A few weeks ago, an incredibly powerful series of thunderstorms, including what was believed to be a tornado, went through Leelanau County, Michigan, where my Northern Michigan office is located, as well as most of Grand Traverse County. There was an incredible amount of destruction to both residential and commercial property, as well as damage done to various crops, including grapes, which support our local winery businesses. The following are some common questions and answers to issues regarding storm insurance:
Am I required to have homeowner’s insurance?
It is always smart to have a good homeowner’s insurance policy, even if you don't owe any money on your home. If you have a mortgage, home equity loan or use your home as collateral, your lender will require you to maintain insurance.
If I file a storm damage claim on my insurance policy, will my premiums go up?
Most states prohibit insurance companies from canceling your coverage or singling you out for a rate increase due to an act of God damage claim.
Are all homeowner’s insurance policies the same?
There may be different types of insurance policies. Levels of coverage, exclusions and limits of liability vary greatly. Some policies provide basic coverage, where others offer broad coverage and high levels of protection.
Does my homeowner’s insurance cover all types of storm damage?
It depends on your policy. Most homeowner’s insurance policies cover storms, including hail, tornado and wind damage, but floods and earthquakes usually require additional coverage. It is always smart to check your policy to see exactly what is covered.
Is replacement cost the same as the sale price of my home?
Not necessarily. The replacement cost is the actual cost to rebuild your home in the event it is completely destroyed, which may be more or less than the market value, or sale price.
What does a homeowner’s insurance policy cover?
Homeowner’s insurance covers the repair or replacement of your home and its contents up to defined limits. Your policy may also include a liability policy that protects you in the event someone is injured on your property due to your negligence.
What are the various types of coverage included in a homeowner’s policy?
To determine the types of coverage you have, check the Declarations page of your insurance policy. Types of coverage are usually as follows:
Coverage A – Damage to your home
Coverage B – Damage to other structures, including garage, deck or swimming pool
Coverage C – Loss or damage to the contents of your home
Coverage D – Loss of use in the case your home is uninhabitable
Coverage E – Personal liability to third parties
Coverage F – Medical payments to third parties
Who pays for living expenses when my home is being replaced after a storm?
Your insurance company will pay for loss of use in the case that your house is uninhabitable after it has been damaged by a storm, up to applicable limits.
Does my policy cover tornado, wind and hail damage?
Most standard homeowner’s insurance policies cover damage done by tornadoes, windstorms and hailstorms. Check your policy for limits and details.
Will my homeowner’s insurance cover the cost of tree removal after a severe storm?
Most policies cover the cost of tree removal after a storm; however, you should check your policy. Some insurance companies will require a separate tree removal policy.
Will my homeowner’s insurance cover damage to cars on my property?
No. Damage to your car is not covered by your homeowner’s policy, even if a tree on your property falls and damages your car. Damage to your car is covered by your comprehensive auto insurance policy.
*Image courtesy the U.S. Coast Guard Air Station Traverse City.