Prepare Your Homeowners Insurance for Storm Season

Hurricane season is coming. How can I be sure my homeowners insurance will cover storm damage?

With hurricane season starting June 1, now is the perfect time to review your coverage. Here’s what you can do to make sure your home is protected.

Update your coverage amount. Readers frequently ask if they can reduce their homeowners coverage because the market value of their home has fallen. Unfortunately, you can’t. Insurance value is based on the cost to rebuild your home, and construction and labor costs have not declined during the housing downturn. But your home’s insurance value may still be less than its market value: Market value includes the property as well as the dwelling. So you need to figure your home’s insurance value separately and recheck the number every few years.

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When you buy a policy, some insurers will send an appraiser to your home to analyze the size, age and materials used and calculate how much it would cost to rebuild. To get a replacement-cost estimate on your own, go to Accucoverage.com, which accesses the same database of building costs that insurers use (the service costs $7.95).

And don’t forget to update your insurance value when you do any major home improvements. Insurers used to pay whatever it took to rebuild your home, but many now limit coverage to 120% to 130% of your insured value. It could cost less than $50 a year to boost your coverage by tens of thousands of dollars and ensure you have the coverage you need.

Fill gaps in your homeowners insurance. Your homeowners policy does not cover flooding. But you can buy flood insurance through the National Flood Insurance Program. If you think you need coverage, do it now: There is a 30-day waiting period before flood insurance takes effect. The annual cost is based on how prone your area is to flooding -- the maximum $250,000 of coverage costs $348 in a preferred-risk area; the same coverage can cost more than $2,600 in a high-risk area. The NFIP’s FloodSmart.gov Web site has several tools to help assess the flood risk and premium for your address. See Prepare for Storm Season With Flood Coverage for more information about the federal program and private insurers’ policies that can boost your coverage levels.

Water damage can also be caused by sewer backup, and most homeowners policies do not cover sewage damage. It can cost as little as $50 per year to add $10,000 to $20,000 in coverage that pays out if a sewer line backs up or your sump pump stops working.

Also, most policies pay only to replace your home as it is built now -- not to comply with new building codes. If you live in an old home or if local building codes have become more strict in the past few years, it may be worthwhile to add a building-ordinance rider to your policy to cover those extra expenses.

Homeowners policies generally limit coverage for jewelry and collectibles to just a few thousand dollars -- paying up to $1,500 for all of your jewelry, for example. But you can add coverage for your valuables up to their appraised value. The cost is based on the amount of insurance you buy -- generally about $10 for $1,000 of coverage for jewelry, and $1.50 for $1,000 of coverage for the appraised value of other items.

For advice about preparing for disasters, see Protect Your Home and Finances Against Twisters. For more information about getting homeowners-insurance claims paid, see Make Your Insurer Pay.

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.