In Sandy's wake: Tips on homeowner's insurance
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Some homeowners who haven't read their insurance policies closely might be in for an unpleasant surprise when they file claims for damage from Sandy.
Since the 1990s, most homeowner policies have included hurricane deductibles typically equal to 2 to 5 percent of an insured home's coverage, said broker Thomas Crowley of Maran Corporate Risk Associates in Southampton. That's in addition to the basic $1,000 deductible in most policies, he said.
Hurricane deductibles usually are triggered by a category 1, 2 or 3 hurricane, depending on the policy. Typically, the trigger is based on the storm's official classification at some time or geographical point before it hits land, so that the deductible might be triggered even if the storm wasn't a hurricane when it came ashore. "Everybody has different language in the triggering clause," Crowley said. Weather forecasters called Sandy a "post-tropical cyclone" when it hit Atlantic City Monday, but it was a category 1 hurricane before that.
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Further, most policies don't cover flooding from a tidal surge or an accumulation of rainwater in the ground; separate flood insurance must be purchased for that, usually underwritten by the federal government. But a flooded basement with rainwater from a breach in the roof or wall, a broken window or a burst pipe would be covered. Except for things like the furnace or air conditioning unit, damaged items in the basement usually are not covered, he said.
Crowley says homeowner policies usually don't cover removal of a tree that falls harmlessly into the backyard, but do if it hits the house, a fence, a shed, a pool or the driveway. If the tree hits a neighbor's house, the neighbor's insurance company must cover it, although it might later seek reimbursement from the tree owner's insurance company.The Consumer Federation of America notes also that most policies won't cover spoilage of food due to power failures./
For the damaged contents of a home, some policies provide replacement cost while others reimburse the "actual cash value" with deductions for age, wear and tear, notes the Manhattan-based Insurance Information Institute.
Homeowners are permitted before an adjuster's visit to check into a hotel if the house is unliveable, but, Crowley warns, hotel expenses are reimbursable only if there is a covered loss to your structure. Normally, a simple power outage is not a covered loss.
"The best thing people can do if something occurs is to call their broker and ask if it's a covered loss," Crowley said.