Hazards

Introduction

When spring comes many people are relieved that winter is over and the mess of snow and ice are behind us. However, spring is just the beginning of seasonal weather that can cause significant damage to property and generate claims. February to April is snow melt season; as the snow melts, flooding is possible, and many people overlook flood insurance because they are not by the ocean, a lake, or river. Plenty of areas nowhere near water flood due to snow melt.

Tornado season begins April 1 and runs through July. Already 2017 is predicted to have a record year of life-threatening tornadoes due to an active jet stream and warmer weather across the country. These two phenomena combine to make tornadoes more likely.

June brings both hurricane and wildfire seasons. While the east coast is threatened by hurricanes, the central and western parts of the country are threatened by droughts and wildfires. Along with the threat of wildfires the threat of dust storms exists; anytime there are droughts and dry land, dust storms can become an issue.

In a study by Swiss Re, disasters that occurred in 2016 cost insurers $56 billion in damages, with $175 billion in total economic losses. As an agent, you want to do what you can to alert your insureds before weather gets ahead of them and they find themselves under or uninsured and unprepared to handle a loss. More importantly, there are steps they need to take to protect themselves from injury as well. Many things apply across multiple situations.

Inventory

The importance of a home inventory cannot be stressed enough. An insured who has an inventory of belongings is in a much better position in event of a loss. That way, whether property is burned, flooded, blown away, or otherwise destroyed, the insured has a catalog of his belongings and can readily provide the carrier the required inventory list. There are many free smart phone apps including Know Your Stuff or Encircle; carriers also have their own apps or software on their websites that an insured can use to build an inventory. An advantage of a smart phone app is the ability to take pictures of items that immediately shows exactly what the insured had. Another important action is keeping receipts; while some carriers may not request receipts, especially in these days of identity theft where people are advised to shred documents, a record of receipts for big purchase items is important. An insured can scan them into the computer or take photos of the receipts and store them electronically so that in case of a dispute there is a record of when and where the item was purchased and the purchase price. A copy of the inventory should be given to the agent or the company so that the record is safe in event of a total loss.

Once an inventory is created, coverage needs to be reviewed: is it adequate? Many people underestimate the amount of property they have. Once you add up all the towels, lamps, silverware, CDs, DVDs, and other items including what is in the junk drawers, the insured may need to increase limits. See Duties After a Loss:Home Inventory for important steps in creating an inventory.

Hazards

Next look at the hazards the insured is most exposed to. Is he in a high snow area where snow melts routinely leads to flooding? Is the insured in a known flood, wildfire, earthquake, hurricane, tornado, or other area? While fire is always a covered peril, there are areas where those in wildfire areas may be required to maintain defensible space. Knowing how to do so, and being able to coach your insureds in doing so, can help your insureds avoid or at least mitigate a fire loss. Maintaining clear space around the dwelling, a certain amount of space between trees so fire cannot jump from one to another, and planting drought resistant and native plants all help in wildfire areas.

With tornadoes or hurricanes the removal of anything that can become airborne is important; both tornadoes and hurricanes have great winds and can throw loose objects into or through dwellings and cause significant damage. As tornadoes arise with little to no warning, encouraging an insured to maintain a clear yard is helpful. See Disaster Compendium Part I for information on tornadoes and hurricanes.

Earthquakes require particular home maintenance as well. As items shake and fall during an earthquake, ensuring that pictures are hung securely to walls, items in cupboards or on mantels are secure, or that items are not kept on mantels at all is important. Furniture should be anchored to the walls as well. Another thing to consider aside from whether or not the insured is in a traditional earthquake zone is whether or not the insured is in an area where fracking has begun. The United States Geological Survey now tracks earthquakes caused by fracking and not just earthquakes caused by tectonics. As earth movement is not covered under traditional policies, advising insureds to add endorsements or purchase separate earthquake coverage is important for those exposed to the risk.

Every insurance agent knows homeowners and commercial property policies do not cover flood; the National Flood Insurance Program starts running commercials in April advising people that standard property policies do not cover flood yet still many, many people do not obtain a flood policy. While it may be expensive, it is usually much more expensive to sustain a loss and replace all the drywall in a lower level than purchase the coverage. At the least, an insured should be made aware of the risks and advised to not store items on the basement floor. Items should be kept up on shelves and off the floor; valuable items should be kept in other areas of the home. Remember, the flood policy has a thirty-day waiting period, so the discussion should be had well before hurricane season starts. Disaster Compendium Part III provides details on earthquakes and floods.

Wildfires, dust storms, blizzards, and volcanoes are other natural disasters that are problematic. The National Oceanic and Atmospheric Administration (NOAA) reports that wildfires burned 5,446,520 acres in 2016, from 65,575 fires. According to the United States Drought Monitor, already 16 percent of the country is sustaining moderate drought as compared to 14 percent last year. Parts II and IV of the Disaster Compendium contain information on these types of disasters. Disaster Compendium Part II and Disaster Compendium Part IV.

One of the most important things an insured can do is have a plan and an emergency kit with medications, important papers—including medical records for pets—cash, and basic first aid supplies. Also needed is knowledge of various safe actions: what areas of a building are safest in a tornado, and what if you are in a vehicle? What if a vehicle if the road floods, or wildfires overtake you? Sharing this knowledge with your insured can help him be prepared in event of a disaster. There are many online resources: ready.gov provides information for biological, chemical, cyber, drought, earthquakes, floods, fires, hurricanes, landslides, tornadoes, wildfires, and other types of disasters with instructions on what to do before, during, or after such an event. Resources are listed in the compendium for each type of disaster.