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NEW YORK, August 2, 2004 - The first major storm of the hurricane season is a reminder that coastal residents should review their home insurance policies to make sure they are properly insured, according to the ̽»¨¾«Ñ¡ Information Institute (I.I.I.).

With more than 68 million people living in hurricane-vulnerable locations along the Atlantic and Gulf coasts, a major storm could be catastrophic, causing billions of dollars in property damage.

Hurricanes and other tropical storms usually cause widespread flooding, yet only about 25 percent of homes in flood plains purchase flood insurance, which is not covered under standard homeowners policies.

In addition, many home owners may not have adjusted their policies to take into account the rising construction costs in their communities. Others, who recently increased the value of their homes through renovations and additions, have not increased their policy limits to more accurately reflect the cost of rebuilding their home today.

A recent Harris Poll found some 80 percent of home owners nationwide say their homes have increased in value, yet only 63 percent report increasing their homeowners' insurance coverage.

"Protecting your home with the proper insurance is part of responsible home ownership," says Loretta Worters, vice president of the I.I.I. "That means reading and understanding your policy, and getting additional coverage if you've made changes or additions to your home."

She also pointed out that many consumers in hurricane-prone areas are still unfamiliar with their homeowners' insurance deductibles. To make private insurance available and more affordable, most companies in hurricane-prone states (including North and South Carolina) now use percentage deductibles for hurricanes and windstorms.

These hurricane deductibles are in the form of a percentage rather than a dollar deductible and range from one percent to 15 percent of the home's insured value. The trigger for hurricane deductibles, or the point at which it applies, varies by company. Triggers generally go into effect only when the National Weather Service issues a hurricane watch or warning and remain in effect for 24 to 48 hours after the storm has passed. The intensity of hurricanes, which are classified according to wind speed, also affects the trigger.

In North Carolina, hurricane deductibles in coastal areas range from one to five percent. A flat dollar deductible of $1,000 is available. In other parts of the state flat dollar deductibles are available from $250-$2,500.

In South Carolina, hurricane deductibles in coastal areas range from two percent to five percent. Flat dollar deductibles of $1,000-$20,000 are available. In other parts of the state 10 percent to 15 percent deductibles are available. In general, the higher the deductible, the lower the premiums.

"Home owners need to check with their insurer to find out for what percentage deductible they are responsible," says Worters. "A coastal resident with a home insured for $200,000, for example, could be responsible for at least $2,000 and perhaps as much as $30,000 worth of storm damage before insurance kicks in."

Some companies in these states have a ?buy back' option, whereby consumers can pay a higher premium in exchange for a dollar deductible. Most companies in North and South Carolina have these buy-back options.

The I.I.I. suggests that consumers review their insurance coverage before disaster strikes to make sure it is up-to-date and ask their insurance agent or company representative about the following:

• Your Home
  There are two types of insurance available for your home: replacement cost coverage pays for the repair or replacement of damaged property with materials of similar kind and quality. Actual cash value reimburses you for the depreciated value of your home and your company would deduct for factors such as age and wear and tear. Also consider a guaranteed or extended replacement cost policy, which provides added protection against sudden increases in construction costs due to shortages of labor and building materials after a widespread disaster.

  Guaranteed replacement cost pays to rebuild your home as it was before the disaster, even if it costs more than the policy limit. Guaranteed and extended replacement cost may not be available if you own an older home, so check with your insurer.

• Your Possessions
  Just like coverage for your home, there are two types of insurance to consider for your personal possessions: Actual cash value -replaces the cost of your possessions less depreciation. Replacement cost coverage - replaces property without a deduction or depreciation. Replacement cost generally costs about 10 percent more, but it provides much better coverage.
• Inflation guard
  Automatically adjusts the dwelling limit when you renew your policy to reflect current construction costs in your area.
• Flood insurance
  Flood insurance is not covered under a standard homeowners policy. It is available, however, through the Federal Emergency Management Agency's (FEMA) National Flood ̽»¨¾«Ñ¡ Program (NFIP). Contact an insurance agent for details or call the NFIP at 1-800-638-6620 or .
• Building Code Upgrades
  Building codes require structures to be built to specific standards. If your home is severely damaged, you will have to rebuild it to comply with building code standards in your state, which could be costly. While most policies do not pay for this outlay, consumers may be able to add an endorsement to their policy. Check with your insurer.
• Additional Living Expenses
  Covers the cost of living elsewhere while your home is being repaired or rebuilt. It pays the cost of hotel and restaurant bills and other additional living expenses beyond what you would pay for ordinary living. If you rent out part of your home, it would also replace lost income for the time you would not be able to collect rent.

Many policies provide coverage for 20 percent of the amount of insurance you have on your house. Coverage varies from company to company, so find out how much you have and if you need additional coverage.
Water back-up

Insures property for damage caused by the back-up of sewers or drains.

To make sure you have the right insurance coverage, contact your insurance agent or company representative. You can also access the I.I.I.'s website at .

The ̽»¨¾«Ñ¡ Information Institute is a non-profit, communications organization supported by the property/casualty insurance business.