cost of the main structure. Taking the time to help customers understand the variables that impact the replacement value can help ensure the information is up to date and accurate. In addition to local constructions costs, the size, amenities, and unique features of the structure can significantly impact the replacement value.
Customers can assist by confirming some of the basic elements of the structure, including the materials and age of construction, as well as reporting on any recent renovations, upgrades, or unique features that may be present, for example, in older homes. Also, older homes may not be up to current building codes—which may call for an endorsement to bring the structure up to code during a covered repair.
Conduct Contents Inventory
A contents inventory will not only help customers determine the amount of insurance they need but will also serve as a convenient tool to document their belongings. A consideration for many is whether to insure them for actual cash value or for replacement cost, which may be an option under some policies and could be worth the additional premium. Floaters may also be appropriate for expensive or unique items.
Evaluate Coverage Options
Customers should understand deductible options and any separate wind or named storm deductibles that may apply. Customers may also benefit from the cost savings associated with selecting a higher standard deductible, which may be appropriate for some.
Consider Additional Perils
Assuming that the policy already covers hurricane, the policy checkup may uncover coverage gaps for other perils. Many consumers are unaware that neither flood nor earthquake is covered by a standard homeowners policy, and that optional insurance policies may be available. The discussion may prompt consideration of new policy types, such as cyber risk, that customers may want but did not know were available.
The insurance checkup may leave customers with enhanced coverage and a greater sense of security. In a future blog, we’ll consider ways in which customers can strengthen their homes—which can not only reduce the risk of loss but also save lives.