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Home Insurance

Safeguard Your Home Before a Storm Strikes

Take these steps now to protect your house and valuables -- plus, what to do after disaster hits.

It'll pay to be a boy scout when storm winds start howling. Check off these three tasks and earn your storm-preparedness merit badge.

1. Make sure you have enough insurance. At AccuCoverage.com, you can estimate how much it would cost to rebuild your home. It takes only $7.95 and ten minutes to complete the site's online questionnaire. Also notify your insurer if you have made any major home improvements.

Standard homeowners policies don't include coverage for flooding. Yet 65% of those responding to a recent survey by the National Association of Insurance Commissioners had not purchased additional flood insurance. You can buy it through the National Flood Insurance Program at www.floodsmart.gov. And do it soon; it takes 30 days to become effective.

Also consider buying an inexpensive rider to cover any expensive jewelry or other special items. Most insurers pay a maximum of $1,500 to $2,500 for all your jewelry. And they limit coverage for other items such as firearms and furs.

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2. Keep a household inventory. Knowing what you've got will make it easier to file an insurance claim in case of disaster. Yet the NAIC survey showed that nearly half of respondents did not have an inventory of their possessions. "It's just one of those things you plan to do and never get around to," says Robert Weagley, chair of the Department of Personal Financial Planning at the University of Missouri.

Weagley recommends going room by room, guesstimating the replacement value of each item. Try doing this with the free home inventory software at KnowYourStuff.org, provided by the Insurance Information Institute. It's also a good idea to take photos and keep receipts, especially for big-ticket items such as furniture. If you want to go the extra diligent mile, try videotaping a tour of your home and your possessions. "The nice thing about video is you can talk and describe things," says Weagley. "You can kind of give it some life."

Once you've compiled this proof of what you own, keep it in a safe place -- such as a safe-deposit box, a fireproof safe or protected online. "If your list and photos blow away with Dorothy and Toto," says Weagley, "it won't do you much good."

3. Build an emergency fund. At a minimum you should save three months' worth of living expenses to cover emergencies. But if you can swing it, a bigger stash -- ideally enough to pay for a year's worth of expenses -- will help cushion your recovery. Keep some cash in your fireproof safe and put the rest in a bank or money-market account to which you can get easy access.

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Make a Full Recovery

Once the storm passes, you're still faced with the headache of collecting on your losses. Keep the process as painless as possible with these three steps.

1. Contact your insurer immediately. Along with the standard emergency numbers, keep handy your insurer's 24-hour contact information, as well as your policy number. The earlier you file your claim, the better. If your home is uninhabitable, your insurance company can sometimes arrange for you to stay elsewhere. Also notify your employer and any lenders so you won't miss a paycheck or a payment.

2. Take pictures of damages. It's not exactly a Kodak moment, but start snapping shots anyway. A visual record of damages can be useful in filing your claim, especially if you have to move some things around to protect them from further damage. Otherwise, leave things as they are until an adjuster can conduct a formal inspection. And don't throw anything away. "You have to surrender damaged property to the insurance company so they can sell it for salvage," says Weagley.

3. Hang on to receipts. Your insurer will reimburse you for any lodging, food and other living expenses you incur while you're away from your uninhabitable house. And if you have casualty losses that are not reimbursed by your insurer, you can deduct them when you file your next income-tax return. To calculate how much of your losses qualify for the deduction, subtract $100 plus 10% of your adjusted gross income from your unreimbursed loss. For more details, go to www.irs.gov.

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Checklist for Your Storm-Season Safe
1. Emergency phone numbers, including the numbers for your insurers (and your policy numbers).
2. Your household inventory, along with any videos, pictures and receipts. Try keeping it all on a flash drive or a CD.
3. Emergency funds -- cash and/or an extra credit card.