preparedness in terms of battening down, marshalling emergency supplies, tuning into a special radio frequency and so forth in the event of a big blow.

But, as those who learned a bitter lesson from past storms and tornadoes know, insurance coverage is also an important part of being prepared.

"If disaster strikes and you don't have insurance, how are you going to pay for repairing the damage?'' insurance executive Mr. Roy Fellows asked.

Since such damage can run into many thousands of dollars, he makes a good point.

Before considering what types of insurance to have, however, it is first necessary to understand what insurance is.

"Insurance is a promise by a company to pay a certain amount to the policyholder in the event of something happening, subject to the terms and conditions of the policy,'' is how Mr. Fellows describes it. "Insurance is invaluable. It protects your assets and allows you to sleep at night.'' The three principal forms of insurance householders should consider are: Buildings Contents All Risks Of course, there may be variances in insurance policies offered by different companies, but generally speaking the above policies cover: Buildings: Loss of or damage to the home caused by fire, lightning, explosion, earthquake, riot and civil commotion, impact (except from a cause arising inside the home), and theft or attempted theft (except where the home is unoccupied -- which, in insurance terms, means insufficiently furnished for full occupation, or vacated and unoccupied for 30 consecutive days), storm or flood, malicious acts, escape of water or oil, damage to or bursting of any plumbing.

Contents: Loss of or damage to contents in the home caused by: fire, lightning, explosion, earthquake, riot and civil commotion, impact, theft or attempted theft, storm or flood, malicious acts, escape of water or oil.

All Risks: Generally, this covers accidental loss of or damage to valuables, unspecified articles and other items named in the policy, both inside and outside the home, and can be offered both in Bermuda and worldwide.

Coverage is usually very broad in an All Risks policy, but certain items, such as contact lenses, sports equipment whilst in use, and damage caused by various methods, including domestic pets, wear and tear, fungus, woodworm, and mechanical or electrical breakdown, are excluded.

Since an insurance policy is a contract between yourself and the company, it is important that you discuss with an insurance representative what type of coverage is appropriate to your needs, and also fully understand the terms of any policy you take out.

Fortunately, some insurance companies have recognised the need to state a policy's terms and conditions in simple, layman's terms, and even publish an easily-understood insurance guide for homeowners. Whatever your policy, you must make sure you read and understand all of its terms and conditions.

For people who don't read or understand their insurance policies, there can be some nasty shocks in store when disaster strikes. For instance, one popular misconception is that if the insurance coverage is for $10,000, that's how much a person can claim back from the insurance company. Not so.

"If you are 50 percent under-insured, any claim can be reduced by 50 percent, which is a standard insurance principle known as average,'' Mr. Fellows explained.

Which means, for example, that if your home is insured for $100,000 but is worth $200,000, that is 50 percent of its value. So if you make a claim for $10,000, the insurance company may only settle for $5,000 (50 percent).

So how do you know how much to insure your property or belongings for? In the case of homes, insurance companies will send a representative to your house to measure and calculate its replacement value free of charge.

In arriving at a proper assessment figure for insurance purposes, many things must be taken into consideration, such as pools, garages and out buildings, garden walls, terraces, and whether it is a one- or two-storey dwelling. So it is wise to seek professional advice, either from an insurance company representative or a professional surveyor.

"Guesstimates'' on property are not accepted by insurers. It is also important to remember that the sum insured should be for the replacement value of a home, not its present value.

"Today, the average Bermuda home's replacement value is approximately $145 a square foot, but you may find variations of this between insurers,'' Mr.

Fellows noted.

He also pointed out that final responsibility for adequate insurance rests with the owner, not the company.

"Responsibility for having adequate insurance on a home and contents lies with the policyholder, although the company can suggest the appropriate sum as a guideline,'' Mr. Fellows said.

In addition to regular home and contents policies, homeowners should ask about beneficial options, such as index-linking and new for old.

Index-linked means that, in the case of home, contents and all risks policies, the sum for which you are insured will be adjusted monthly by the insurance company according to Government's Retail Price index. The purpose is to protect you against inflation. At each renewal the premium will be based on the adjusted sums insured, but remember: the sums insured must be correct to start with, otherwise you will still be under-insured despite index linking.

New for old is an option whereby, in settling a claim, the insurance company will allow a new item to replace the old, without taking into consideration such things as wear and tear on the value of the old item.

"In other words, if you had a five-year-old settee which was badly damaged, we would get you a new settee, whereas if you had an indemnity policy we would take wear and tear into consideration and the company would reimburse you for the value of the old settee,'' Mr. Fellows explained.

Of course, some policy options incur an extra premium, so before making a final decision be sure to discuss them with your insurance representative. You might also comparison shop between companies to get what is the best coverage for you.

"But remember, cheap insurance is not always the best insurance,'' Mr.

Fellows warned.

Also be aware of deductibles, which come in two forms -- voluntary and compulsory, which may apply to each and every loss. Both can be identified in your policy.

With regard to the contents of a home, valuable items such as gold, silver, furs, antiques, porcelain collections, works of art, stamps or coins should be listed separately to general contents. Discuss the correct procedure with an insurance representative.

Just as insurance companies have certain obligations in respect of a policy, so too do policy holders. Be sure to find out what terms and conditions you must fulfil in order for the policy to be valid.

In the event of a claim, for example, the insurance company and sometimes the Police must be notified straight away. Written claims must be filed within a specific period of time.

After initial notification of damage, the insurance company will send its representative as quickly as possible to inspect and assess the damage in respect of your claim. Meanwhile, you are expected to effect temporary measures to minimise further damage -- e.g. putting tarpaulins over a missing roof to protect the ceilings and interior of a dwelling.

Once inspection is complete, you will be required to obtain and submit to the insurance company a written estimate for repairs before work proceeds. Ask the company how many estimates they require -- if the repair is extensive, more than one may be requested -- and when work can begin.

You must also understand how far the insurance company will go in replacing your damaged property before you begin repairs. For example, if wooden floors were destroyed and you want to replace them with marble floors, you will have to pay the difference between the cost of wooden and marble floors.

And what if you say "I can't afford the premiums on insurance?'' According to Mr. Fellows, most companies will try to work out a comfortable arrangement with the client, because the reality today is that people cannot afford not to be insured.

ARE YOU INSURED? -- Devastation such as this can spell financial ruin without insurance. With the 1992 hurricane season now five days old, it's time to think seriously about insurance before disaster strikes.