I have litany of reasons why people don't prepare. It ends with, "If it's that bad, they government will take care of me." Unfortunately, this is not the case as many people on the East Coast are finding out as they recover from the recent superstorm.
The truth is that most of the money used in rebuilding does not come from the government but from insurance. FEMA's Individual Assistance Program supplements but does not duplicate insurance coverage. There is also a cap on the amount of assistance the program can provide.
The problem with insurance is that insurance companies are fairly adept at sliding out from under claims at the time of disaster, largely because policy holders don't read their policies and have no idea what's covered and what is not. For example, following Hurricane Andrew in 1992, many policies now include a hurricane deductible based on a percentage of the coverage limit. Since Sandy was technically not a hurricane when it struck the East Coast, it will be interesting to see if insurance companies try to invoke this deductible as a tactic to get policy holders to settle to avoid lengthy litigation.
Even more worrisome is that policies typically exclude floods, mudslides, mold, fungi, and wet or dry rot, all of which are going to be present in the wake of the superstorm. Anyone that was not carrying flood insurance at the time of the storm is in trouble.
The point here is that a single policy may not protect you in a disaster. You need to consider the risks, the cost of replacing your home or property, and the options available to you. There's no time like the present to review your policy with your broker and make sure your coverage is adequate. Despite what you think, the government is not going to bail you out.
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