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Cliston Brown


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August 31, 2012

At Midpoint of Hurricane Season, PCI Urges Vigilance

CHICAGO—The landfall of Hurricane Isaac coincides with the traditional peak time for hurricanes, and the Property Casualty Insurers Association of America (PCI) urges coastal residents of the Gulf and Atlantic to be prepared for other storms in the coming weeks.

“It is crucial for coastal homeowners and business owners to be vigilant, not just this week, but over the next few weeks as well,” said Chris Hackett, PCI’s director of personal lines policy. “Historically, many of the deadliest and most costly hurricanes have hit at this time of year, including Katrina, Andrew, Charley, Ivan and Hugo, among others. We urge residents along the Atlantic and Gulf coasts to be prepared and alert, and ready to take steps quickly to safeguard their lives, their families and their property.”

Noting that September is usually a peak month for hurricanes, PCI recommends that homeowners, businesses and public policymakers take the necessary steps to ensure that everyone is prepared for the potentially devastating effects of a major storm. There have already been 10 named Atlantic storms this season. An earlier storm, Tropical Storm Debby, caused an estimated $105 million in insured property losses in Florida in June. There are no estimates yet on the damages from Hurricane Isaac.

Homeowners can take simple steps to protect their property and assets from becoming a casualty of a storm.  PCI has developed the following tips that will help consumers reduce exposure to losses and make certain that they have adequate insurance coverage to recover from the economic damage a catastrophic event.

1. Review your insurance policy to avoid any surprises. Review your property insurance policy, especially the “declarations” page, which summarizes the coverage you have purchased. The standard homeowners insurance policy does not cover all losses. Based on your circumstances you may need to purchase endorsements or additional policies. Depending upon where you live, a homeowner may need to have the standard homeowners policy, a personal-articles policy, a flood policy, an excess flood coverage and a wind and hail policy to ensure your property is adequately covered.

2. Talk with your agent/insurer to make sure you have the right policies with adequate limits. Your agent or insurance company can assist you in determining the type of policies you should have and the correct limits of coverage. Check whether your policy pays replacement cost, or actual cash value for a covered loss. Actual cash value takes depreciation into account. As a result, the compensation you receive may be much lower than the retail price of a new item. The cost of rebuilding your dwelling with materials of like kind and quality may differ from the current market value of your home.  In some areas, new building codes will increase the cost of rebuilding. These factors should be considered in the decision regarding how much insurance to buy. If you have increased the value of your property, be sure to increase the protection for your property.

3. Get flood insurance. It is a good idea for people to buy flood insurance. Inland flooding can occur as far as 500 miles from the site of a hurricane. Flooding is not covered in standard homeowners insurance policies. It may be purchased through insurance agents from the National Flood Insurance Program (NFIP), which is administered by the Federal Emergency Management Administration. Homeowners should also be aware that contents or additional living expenses coverage is not automatically included. There is also a 30-day waiting period to get flood insurance, so it is important to act before floodwaters start to rise.

4. Make sure you know the amount of your deductible. The deductible is the amount of loss that the homeowner must pay. It may be based on the value of your home or a fixed dollar amount. In many hurricane-prone areas insurance deductibles may range from one to five percent of your home’s value. The higher the deductible, the lower your premium will be.

5. Purchase insurance well in advance of a storm. Most insurers will not offer insurance after a hurricane watch or warning has been issued. Generally this moratorium on new coverage will be in effect for 48 hours after the watch or warning has been canceled. The NFIP also has a 30-day waiting period before the policy is effective.

6. Inventory household items now to speed up claims processing after the storm. Inventory your household items, and photograph or videotape them for further documentation. Keep this information and your insurance policies in a safe place, such as a safety deposit box.

7. Store important documents where they will stay safe and dry. Keep the name, address and claims-reporting telephone number of your insurer and agent in a safe and easily accessible place. Property owners should keep a copy of their insurance policies and other important papers with them in a watertight package.

8. Develop an emergency plan before the emergency. Every family should have an emergency plan.  Emergency planners suggest that you discuss the type of hazards that could affect your family and consider your home's vulnerability to storm surge, flooding and wind. Determine escape routes from your home and establish a meeting place. Stock non-perishable emergency supplies and a disaster supply kit with enough food and water for three to seven days. When severe weather is approaching your area, listen carefully to local authorities and take the necessary precautions to protect yourself, your family, and your property. If you are given an order to evacuate because of threatening weather conditions, do so. Contact a friend or family member and let them know where you can be reached. Remember to shut off your water  and to lock up your home.

9. Perform routine home maintenance now to avoid major repairs later. Mitigation is a critical component in reducing the amount of damage that may occur when a hurricane or tropical storm makes landfall. Adding storm shutters and other retrofitting can help protect a home from strong winds. In addition, a well maintained home will help ensure that roofing, windows and doors are secure. Structural problems and weaknesses can also be identified and corrected before major damage occurs.

10. Don’t make your house a target for debris. Protect your property by covering all windows with plywood or shutters, moving vehicles into the garage when possible and placing grills and patio furniture indoors. Make sure watercrafts are stored in a secure area, like a garage or covered boat dock. A typical homeowner’s policy will cover property damage in limited instances for small watercraft, and separate boat policies will provide broader, more extensive property and liability protection for larger, faster boats, yachts and jet skis.

PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association. PCI members write over $180 billion in annual premium, 39.2 percent of the nation’s property casualty insurance. Member companies write 45.5 percent of the U.S. automobile insurance market, 32.0 percent of the homeowners market, 37.3 percent of the commercial property and liability market, and 40.6 percent of the private workers compensation market.