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Preparing for storm costs
Hurricane damage can be expensive, but it doesn't have to empty your wallet. There are ways to save.
August 29, 2005: 7:32 AM EDT
By Shaheen Pasha, CNN/Money staff writer

NEW YORK (CNN/Money) - After Hurricane Charley pounded the Florida coast last August, Kay Peebles and her husband Bill were left cleaning up the mess as a large oak tree plowed into the roof of their home and 40 other uprooted trees littered their lawn.

The cost of the damage? Nearly $8,000 -- short of the retired couple's $10,000 insurance deductible.

So this year, the couple intends to minimize out-of-pocket losses through some simple home improvements.

It's a move more Floridians are making in the wake of last year's four powerful hurricanes. And it could prove to be a wise investment this year as the National Oceanic and Atmospheric Administration released its revised outlook for the 2005 hurricane season, indicating that there are more severe storms to come.

What's more, insurers are raising rates and opting to be more selective in the policies they take on.

With Tropical Storm Katrina anticipated to turn into a hurricane by late Thursday or early Friday, are you prepared? Here are some tips from insurance experts to help you protect both your wallet and your homes:

Hurricane-proof your home

Insurers say that policy holders are frequently caught unaware that their homes are vulnerable to the high winds of a hurricane.

Gary Cantor, managing director at Florida Peninsula, which provides coverage to the coastal areas many insurers shy away from, said homes with gabled roofs are more likely to suffer wind damage. Tile and aluminum roofs are preferable, but tying down a gabled roof with additional braces should help prevent some damage.

Windows and doors are another overlooked area.

A a cost of $14,000, Kay and Bill Peebles are installing a special hurricane fabric to their windows that's constructed to withstand winds of up to170 MPH. But homeowners can protect their windows for a lot less with storm shutters and even plywood. Doors can be protected with door bolt materials and garage doors can be reinforced with horizontal bracing in each panel, according to the American Red Cross.

And don't forget about the foliage. Keep large trees on your property trimmed.

An added perk to being smart about prevention? Every step you take to minimize damage of your home may actually shave significant dollars from your homeowner's insurance premiums, said Bob Hunter, director of insurance at Consumer Federation of America.

Know your policy

Too often policy holders are underinsured, said Loretta Worters, spokeswoman for the Insurance Information Institute.

One common mistake, for example, is that homeowners assume that items such as flood and windstorms are covered.

Not so.

Standard homeowner's policies usually only protect against damage from fire, theft, lightning and explosions. Worters said much of the damage from 2004's Hurricane Ivan in West Florida was the result of storm surge. Flood insurance is available from the Federal Insurance Administration from the National Flood Insurance Program and should be a standard investment.

Given the high occurrence of hurricanes in Florida, many carriers refuse to write windstorm policies, forcing resident to seek insurance from the state-regulated Citizens Property Insurance Corp. an insurer of last resort with the highest rates in the state.

Insurers that do provide coverage can set a pretty lofty deductible. Since 1992's devastating Hurricane Andrew, Florida insurers have raised premiums for hurricane insurance and changed deductibles from set dollar amounts as low as $500 to between two percent to five percent of the total value of a policyholder's home.

With the recent surge in home values in Florida, a homeowner could be responsible for almost $6,000 in damages before an insurance company steps in with a check.

Florida Peninsula's Cantor said some insurers may allow homeowners to opt for higher premiums at the outset in order to lower their deductible to between $500 and $1,000.

As the Florida state legislature recently called for insurers to only charge one seasonal deductible, as opposed to multiple deductibles, that may add up to significant savings in high-risk areas.

But Consumer Federation of America's Hunter said policy holders are better off opting for the highest deductible they're comfortable with. He said even in a busy hurricane season, there's no guarantee that a house will incur significant damage and most policyholders will likely benefit from the lower premiums associated with higher deductibles.

Know the value of your property

Too often homeowners buy policies that cover the value of their home when they first purchased it. That's a mistake. With surging real estate values, Worters said homeowners should take the time to do an insurance check up.

"Most insurance companies and agents regularly contact homeowners to ensure that their insurance policy limits keep up with the value of their home so that there will be sufficient funds to rebuild after a hurricane or other catastrophe," Worters said.

Worters added that while 98 percent of homeowners nationally have insurance, about 64 percent remain underinsured by an average of 27 percent. That can prove costly for homeowners if they're forced to rebuild after a natural disaster.

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Interested in hearing more about insurance and the hurricane season:

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Forecasters are calling for a jump in hurricanes:

Watch out insurers: Stormy weather ahead  Top of page

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