With Hurricane Ian ripping through Florida, some may wonder how well their homeowners' insurance will fare in a natural disaster.
For starters, it typically depends on the disaster. A standard policy covers damage from many calamities, but a handful does not and require separate coverage for protection.
Even if your insurance covers the destruction, it may not be enough. Many homeowners simply do not have adequate protection to cover all their losses. And, because of a tax reform law, uninsured losses can only be deducted in specific cases.
"While it's too early to tell what the damage projections will be, many of the insurance modelers are putting it at between $20 and $40 billion, depending on the category storm, and where it hits," Loretta Worters, a vice president at the Insurance Information Institute about Hurricane Ian told USA TODAY on Wednesday. "Obviously, the more populated areas would result in higher losses."
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No direct hits occurred in Florida over the past three hurricane seasons - until Ian.
Florida is the site of 79% of all homeowners insurance lawsuits over claims filed nationwide, even though Florida's insurers receive only 9% of all U.S. homeowners insurance claims, according to the Florida governor's office.
Here's what you should know about your insurance covering your house.
What damage does home insurance cover?
Homeowners' insurance cover damage sustained from most hazards, including a tornado, hurricanes, severe storms, rain, wind, and fires.
Also, homeowners' insurance will pay to repair the structure of the property up to the insured amount and other detached structures like a garage or garden shed - typically around 10% of the main structure's insured amount.
It also covers possessions inside the home - typically up to 50% to 70% of your home's structure is insured. Landscaping elements such as trees and shrubs are generally reimbursed at about $500 per item, Worters said.
As for Florida, Worters said it is "already in a state of crisis." Florida residents currently pay the highest homeowners insurance rates in the United States at an average of $4,231 in 2022, nearly three times the U.S. annual average of $1,544, Worters said.
She cites that Hurricane Andrew which killed 23 people in the U.S. and three in the Bahamas in 1992 caused an estimated $15.5 billion in total insured losses, according to Property Claims Services (PCS). This also resulted in the insolvency of 11 insurance companies, she added.
"If a similar Category 5 Andrew-like hurricane were to strike just south of Miami and just 8 miles north of Andrew's landfall in the city of Homestead, Florida, modelers estimate that total insured losses would exceed $138 billion," Worters said depending on Ian's swath. "Florida's vulnerability to hurricanes had been seriously underestimated. That reality was not lost on other coastal states nor on the insurance industry, which reassessed their exposure to catastrophic storm damage in the aftermath."
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What damage is not covered?
Damage from flooding and earth movement - which includes earthquakes, mudslides, landslides, and sinkholes - is excluded from homeowners insurance.
To get flood and mudslide protection, you must buy a separate policy from the federally funded National Flood Insurance Program or a private insurer. You must also buy separate coverage for your possessions; these are not automatically included in the flood policy, said Don Griffin, vice president of policy, research, and international at the American Property Casualty Insurance Association.
"Insurers stand ready to help their policyholders recover and rebuild after Hurricane Ian," Griffin told USA TODAY. "Ian will cause catastrophic damage in Florida, but the risk to homeowners does not end once the storm has passed."
For earthquakes, you must buy a separate policy from a private insurer or, if you live in California, from the state's California Earthquake Authority. In some states, insurers will cover sinkholes if you buy separate coverage.
Some policies may also exclude specific weather in certain areas where it's common - such as windstorms in coastal states.
"In coastal states like Texas, Florida, and Louisiana, they have what they call coastal programs," Griffin said. "What it does is if windstorm is excluded in the policy, you can buy it back through the state's program."
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Other homeowners' policy coverage costs
A homeowners' policy will reimburse you for any additional living expenses incurred if you can't live in your damaged home. These costs include hotels, restaurant meals, and laundry expenses.
"These are for costs that exceed your typical costs," Worters said. "You can't have an exorbitant restaurant bill. It comes with limits."
Any theft or damage that's done to your home by looters or vandals after a disaster is also covered by your homeowners' policy.
What about uncovered losses?
You can deduct personal property losses not covered by your insurance, but only if the damage is from a federally declared disaster by FEMA.
To deduct the losses, you must subtract $100 from each loss before adding them up. The total must be more than 10% of your adjusted gross income. You can also choose which year to take the deduction - it doesn't have to be the same year the disaster occurred - to expedite your tax refund or possibly maximize it, Worters said.
Your insurer can cover only what it knows you lost. That's why it's important to keep accurate records for filing claims in the future.
Make sure your insurance policy accurately describes your home - including square footage, number of rooms, age, and materials it's constructed from. It should also account for any recent improvements - like a new roof or water heater - and upgrades - such as a room addition or a new pool.
It's also important to have an inventory of your possessions. It can be hard to remember what you owned in the emotional aftermath of a disaster, especially if you and your family are dealing with injuries or worse.
An easy way to take inventory ahead of time is to go through each room and closet and record every possession on your smartphone's video. When possible, note the make and model of items, especially higher-end appliances.
Rare or expensive items such as art, collectibles, or jewelry require additional coverage apart from your homeowners, condo, or renter's insurance, and must get appraised first before getting a separate policy.
Store your inventory record and insurer's contact info somewhere besides your house or digitally where you can retrieve it at any time.
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Beware of fraudsters
Griffin also advises those whose homes get damaged by Ian to be wary of fraud.
"We have seen with previous storms how fraudsters, dishonest contractors, and other third parties come out of the woodwork to prey on homeowners in desperate need of repairs," Griffin said. "Some of these third parties abuse the insurance claim and damage repair process for their own financial gain, which will only serve to fuel the crisis in Florida's property insurance market."
Griffin said homeowners should call their insurer or agent to start the claims process as soon as it is safe to do so. He said his organization recently partnered with Florida's Insurance Consumer Advocate to create a Prevent Contractor Fraud and Abuse Guide to help homeowners know the warning signs.
"Before signing any contracts, homeowners should work closely with their insurer to verify the repairs are covered by their policy, then find a licensed and reputable contractor to do the work," Griffin said.
This article originally appeared on USA TODAY: What if Hurricane Ian hits your home? Your guide to disaster insurance