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Americans need to force themselves to make a list.
Research from the DC Department of Insurance, Securities and
Banking (DISB) and the National Association of Insurance Commissioners (NAIC)
shows that many Americans are not thoroughly prepared to handle the effects of
a disaster. That preparation begins with a simple list—an inventory of their
possessions.
According to the survey, 48 percent of homeowners or renters
admitted they do not have an inventory of their possessions. Of those who have
compiled an inventory, 32 percent have not taken any pictures of their items, 58
percent have no receipts indicating the cost of their possessions, and 44
percent have not stored their inventory list in a remote location.
“A comprehensive list of your belongings and their estimated
value will help you file an insurance claim after a disaster,” said Thomas E.
Hampton, DISB Commissioner. “Creating an inventory and storing it in a safe
location away from home is one of the most basic—and most effective—disaster
preparedness steps anyone can take to help protect themselves and their
financial future.”
Another problem the survey revealed is that more than
one-fourth of Americans don’t know the specifics of their property insurance.
For instance, 43 percent own homeowners or renter’s insurance policies that
provide a replacement cost payout; 27 percent have policies that insure their
homes for the actual cash value; and 28 percent do not know which type of
coverage they purchased.
Of those who can name what their policy pays out, many don’t
understand the implication on their financial situation, Hampton says. Replacement cost is the amount
it would take to replace or rebuild a home or repair damages with materials of
similar kind and quality, without deducting for depreciation. Actual cash value
is the amount it would take to repair or replace damage to a home and its
contents after depreciation.
“Many consumers are not able to completely recover after a
disaster because they don’t realize how depreciation can impact their assets,” Hampton explained. “It is
important for consumers to understand the implications of purchasing an actual
cash value policy vs. replacement cost insurance. In the event of a disaster,
the difference could mean thousands of dollars in payout.”
Finally, the survey found that the majority of consumers do
not have coverage to protect themselves from specific types of losses that are
not reimbursed under standard policies.
- 69 percent do not have earthquake insurance
- 65 percent do not have flood insurance
- 56 percent do not have insurance for a water line break
- 55 percent do not have insurance for a sewer line break
“Many homeowners and renters are vulnerable, especially if
they live in disaster-prone areas,” Hampton
said. “Consumers should review their insurance policies yearly with their agent
or company to make sure they have the coverage needed to protect their family
and their belongings.”
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