But insurance executives and state officials alike say that all too often customers who have not updated their insurance policies may find they have inadequate coverage to rebuild their home or replace its contents.

State Insurance Commissioner John Oxendine said that some homeowners opt for less expensive policies that pay only actual cash value as opposed to paying to purchase a similar, new item. The same is true for the value of the house or to build a completely new one.

"Over in Carroll County, there was a tornado and a family had stated-value insurance to rebuild the house up to a certain dollar amount," Oxendine said. "It's not going to be enough money at current prices to rebuild their house. They're either going to have to build a smaller house or go in debt to rebuild the same kind of house."

Oxendine recommends the replacement value coverage for both home and contents. Otherwise, instead of replacing your 10-year-old refrigerator with a new one, the insurance company would pay you about what it would fetch at a garage sale. The same is true for your clothes, furniture, electronics and other items.

"With full replacement value, you go to the store and buy a new TV and a new computer," he said.
Many companies offer extended replacement value insurance, which will cover up to 100 percent of the value of the home, plus a certain percentage to cover rebuilding the home in today's market. It may have cost you $100,000 to build your home 10 years ago, but it might cost $120,000 to replace it today.

Joe T. Wood Jr., an executive with Turner, Wood and Smith Insurance Agency, said there were isolated situations after the March 1998 tornado in which persons needed additional coverage.
Wood said that one area in which many insurance policies have limitations is in the removal of downed or damaged trees.

"It's very limited and some policies only give you $500 or $1,000, and that's per loss and not per tree," Wood said.

Oxendine said that dishonest people often show up after a disaster offering to cut down trees and falsely convince homeowners that the insurance company will reimburse them.

"Last year in Henry County, we had people charging thousands and thousands of dollars to remove trees," Oxendine said. "The tree cutters said ‘Don't worry, we'll get the insurance company to pay you back.'"

He contacted the Henry County Police Department, who cracked down on the unscrupulous practice.
While there are state laws against price-gouging, Oxendine said that fly-by-night scam artists also try to take advantage of homeowners for repairs.

"People need to get multiple references and you need to deal with someone local. Make sure they have a local address and are in the local community," he said. "There are people who will hear of a tornado and will hop in their pickup truck and drive several states to go and make money."

Oxendine said that many times in rental property, the tenant does not carry insurance on their household goods.

"We had a situation recently in Crawford County where a man lost all of his possessions in a mobile home," he said.

Wood said insurance for those living in rented dwellings is relatively inexpensive. However, data from the Insurance Information Institute shows only 48 percent of those in rental units carry property insurance.

Before a tornado, fire or other disaster strikes, Wood said it is important to have an inventory of your household contents. This can be accomplished by making a handwritten list, digital or still photographs or by making a videotape.

"We encourage it of all our customers," Wood said, adding that his agency offers to keep a copy of the inventory in their office files.

The Insurance Information Institute offers a free online inventory system at knowyourstuff.org. The site has downloadable software to store information on your computer or on an outside server. It allows organization of possessions room by room and provides lists of possessions that are typically found in certain rooms. It also has the capacity to store digital photographs to document possessions visually.

The Web site also offers a paid service to store information on a secure site for an annual fee.
Making an inventory is as simple as going through your home with a video camera. Walk through each room, do a quick sweep and get everything you own on tape. Don't forget the attic, basement, closets and off-site storage room, if you have one.

Or take the low-tech method: Make a list and snap a few photographs. Stash your video or photos in a safe-deposit box with a copy of your policy. If you keep your inventory at home, make a second copy to give to a friend or keep at the office.