The aftermath of recent hurricanes will unfold for months to come. Unfortunately, natural disasters have a way of reminding us how important some of the more humdrum aspects of our financial lives can be, like the details of property and casualty insurance coverage.
The best time to acquaint yourself with the terms of your insurance policies is not in the aftermath of a severe event but rather before it occurs. Unfortunately, many victims of a flood learn quickly that a standard homeowner’s policy covers structural and water damage only in limited circumstances, such as when a falling tree knocks a hole in a roof or breaks a window, allowing rain to fall inside.
Most policies do not cover damage that results from rising water, unless the homeowner lives in a designated flood zone and has purchased insurance through the federal government’s National Flood Insurance Program. (To make a claim through FEMA, go to fema.gov/nfip-file-your-claim.)
For those who do not have flood insurance, the government is likely to step in with a safety net. Check with DisasterAssistance.gov to learn the details as they are announced. In the meantime, take a set of photos before you move anything. Then make a list of damaged or lost items, including their date of purchase and value, and gather receipts if possible. Report the claim as quickly as possible — insurance companies respond on a first-come, first-served basis. Once you have reported the claim, be sure to get your claim number and write it down.
Don’t make permanent repairs until the insurance company has inspected the property, and you have agreed on the cost of repairs. Do inform the insurance company if you need to make temporary repairs to prevent further damage to your property.
You will then meet with the insurance company’s adjuster, who will survey the damage. In some cases, this person is an employee of the insurance company; however, with a flood the size of the one in Texas from Hurricane Harvey, there are likely to be plenty of independent adjusters, known in the business as IAs, on the scene.
The Consumer Federation of America, or CFA, recommends that you “ask if they [the adjusters] are authorized to make claim decisions and payments on behalf of your insurance company, and ask for the name of the in-house company adjuster to whom the IA is sending your information.”
Remember that all settlement offers from insurance companies can be negotiated, so don’t go nuts when you first review the adjuster’s written assessment of the damage, and refrain from cashing or depositing the insurance company’s check until you review the full report and agree with all items and costs.
Adjusters should account for regional differences in the cost of materials and contractors, but if they don’t, make a case for a higher amount. Some red flags include omissions of damaged items, partial or incomplete measurements and lowball estimates of contractors’ costs.
If you see a problem, return the first check and request that the adjuster revise the report; then request a check from the insurance company for the correct cost of the damage. CFA also notes that you may choose to talk to an insurance company’s approved contractor to estimate your property damage, “but you are not under any obligation to use them.” If you hire your own, be sure to secure references and evidence of insurance.
The process can be lengthy, so be sure to create a paper trail. In addition to calling, register all complaints in writing — the more specific, the better. If problems persist, contact your state’s insurance commissioner. Keep working the process; it can take patience and persistence, but ultimately, you have to be your own advocate.