Most mortgage lenders require that you purchase coverage before closing or entering into escrow on a property.

Some lenders, however, don’t demand insurance on condominiums. But the condo association may require you to insure the interior of your unit (including your possessions), while the condo association is required by state law to insure the exterior of the building and all common areas.

State insurance laws vary on coverage and limits, so ask an experienced insurance agent in your state about specific laws. It’s wise to get a feel for insurance rates in areas with above-normal incidences of natural disasters, including earthquakes and tornadoes. In some areas, coverage may not be available at affordable rates, if at all, or only through a state fund, which offers only limited coverage.

What’s covered: Types of policies vary

Basic coverage

Includes vandalism, theft, explosions, fire, lightning, wind-storms, hail, window, glass breakage and damage from vehicles, aircraft and smoke.

Broad coverage

Includes damage from ice, snow, sleet or falling objects; bursting or freezing of pipes; heating or air-conditioning systems and appliances; electrical malfunction to electrical systems and appliances; and structural collapse.

Liability coverage

Coverage for a loss sustained inside a condo unit or on a single-family home property -- for example, a guest slipping and falling in a bathtub and someone falling on an icy sidewalk.

Replacement costs insurance

Covers the cost of replacing a structure but not the land. Look for a guarantee of 80 percent of full replacement costs.

Deductible

The amount of loss expenses you must pay before insurance payments kick in.

Actual cash value

Replacement costs minus depreciation.

Flood insurance

Do you live in a flood plain? Then you’d better have insurance. Most federally sponsored home loans require you to obtain flood insurance if you’re purchasing property in a flood plain. Your mortgage lender will receive a flood certification on your property during the application process, and if it’s discovered that your home is ina flood plain, you will need to purchase insurance.

The Federal Emergency Management Agency operates the National Flood Insurance Program, which offers coverage to homeowners in participating communities. FEMA categorizes flood zones according to how likely they are to experience flooding. Areas rated an “A” are at the highest risk, and all mortgage lenders offering a loan in an A flood zone will re- quire the borrower to obtain flood insurance. Locales labeled B, C, D, V and X carry lower risks and the possibility that mandatory insurance may not be needed.

Keep in mind, however, that lower risk doesn’t mean that an area won’t experience severe flooding. Evolving weather patterns can affect areas that historically haven’t had predictable flood patterns; these areas may also lack an extensive flood-control infrastructure. Your home can also flood from backed-up sewer systems that are overwhelmed by severe storms.

Rates for insurance policies vary from $200 to $700 a year, based on your flood-risk level. Policies restrict coverage amounts to $250,000 for structures and $100,000 in personal property.

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In the wake of the recent storm, homeowners may have questions about what damages are covered by insurance.

While each insurance policy differs, Pennsylvania Insurance Commissioner Michael Consedine today offered the following examples of what is and is not covered in a typical homeowner's policy:

• Flood damage.  Standard homeowners and renters insurance does not cover flood damage. Flood coverage, however, is available in the form of a separate policy from the National Flood Insurance Program and takes 30 days to become effective.  If your flooding was related to sewage backup,  ask your insurance agent or carrier if an endorsement for sewer backup coverage was added to your homeowner's policy. If so, your losses may be covered if the water damage was caused by sewer lines backing up through your home's drain pipes. 
  
• Auto damage. If you have comprehensive coverage on your auto insurance policy, the damages sustained from flooding will be covered.

• Power outages. Generally, there is no coverage for damage or a loss caused by a power outage if the source of the power outage did not occur on the insured premises. However, if the source of the power outage occurred on the insured premises, there is coverage. 

• Removal of trees and branches. The removal of downed trees and/or debris is covered if there is damage to a covered structure or the Pennsylvania governor declares the area where the damage occurred is a disaster area.

• Additional living expenses. There may be an allowance for offsite housing until your home is repaired. Keep all your bills and payments made for offsite housing.

Consedine encouraged consumers to read the terms and conditions of their own policies.

After you contact your insurance company, take pictures of the damage and log your expenses:

• Do not throw away your damaged property and do not make any permanent repairs. Your claim could be denied if the insurance company or adjuster is unable to see the extent of the damage to your property. If you do make permanent repairs before the adjuster has seen the damage, your claim could be denied.
• Be wary of anyone who knocks at your door and offers to do your home repairs. Natural disasters can be a magnet for scam artists.

• Know your options when working with a property claims adjuster. You have the option of working with a company-appointed adjuster or you may choose to use a public adjuster to assist you in filing your claim. Be aware that public adjusters will charge a fee for their services.

• Be sure you are working with a reputable, dependable contractor. Home-improvement contractors that do more than $5,000 of business per year in Pennsylvania must register with the Attorney General's Bureau of Consumer Protection. You can also check with the Better Business Bureau.

Consumers should also visit www.insurance.pa.gov and click on the "Storm Tips" icon.

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First comes the storm, then — all too often — the higher insurance premiums.

When Hurricane Sandy makes landfall this weekend it could cause as much as $1 billion in damage along the eastern seaboard, by some estimates. The result could be widespread damage to homes, including fallen trees, torn-off roofs and broken windows. And even homeowners spared the worst of the storm might not get off entirely scot free: Insurance agents say premiums may rise and coverage could be slashed for homes in affected areas, whether or not they file claims. “Even if you haven’t been hit, [that] doesn’t mean some of your neighbors haven’t been adversely impacted by the storm — and that could impact you,” says Michael Barry, a spokesman for the Insurance Information Institute, which represents home insurers.

Homeowner insurance premiums have been on the rise for years. They average $1,004 this year, up 5% from a year ago and up 22% since 2007, according to the Insurance Information Institute. This is the first year the national average cracked the $1,000 mark. Meanwhile, insurers in some states have already raised premiums by as much as 12% this year .

Insurers cite several reasons for the spike, including losses from claims filed in previous years and low returns on their investments.

But critics say insurers have more leeway to avoid hiking insurance premiums for the time being. The first half of this year saw a drop in catastrophic losses, which totaled $13.8 billion, compared to $24.4 billion during the same period a year ago, according to the Insurance Information Institute. The industry’s overall net income after taxes skyrocketed during this period to $16.4 billion, compared to $4.8 billion a year prior.

Still, the risk of rising premiums or scaled back coverage isn’t off the table, especially as severe weather events rise in frequency in the northeast. In the last 14 months, the region has been hit by Hurricane Irene, a severe October 2011 snowstorm, and now there’s pending Hurricane Sandy. “They’re looking at changing weather patterns and saying this is changing the way we need to look at risk,” says Scott Simmonds, an independent insurance consultant in Saco, Maine.

To avoid changes to clients’ policies, some independent insurance agents say they will recommend they don’t file claims from this storm. Spencer Houldin, president of Ericson Insurance, an independent insurance agency based in Washington Depot, Conn., says he plans to tell clients who’ve filed two claims within the past three years to refrain from filing another one related to a natural disaster—if they can afford to cover the costs for the repairs themselves. Otherwise, he says, there’s a good chance their insurance company won’t agree to provide coverage when their policy is up for renewal. (Even if they don’t file, insurers could look to raise premiums anyway, says Barry.)

The type of coverage homeowners receive could also change. Some experts say if severe weather events persist in the Northeast, insurance coverage could begin to mirror policies in the Gulf Coast. In the Gulf Coast many basic homeowner insurance policies have limited wind damage coverage — or exclude it entirely. “As more of these events happen, the chances increase that policy structures will change,” says Simmonds.

For its part, the insurance industry says that’s an unlikely scenario for much of the Northeast for the time being. Barry says roughly 98% of homeowner insurance policies in New York are provided by private insurers. In some Gulf Coast states, by contrast, many homeowners are now covered only by state-run property insurers of the last resort.

So what can homeowners do? If the loss sustained by Hurricane Sandy is too large to realistically cover on their own or if it’s the first damage in years, experts say they should file a claim with their insurer. Keep in mind that insurers can’t raise premiums or drop coverage until a policy is up for renewal. And even then in many states they’ll need approval from the state’s insurance department before they can do this.

If premiums rise, homeowners can avoid that hit by increasing their deductible. But that means they’ll have to pay more out of pocket when they file a claim in the future.

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