June 25, 2010
Natural Disasters Happen. Will Your Home Be Ready?
By PAUL SULLIVAN

THE oil spill wreaking havoc in the Gulf of Mexico may be capturing your attention at the moment. But the odds are far greater that a natural disaster — a hurricane, wildfire or windstorm, for instance — will affect you.

The insurance industry is reminding homeowners of those odds this month, at the official start of the hurricane season, noting that forecasters have said it may be a bad one.

Getting out of your home safely is the priority in a storm. But from a financial point of view, homeowners should focus on protecting their property long before a storm is bearing down.

Homeowners in coastal Florida have learned the hard way the value of storm shutters and proper construction, but Robert Courtemanche, chief executive of ACE Private Risk Services, said homes farther up the East Coast were not as well protected. He said the building codes in the Carolinas, which frequently get hit hard by hurricanes, had not caught up with those in Florida, and in areas like the Hamptons, on Long Island, many houses lacked shutters or reinforced windows.

“The theory goes that with global warming, sea temperatures are going up, and that increases the likelihood of more severe storms further up the East Coast,” Mr. Courtemanche said.

Of course, plenty of people live far from the coast and have little to worry about from hurricanes. But there are still wildfires on the West Coast, hailstorms and plenty of things outside a house that could do damage in a severe windstorm.

Regardless of the threat, preparation is the key. “I wouldn’t recommend packing your most valuable possessions in the back of your Jag and heading up I-95,” said Scott Spencer, worldwide appraisal and risk prevention manager at Chubb Corporation. “I’d recommend having a plan.”

Before the storm season begins, here are tips on preparing for trouble that may befall you.

HURRICANES Every year, hurricanes form in the Atlantic and work their way across Florida, through the Gulf of Mexico or up the East Coast. They can cause millions of dollars in property damage, deaths and dislocation. Still, year after year, people remain unprepared.

According to a poll in May sponsored by the Insurance Information Institute, a nonprofit advocacy group, only 50 percent of Americans have an inventory of their possessions in case they need to file an insurance claim.

Worse, the poll found that 26 percent of residents in the South — 32 percent in Louisiana and Mississippi — wrongly believed that their homeowner’s policies covered flood damage caused by a hurricane. The policies do not.

“With hurricanes, you’re covered for the wind damage, but you’re not covered for the flooding,” said Jeanne Salvatore, spokeswoman for the institute. “Most times there’s flooding in a hurricane.”

One problem this hurricane season is that the National Flood Insurance Program ran out of money on May 31, and, so far, only the House has authorized additional aid. The federal program covers the first $250,000 in building losses and the first $100,000 in personal property losses.

Most private flood policies are written to cover losses above those thresholds, and not all insurers provide primary flood coverage. Ronald Laconi, president of Chartis Private Client Group, a division of the American International Group, says that in areas like coastal Florida, his company offers only coverage above the federal program.

Many policies also have a hurricane deductible for wind damage that can range from 2 to 10 percent of the value of the home — not the actual damage. Ms. Salvatore suggested that homeowners check to make sure their policies included rebuilding their house to meet the current codes.

Beyond the proper insurance coverage, homeowners can do a lot to reduce the risk of damage.

“In a coastal area, the single most important thing we recommend is the protection of the openings of the house with either storm shutters or impact-resistant glass,” said Barry Davis, a regional manager for risk services at Fireman’s Fund Insurance Company in Orlando, Fla.

He also said people often forgot to secure the garage. If it blows in, the structure of the house can be compromised. In one particularly fierce hurricane, Mr. Davis said, he backed his cars against the garage door to keep it from blowing in.

Todd Triano, vice president of loss prevention at Chartis, said 80 percent of catastrophic damage to houses was caused by garage doors being blown in. And he pointed out that homeowners might have reinforced doors and shutters, but if the latches or hooks had been corroded by salt air, they would not hold.

Another risk is what is in your yard. “In Florida, the missiles you have to worry about are palm trees and lawn furniture,” Mr. Triano said. Mr. Davis cautioned that everything should be inside or tied down in a hurricane.

High-end insurers spend a good deal of time counseling their wealthier clients on how to protect their homes. They often offer services that will monitor a home if the owners are away. At Fireman’s Fund, Mr. Davis said part of his job was to make recommendations on the homes before a policy was written.

Less-affluent clients bear the onus of making sure their own homes are secure. And being complacent is quite risky.

“A lot of people are put off by the time it takes to go through this process with them,” said Dale Tomlinson, assistant vice president for premier accounts at ACE. “We don’t get much pushback, but when we do it’s about time consumption. Too often, we think this is not going to happen to us.”

WILDFIRES Just as hurricanes in the Southeast make headlines in the summer, wildfires on the West Coast usually dominate the fall news cycle. Wildfires have also become an issue in other dry states starting as early as the summer.

Taking precautions is crucial here, too. The most obvious ones are managing the vegetation around your house. Planting fire-resistant plants is important. So, too, is clearing brush around your property. Wood mulch in wildfire areas is also a risk; it creates a wick.

Again, high-end insurance companies offer services to protect houses in wildfire-prone areas. Chartis sprays Foschek — a chemical fire retardant that is the orange solution you see dropped from helicopters — on the perimeter of houses to deflect the wildfire, while ACE coats clients’ houses in a fire-repellent gel.

WINDSTORMS Vast swaths of the country do not have to worry about hurricanes or wildfires, but as residents of the Northeast learned after storms in March, trees can pose a serious risk to their homes.

Mr. Spencer of the Chubb Corporation offered a checklist of warning signs to know if trees could fall on your home. If part or all the tree is not leafed out, it is unhealthy or dead. If you have excavated around a tree, the root system could be weakened. Piling mulch around the trunk is discouraged because it robs the tree of nutrients.

The challenge with trees, though, is if your neighbors are negligent, you may be stuck paying the deductible on your homeowner’s policy. “If your neighbor’s tree falls and hits your house, it’s your insurance claim,” Mr. Spencer said. “The best you can do is make him aware of the tree health issues.”

And that’s when a natural disaster becomes even more frustrating.