D. Marie How to file an insurance claim if your home was damaged by a storm
As the response to Hurricane Matthew shifts from preparation and rescue to recovery, tallying up the insurance damage — and who will pay for it — is a concern for many homeowners.
CoreLogic, an Irvine, Calif., real-estate research firm, estimates that about $4.5 billion in residential insurance claims will be filed as a result of Hurricane Matthew, with 90% of claims resulting from wind damage and 10% from flooding and storm surges. By comparison, nearly three-quarters (70%) of the $40 billion in insured damage in 2005’s Hurricane Katrina came from flooding. About 100,000 homeowners are expected to file claims worth $7.5 billion, according to the Consumer Federation of America, a Washington, D.C.-based advocacy group.
Still, while homeowners insurance is often a straightforward affair, flood insurance is much more complicated, because the flood insurance program is managed by the federal government, Typically, filing and processing flood claims take much longer than your average homeowners insurance claim because of the complexity and size of the claim, says Terry Black, vice president of claims for Aon National Flood Services in Lakeside, Montana.
Black expects 18,000 to 20,000 homeowners to claim damages for flooding, with homeowners expecting to claim $35,000 in damages on an individual home basis. All told, flood damages in Florida, the Carolinas, Georgia and Virginia may still top more than $1 billion, Black said.
Here are some important considerations for both standard homeowners insurance and flood insurance.
THE MORNING REPORT
Start your workday the right way with the news that matters most.
Your information is 100% secure with us and will never be shared Disclaimer & Privacy Policy
Document everything and keep records
Before the storm, take photos of your home and possessions. This will help you prove what you had and its condition after it’s been damaged.
When you file a claim, you should immediately start a notebook documenting contacts with your insurance company, says the Consumer Federation of America. List the date, time and a brief description of the exchange. If you need to complain later, this information will be vital. If an adjuster says he or she will come and does not, write it down, the CFA recommends. If an adjuster is rude, write it down, as well.
Get out your inventory of possessions or try to list your possessions. If you later realize you have no pictures when you file a claim, don’t forget that your family likely has pictures of rooms in your house (for example, from holidays or other celebrations) that can be helpful in re-creating a list of your belongings, the CFA said.
The CFA recommends getting a repair estimate from a trusted local contractor to use as a guide in talking with the adjuster. Keep receipts from emergency repairs and any costs you incur in temporary housing. This may be reimbursable under the “Additional Living Expense” portion of your homeowners policy. You may be entitled to money upfront for living expenses, such as hotel costs, if your home becomes uninhabitable.
Most claims problems, if they arise, come later, when bigger payments are sought, and especially when it comes to rebuilding your home. Many insurers will write out checks that must be co-signed by the mortgage holder, (i.e., the bank or loan servicer) they will likely require detailed estimates and proof that the repair was done, all of which means getting your insurance claim money could take weeks or even months.
You can clean up before the adjuster arrives
When it comes to flooding, it’s OK to begin to clean up before an adjuster arrives, says Aon’s Black. “Our advice is to clean up immediately to mitigate further damage. Make sure to take photos and document your actions,” he said. You should begin by removing wet contents, and sort the salvageable possessions from the non-salvageable. Then start drying out the house, running fans, and renting a dehumidifier to prevent mold from building up. You should also rip up carpets that can’t be dried, or knocking out drywall Take photos of everything, make a list of everything — including model numbers, serial numbers, Black recommends.
Know your coverage limitations and be aware of premium hikes even if you didn’t file a claim
It may come as a shock to find out that while your homeowner rates may not have changed year to year, your deductible has increased or limitations added, or both.
“This liability shift to consumers may take some by surprise, since disclosures are often buried in renewal paperwork that consumers may not understand or even read,” said J. Robert Hunter, director of insurance for CFA who’s also served as the insurance commissioner of Texas and the administrator of the National Flood Insurance Program.
For example, Hunter points out the introduction of percentage deductibles (up to 10 % of the value of a home) could shift much of the cost of Hurricane Matthew from insurance companies to insurance consumers in the form of higher deductibles, compared with earlier storms.
Hunter warns of another restriction where there is a limit on replacement cost payments, which might come into play in the event that a home is totally destroyed. A typical cap, Hunter said, is 20 % above the face value of the policy.
For example, if a home would cost $200,000 to replace and that amount was the limit on the policy, the insurance company would pay no more than 20% more, or $240,000, Hunter said . If the surge in construction costs due to extreme demand caused the price of replacing the home to jump to $300,000, the homeowner could be short $60,000 , Hunter warned.
”If costs surge because of the spike in demand in materials or labor from a major storm like Hurricane Matthew or if the state does not monitor price gouging sufficiently, this limit might apply,” he said.
In addition, Hunter warns that some insurers use what is called an “anti-concurrent-causation” clause in their policies that, insurers allege, removes coverage for wind damage if a flood happens at about the same time. Check your policy carefully, Hunter said, and consult an attorney if necessary as courts tend to look favorably toward policyholders on ambiguous insurer-written language.
In addition, the CFA is urging homeowners to keep an eye out in the coming weeks and months for what it said were unnecessary rate increases post Hurricane Matthew. “There is no reason for insurers to raise rates or cut back coverage due to Hurricane Matthew, which is a storm well within the projections underlying insurers’ current rate schedules,” said Hunter. “Insurers have already raised prices and cut back coverage along the east coast and no further price or coverage action is called for,” he said.
Don’t be afraid to file a claim (or a supplemental claim) either
“You have paid your premium and are entitled to coverage,” said Hunter. “If you have a legitimate claim, do not hesitate to file it.” Filing a claim shouldn’t raise your individual rates, or provoke an insurer not to renew coverage, said Hunter. Hunter noted that after Hurricane Andrew in 1992, Florida homeowners were able to prevent insurers from increasing rates or withdrawing coverage by pressuring state insurance regulators and elected officials who succeeded in passing a moratorium on non-renewals. “Consumers should fight any attempt to use hurricane claims as an excuse not to renew homeowners’ policies or sharply raise home insurance rates and should complain to state regulators if insurers do take such actions,” Hunter said.
When it comes to flood loss claims, be prepared to hurry up and wait
Aon’s Black says that 45 to 60 days is typically when you should expect to have your final check from flood losses. Once you’ve signed what’s known as a proof-of-loss, you should have a check within 10 days of it being filed with the company, he says. Black says homeowners can also file a supplemental claim if the proof-of-loss is over the 60-day deadline or over the deadline of any extension that FEMA has granted, the insurance company or its service provider can request that FEMA waive the deadline on the signed proof of loss due to newly discovered damage or higher replacement cost or repair prices ,
If you don’t have flood insurance, get it now (and you might already be required to have it)
Flood insurance is separate from homeowners insurance (though it is often administered by the same company), and if you live in a designated high-risk flood area it’s required for homeowners with a mortgage that’s backed by Fannie Mae FNMA, -3.78% or Freddie Mac. FMCC, -4.60% The government defines “high-risk” as a 1 in 4 chance of a major flood during the period of a 30 year mortgage. Flood insurance takes 30 days to take effect, so you can’t buy it and expect be covered the same day. Depending on the policy or the premium, flood insurance covers up to $250,000 in damages to the home, and $100,000 in damages to contents. In addition, homeowners can get up to $1,000 in expenses reimbursed for mitigation measures taken when flooding is imminent, such as sandbagging, or buying or renting water sump pumps.
Flood insurance, on average, costs about $700 a year in premiums, according to the National Flood Insurance Program. In addition, like your first year’s home insurance premiums that have to be paid in advance for the loan to close, flood insurance premiums must be paid up front as well. Black also recommends homeowners look into flood insurance for some low-risk neighborhoods, as even accidents such as a neighbor’s above-ground swimming pool collapsing or a water main break could be covered.
You can find out your flood risk, and what a policy costs, at Aon’s FloodTools site floodtools.com Often there are local discounts for community flood mitigation efforts, along with those you make in your own home, such as adding vents to allow water to flow through a basement and not back up into the living areas, or raising the house so it’s above expected flood levels.
Published at Fri, 14 Oct 2016 21:06:38 +0000
