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Safety Report: Costly Insurance Claims

Posted: Updated: Dec 28, 2011 01:04 PM EST

The August earthquake that rocked Louisa County is teaching all homeowners a lesson about insurance.  Hundreds of homeowners are left with hefty repair bills to pay out of pocket because nearly no one had earthquake coverage as part of their insurance policy.

State Farm Agent Greg Leffler manages insurance policies for 2,100 households in central Virginia.  "Fire, theft, vandalism - all those things can be covered by your typical insurance coverage," he said.

Virginia sets a minimum standard of coverage all insurance companies must follow.  Not included are disasters like a nuclear accident, earthquake, or flood.

Leffler stated, "Surface water for outside typically has to be covered by a flood policy - which is written through the National Flood Insurance Program."

Wind, water, and fire damage top the insurance claims for Virginia homeowners.  According to State Farm, the average cost for water damage due to burst pipes is $7,498.  Wind damage costs them nearly $9,000.  Fire losses total an average $26,327 for a household.

George Lyle with the State Corporation Commission's Bureau of Insurance encourages homeowners to shop and compare prices, so those costs don't come out of pocket.  "It's open competition, so it's up to the consumer to shop around and make sure they're getting the best price," he said.

And know what's covered.  "After the loss occurs, you can't change anything," said Lyle.  "You're stuck with the coverage you have at the time of the loss."

Lyle says you also need to know your deductibles.  They may be higher for hurricane or wind storm damage.

"That's the biggest complaint we've gotten recently - the surprise with the deductibles.  A lot of companies in order to keep prices lower have increased deductibles," stated Lyle.

Insurance companies are required to notify you of any changes to your policy.  Agents say you should sit down and review the fine print with them every three years.

Leffler said, "A lot of people typically make changes when they come in, because they didn't know that they didn't have a particular coverage and how much it costs."

One insurance agent we talked to says that he's sold more than 75 earthquake policies since August. Before, only about one in 100 customers would buy it.

To check out a consumer's guide to homeowner's insurance, click here.