UP's Bach says homeowners contemplating whether to buy earthquake insurance should base their decision on the soil conditions of the property, how the home was built, and the age of the house.
Fires. Standard homeowners' insurance covers fire damage, but the extent of the coverage varies. However, the process for filing a claim is the same: The insurance agent will send an adjuster to assess the damage and then the company makes an offer for reimbursement.
If you're not happy with that figure, you can use a public adjuster, who will survey the home and then try to negotiate with the insurance agent for a fairer price. But a public adjuster will take a significant chunk out of the settlement—usually 10 to 15 percent.
To avoid paying that high fee, consider reaching out to your state's insurance commissioner's office, which can help ensure you're getting a fair deal. If you still go with a public adjuster, check with the commissioner's office to confirm the adjuster is licensed.
In the event of a total loss, your insurance should cover the cost of building a new home from scratch using comparable materials. While the home is being built, traditional policies require the insurance company to cover living expenses for a certain period of time—usually up to 12 months.
As for your possessions, the best way to recoup losses is to get guaranteed replacement coverage. It'll cost extra, and many companies no longer offer it, but replacement coverage means the insurance company would compensate you for damaged or lost items at their current value without depreciation. So if you bought a TV for $300 and the same set costs $500 today, you'd get the full $500.
Dealing with insurance agents. While a lot of insurance companies are trustworthy, some may try to take advantage of customers—especially if they're filing a big claim.
If you're having trouble with a claim, CFA's Hunter recommends asking the insurance company to send you—in writing—the reason they're not offering what you think is the right amount and the part of the insurance policy they're citing. He says this positions you well in two ways: "Once they tell you their reason, they're locked into it and can't change it. The other benefit is if there's any ambiguity in the language of the policy, the court would decide in your favor."
The bottom line. "Insurance is one of the most important products you can buy. Any yet, it's so confusing," Bach says. The more you educate yourself about what kind of insurance you need, the safer your home will be—especially if another Hurricane Sandy should strike.