Recipe for Disaster?

When natural disasters strike, the most important consideration is survival. It isn't until after the hurricane winds stop blowing, the tor-nado stops twisting, or the earth stops quaking that the financial wounds become apparent. They can, though, be almost as painful as physical ones. Just ask the hundreds of thousands of Americans whose homes or businesses recently took a hit from Hurricanes Charley, Frances and Ivan. Damage from those three storms could reach tens of billions of dollars by the time the counting is done-much of which won't be covered by insurance.

Americans who live along the hurricane zones of the Southeast, the Tornado Alley of the Plains, or the tectonic fault lines of the Pacific Coast have obvious reasons to worry about natural disasters. But no matter where you live, events like the three hurricanes mentioned above provide reason enough to take a quick peek at your homeowners policy. Better yet, make it an annual tradition to review the insurance that protects one of the biggest investments you'll ever make.

A standard homeowners policy covers a house, its contents, landscaping and outbuildings, along with any visitors to the property. Damage from a number of situations-fire, hailstorm, falling trees and so on-will typically be insured against. Other potentially costly problems, though, tend to be omitted. Earthquakes? Not usually covered. Floods? From broken pipes, yes, but not from rising water courtesy of Mother Nature. Mold infestations? If at all, with a limit so low it won't help much if mold is actually discovered.

Much of the language in a homeowners policy is boilerplate written by and for lawyers, which means it's unintelligible to the rest of us. If nothing else, though, read the exclusions section of your policy. You'll find it in the "conditions and coverages" section. For most people, what they read there is enough to keep them awake at night. It's a nightmare list of all the disasters that could befall your house, leaving you a financial wreck, homeless and maybe even bankrupt.

Armed with that list, decide what risks you are-and are not-willing to accept. It isn't just disasters, either. Don't forget to consider excluded items such as high-value jewelry. Keep in mind, too, pets that might limit or void your policy. Faced with an increasing number of dog-bite claims, for example, many insurance companies are refusing to sell or renew policies to homeowners with Doberman pinschers, pit bulls, Rottweilers and some other breeds. Check your policy for pet limits or exclusions. Then head to an insurance agent to get quotes on policy amendments or additional coverage that might fill in the gaps.

Scott Bernard Nelson is deputy business editor at The Oregonian and a freelance writer in Portland, Oregon.