Insurance and the Rebuilding Process
If we have learned anything from this year's hurricane season, it should be that it's not worth it to be without comprehensive insurance on our homes. I've said it before and I'll say it again: your 'basic' homeowners policy is woefully insufficient. It won't cover flood damage. It won't cover wind damage. It won't cover hurricane damage. In fact, it won't cover most kinds of severe damage from severe weather or catastrophic events, like earthquakes. And this is where you have to review your policy (well in advance of disaster) and be sure you fully understand the fine print.
And we're not just talking about knowing the fact that the fine print is there. We're talking about reading it and asking any necessary questions so that you know what it really means.
While you might qualify for help from FEMA if you are in an location declared an official "disaster area", what if your damage is localized in some way? What if it was unique to your property? What if FEMA never gets involved? How will you afford to repair and rebuild if something serious happens to your home?
I can't imagine a worse situation than to have to pay a mortgage on a home that is no longer standing.
While none of us "likes" insurance, it is your financial safety net. If something happens to your home, you can recover at least part of your expenses. You may be able to get a full reimbursement, depending on the type of policy that you choose. However, you need to evaluate the cost of the insurance against the level of risk that you are taking, and how much money you could muster on your own if necessary. After all, the more risk you ask the insurance company to take with you, the more money they are going to charge you -- up front.
Most financial advisors will tell you that you should have at least three basic underpinnings to your financial security: savings; wills for you and your spouse; and, insurance. Don't be fooled into thinking that insuring your home is less important than insuring your life or your health.