The recent tornado outbreaks across the midwest and plains states left behind a trail of destruction and devastation.
It's a sobering reminder of how catastrophic a natural disaster can be. It's also a reminder that we can take steps today to be properly prepared for a disaster tomorrow.
It begins with understanding whether your homeowner's insurance is appropriate for you, according to a recent CBSNews MoneyWatch story.
If a tornado strikes, homeowner's insurance will cover the replacement cost of your home and its contents, says Dave Keil, an insurance agent with Dupaco Insurance Services in Dyersville, Iowa.
Review your coverage to determine whether it is enough, too much or just right. If your dwelling or its contents are over-insured, for instance, you will never fully collect on the extra premiums you've paid for that policy.
Keil offers some guidelines to consider when determining how much coverage you need:
- Dwelling coverage: Multiply your home's total square footage by the cost-per-square-foot to build a new home (use $130-$145 per square foot as a rough guideline) to determine the replacement cost for the structure.
- Content coverage: Content coverage must be at least 40 percent of the amount of your dwelling coverage. Put a rough value on your furniture, appliances, paintings and other belongings to determine whether the minimum coverage will suffice.
Next, if you haven't done so, take video footage of your entire home. Store the video somewhere safely away from your home, and repeat this process every couple of years. If your home is ever destroyed, that video will be your memory, helping you determine a replacement cost for your contents.
If a disaster strikes
Contact your agent immediately to begin the claims process. You will be instructed to fill out a claim form to determine the replacement costs of your possessions. This is where the video comes in.
"If you don't have an idea of what you have, it's going to be very, very hard to start filling out these sheets," Keil says.
Once your claim is processed, you will receive a check. Many homeowners are surprised that the check is often made out for only about 80 percent of the replacement cost. As soon as you can prove that you are replacing your home, you will receive a check for the remaining 20 percent.
"If you choose not to rebuild, you can sell your lot and take your 80 percent and do what you want with it," Keil says. "You don't have to rebuild."
By Emily Kittle