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Disaster-proof your home cost-effectively
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It pays to shop around. Some insurance discounts are mandated by law, and others are company incentives.

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Some projects pay for themselves quickly. Kevin Simmons, an associate professor of economics at Austin College in Sherman, Texas, studies the costs and benefits of disaster mitigation. He also lives in a town where damaging hailstorms are frequent unwanted visitors.

When he bought his house, the roof was hail-damaged. Instead of reroofing with regular shingles, he shelled out about $1,500 more for flexible hail-resistant shingles. He says his insurance company reduced the premium by $500 a year. "That's a no-brainer," Simmons says -- the more-expensive shingles paid for themselves in three years.

Judging cost-effectiveness
That's rare. Some expensive projects have no chance of paying for themselves in the time that the homeowner intends to live in the house. It's worthwhile to ask whether such upgrades increase the value of the house, and if so, by how much.

Simmons tackled one such question a few years ago on behalf of a town on a barrier island on Florida's Gulf coast. (His clients asked him not to identify the town.) He and his associates researched sales records to determine whether having built-in metal storm shutters increased a home's value. Fewer than 30 percent of homes in the town had shutters.

"We found that homes with storm shutters sold at a premium of about 5 or 6 percent," Simmons says.

That was on the barrier island, though. A short distance away, on the mainland, homes with shutters didn't sell for a significant premium. Buyers perceive, Simmons says, houses on barrier islands are more vulnerable than houses on the mainland.

The most cost-effective home improvements -- in terms of raising a home's value -- are those that make the house look better. Most disaster retrofitting projects, such as bolting a wood-frame house to its foundation to resist earthquakes, or installing brackets to hold storm shutters, are invisible, ugly or, at best, utilitarian looking. Don't expect to recoup the cost of a disaster-mitigation project when you sell the house.

Get objective, experienced advice
A real estate agent with years of experience selling houses in your neighborhood can offer an opinion about the effects of disaster retrofitting on resale price. Or hire a property appraiser to make an estimate. Ask a seasoned professional who knows your neighborhood well. Don't seek the contractor's opinion about the effect of his work on your home's value. That's like asking a barber if you need a haircut.

Even if a project doesn't pay for itself in lower insurance bills and increased resale value, it might be worthwhile if the upgrade makes you feel better. It feels satisfying to know that your shutters and roof can handle a strong hurricane; that the water heater is strapped to the wall studs so an earthquake won't rip it from the pipes, flooding the house with water and natural gas; that you have wildfire-resistant landscaping and soffits and eaves.

On the other side of a disaster, there's no feeling of misery like being displaced from your place of comfort. It's depressing to have to move out of your home while it's getting rebuilt, or to have to live in disarray while repairs are being made. No one can set a price on that but you and your family.

Bankrate.com's corrections policy -- Posted: August 29, 2005
 
 
More stories by Holden Lewis
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