Hurricane Joaquin Set to Rock East Coast: Are You Properly Insured?

NEW YORK (MainStreet) — With Hurricane Joaquin set to rock the East Coast of the U.S. over the next few days, consumers are assessing their preparedness for potential damage. In terms of insurance, are you ready to prevent a natural disaster from becoming a personal finance nightmare?

Many coastal areas are still prone to flooding from storms, tornadoes and hurricanes even though the National Oceanic and Atmospheric Administration predicted the 2015 Atlantic hurricane season, which runs from June 1 to November 30, will be below normal. This summer the NOAA predicted a 70% chance of 6 to 11 named storms with winds of 39 mph or higher, including three that become hurricanes.

“A below-normal season doesn’t mean we’re off the hook,” said NOAA Administrator Kathryn Sullivan. “As we’ve seen before, below-normal seasons can still produce catastrophic impacts to communities.”

Flood Insurance Details

As hurricane season begins, consumers should start by checking their current homeowner’s insurance coverage. More often than not, homeowner's insurance won't suffice in the event of flooding; such policies won't cover damage resulting from the rising water a hurricane sends your way. In such situations, claims adjusters assessing the damage from an event like Hurricane Joaquin will blame the flooding and refuse to cover the cost of repairs. 

If you're hoping to hop on the supplementary insurance bandwagon last minute, though, you're probably out of luck: it's best to avoid waiting until the last minute to buy flood or wind insurance, because some companies make a purchase effective only after 30 days. If you live in a high-risk area and have a flood insurance policy, you should learn what your true premium rate is, without subsidies.

Of course, as MainStreet has reported, the National Flood Insurance Program is some $24 billion in the hole. Many homeowners in flood zones are beginning to feel that fiscal pain as flood insurance premiums skyrocket. Rate increases of 18% to 25% for some policyholders have gone into effect as of April 1, with additional surcharges up to $250.

That's in part because of climate change and decades of premiums lagging risk, according to Nicholas Pinter, professor of geology at Southern Illinois University. But the "government handout" of flood insurance subsidies will have to end, he told MainStreet - with homeowners absorbing a "doubling or tripling, or in some cases much more," increase in premiums. That, or else floodplain residents should consider moving to higher ground.

George Kasimos, a real estate agent in Toms River, N.J., is intimately familiar with flood insurance. His home was damaged by Superstorm Sandy, but his claim was paid, and he rebuilt. Kasimos says the $24 billion flood insurance shortfall is due to the bureaucracy and "mismanagement" of the Federal Emergency Management Agency.

"Only 44% of our premiums actually go toward paying of our claims," he says. Kasimos contends that out-of-control expenses - and litigation defense - are contributing to the insurance program debt.

If you do have insurance, homeowners should take photos of their home and valuable items and download the pictures to a website so they can retrieve it remotely in the aftermath of a storm for an insurance claim.

Don't Forget Your Car

Consumers also need to prepare by checking their auto insurance coverage

Drivers have two options when they purchase auto insurance to protect their vehicles. Collision only provides coverage for when a driver collides with another object or vehicle.

Comprehensive insurance, which is cheaper and often purchased by people with older cars, provides coverage for risks such as fire, theft, falling objects, hail, wind, vandalism, striking an animal and floods, said Bill Crowley, worldwide automobile claim manager for Chubb Insurance in Warren, N.J.

The most common weather-related claims are for hail, falling tree limbs and water damage. To avoid gaps in your coverage, drivers should aim to purchase both collision and comprehensive coverage, he said.

One frequent occurrence is a claim for water damage after the car has been driven into water that is "deep enough to severely damage the vehicle," Crowley said. Although Chubb considers these losses under the "comprehensive" coverage, other insurance companies will consider these situations as falling under "collision" and see the water as an object, he said.
For drivers who leave their cars in parking lots or on the street because of high water and experience damage to their vehicle, the case is usually considered a flood loss and becomes a comprehensive claim.

"Vehicle owners who do not have collision coverage on their vehicles may want to check with their insurer or to see what position they take on situations when the vehicle has been driven into deep water," Crowley said.

The amount of damage from a flood can be extensive and may not be limited to just the engine and electrical systems where you can view the extent of the loss, said Laura Adams,'s senior analyst.

Tasks Prior to a Storm...

Beyond insurance. prepping your home is also essential: developing a current inventory of your possessions with their make and model numbers can speed up a claim and verify losses for your income tax return, said Jim Gustin, a senior property specialist at The Travelers Companies, the Hartford, Conn. insurance company.

Stocking up on food, bottled water and other essential items such as prescription drugs for a week is important, said Peter Duncanson, director of disaster restoration training for ServiceMaster Restore, a Memphis, Tenn.-based residential disaster restoration company. Create an emergency container filled with cash, a first aid kit, batteries and blankets. Make sure you add spare phone chargers and fill up your vehicle’s gas tank.

“Estimate that each family member will need a gallon of water every three days and have a ready supply of nonperishable foods,” he said.

Ensure Your Data Is Not Vulnerable...

Start by backing up your data on a regular basis. Digital encrypted copies of your paperwork which contains personal or financial information like insurance policies, account numbers, pay stubs and even W-2s come in handy, said Brian Berson, CEO of FileThis, a Mill Valley, Calif.-based automated digital organization platform that fetches and organizes personal documents from your computer or mobile devices.

“While businesses have IT specialists who carve out sophisticated disaster recovery plans, consumers usually don’t think about having a plan in place for a disaster,” he said. “Free apps like Evernote or FileThis keep digital copies of important documents in the cloud, which means disasters can’t destroy personal data as it is not stored on local computers or filing cabinets.”

Communication During a Storm...

While texting has become more readily available after a storm or hurricane has landed, don’t expect it to work all the time. Cell phone towers are often damaged and temporary cell sites on trucks may not be available in your area. Appoint a meeting location to meet just in case you get separated.

Depending on where you live, venting about your power outage via a tweet might get your electricity restored faster. A platform created by OMNETRIC, a joint venture of Siemens, the German engineering company, and Accenture, the Irish consulting firm, extrapolates public data from social media and combines it with real-time weather, GPS, photos and information from customers submitted via Facebook or Twitter. Working with San Diego startup DataCapable, the company implements the data to determine where the outages are, finds the closest repair truck and gives the team more visual information to assess the repair before they arrive.

“Utility repair crews often approach the scene without full knowledge of what may have caused the outage, what potential challenges or dangers may be present and what tools may best suit the necessary repairs,” said Wade Malcom, CEO of OMNETRIC Group North America, based in Minnetonka, Minn. “The technology gives utilities access to the time stamp, GPS coordinates and visual clues, providing a repair crew with a 360 view of field conditions.”

If the storm knocks out your power for days or weeks, a power inverter can come in handy by using your vehicle as a power source. They allow a car’s battery to run a variety of electronic devices, including phones, laptops and cameras, said Arthur Romero, an owner in the Houston area of seven Batteries Plus Bulbs, a Hartland, Wis.-based battery supply company.

“Be sure to purchase extra power inverters for your car,” he said. “They come in a range of sizes and power capacities, with a starting price of about $20. Get your vehicle battery tested to make sure it will work for you during a storm.”

Purchasing LED flashlights might be more economical, because they use the least of amount of power and some of these lanterns and flashlights can last up to 200 hours on one set of batteries, Romero said.

It may seem like a throwback to another decade, but a battery-powered, two-way or hand-crank radio can be extremely handy to give you weather updates and evacuation instructions. If all your electronic devices are out of power, the radios can give you other information such as the time and information such as road closures.

In the Aftermath of a Storm...

After assessing the situation, take photos to document the damage. One of your first calls should be to your insurance agent or a company which can assists in the cleanup process.

“Begin water cleanup and removal within 24 to 48 hours to avoid mold and further water damage,” said Duncanson.

Mold growth in your home is a major concern, because it can lead to health problems such as asthma and upper respiratory tract symptoms, said Robert Weitz, a certified microbial investigator and founder of RTK Environmental Group, a Stamford, Conn. environmental testing firm. A certified mold inspector can test and assess the damage.

Recovery after an immense storm is unpredictable, said Gabriel Lugo, franchise operations director of 911 Restoration, a Van Nuys, Calif. restoration service company.

"Damage from a simple flooding can be taken care of in three to seven days depending on the level of destruction, but the worst effects from a hurricane can take months to fully recover from,” he said.

More from Car Insurance

Why Property & Casualty Insurance Should Not Be Optional

Why Property & Casualty Insurance Should Not Be Optional

5 Tesla Products Elon Musk Has Announced Since He Started Taking Model 3 Orders

5 Tesla Products Elon Musk Has Announced Since He Started Taking Model 3 Orders

Seven Questions to Ask an Auto Dealer Before Signing on the Bottom Line

Seven Questions to Ask an Auto Dealer Before Signing on the Bottom Line

Does Your Insurance Cover Dog Bites, Flooding or Your Dashboard Change?

Does Your Insurance Cover Dog Bites, Flooding or Your Dashboard Change?

Video: 4 Stunning Cars You Don't Want to Miss at the New York Auto Show

Video: 4 Stunning Cars You Don't Want to Miss at the New York Auto Show