1 Settlig Isurace Claims After a Disaster What you eed to kow about how to file a claim how the claim process works what s covered ad what s ot
2 First Steps Cotact your aget or compay immediately. Fid out Whether the damage is covered uder the terms of your policy how log you have to file a claim whether your claim exceeds your deductible (the amout of loss you agree to pay before isurace kicks i) how log it will take to process the claim whether you ll eed estimates for repairs Make temporary repairs Take reasoable steps to protect your property from further damage. Save receipts for what you sped ad submit them to your isurace compay for reimbursemet. Remember that paymets for temporary repairs are part of the total settlemet. So if you pay a cotractor a large sum for a temporary repair job, you may ot have eough moey for permaet repairs. Beware of cotractors who ask for a large amout of moey up frot ad cotractors whose bids are very low they might cut corers ad do shabby work. Do t make extesive permaet repairs util the claims adjuster has assessed the damage. If you eed to relocate, keep your receipts If you eed to fid other accommodatios while your home is beig repaired, keep records of your expeses. Homeowers isurace policies provide coverage for the cost of additioal livig expeses if your home is damaged by a isured disaster. Prepare for the adjuster s visits Your isurace compay may sed you a proof of loss form to complete or a adjuster may visit your home first. (A adjuster is a perso professioally traied to assess the damage.) I either case, the more iformatio you have about your damaged possessios a descriptio of the item, approximate date of purchase ad what it would cost to replace or repair the faster your claim geerally ca be settled. To substatiate your loss, prepare a ivetory of damaged or destroyed items ad give a copy to the adjuster alog with copies of ay receipts. Do t throw out damaged items util the adjuster has visited. You should also cosider photographig or videotapig the damage. If your property was destroyed or you o loger have ay records, work from memory.
3 Idetify structural damage to your home ad other structures such as a garage, tool shed or i-groud swimmig pool. Make a list of everythig you wat to show the adjuster, for example, cracks i the walls ad missig roof tiles. You should also get the electrical system checked. Most isurace compaies pay for these ispectios. Get writte bids from licesed cotractors. The bids should iclude details of the materials to be used ad prices o a lieby-lie basis. This makes adjustig the claim faster ad simpler. Keep copies of the lists ad other documets you submit to your isurace compay. Also keep copies of whatever paperwork your isurace compay gives you ad record the ames ad phoe umbers of everyoe you speak to. Flood damage is excluded uder stadard homeowers ad reters isurace policies. Flood coverage, however, is available as a separate policy from the federal govermet s Natioal Flood Isurace Program (NFIP) ad from a few private isurers. The NFIP provides coverage up to $250,000 for the structure of the home ad $100,000 for persoal possessios. Flood isurace claims should be filed with your homeowers isurace compay. Factors that Determie the Amout of Settlemet You Get Factors That Determie the Amout of Settlemet You Get Type of Policy Replacemet Cost ad Actual Cash Value: Replacemet cost policies provides you with the dollar amout eeded to replace a damaged item with oe of similar kid ad quality without deductig for depreciatio (the decrease i value due to age, wear ad tear, ad other factors). Actual cash value policies pay the amout eeded to replace the item mius depreciatio. Suppose, for example, a tree fell through the roof oto your eight-year-old washig machie. With a replacemet cost policy, the isurace compay would pay to replace the old machie with a ew oe. If you had a actual cash value policy, the compay would pay oly a part of the cost of a ew washig machie because a machie that has bee used for eight years is worth less tha its origial cost. Exteded ad Guarateed Replacemet Cost: If your home is damaged beyod repair, a typical homeowers policy will pay to replace it up to the limits of the policy. If the value of your isurace policy has kept up with icreases i local buildig costs, a similar dwellig ca geerally be built for a amout withi the policy limits.
4 With a exteded replacemet cost policy your isurer will pay a certai percetage over the limit to rebuild your home 20 percet or more, depedig o the isurer so that if buildig costs go up uexpectedly, you will have extra fuds to cover the bill. A few isurace compaies offer a guarateed replacemet cost policy that pays whatever it costs to rebuild your home as it was before the disaster. But either type of policy will pay for more expesive materials tha those that were used i the structure that was destroyed. Mobile Home, Stated Amout: If you ow a mobile home, you may have a stated amout policy. With this policy, the maximum amout you receive if your home is destroyed is the sum you agreed to whe the policy was issued. If you opt for the stated amout, update your policy aually to make sure that the amout will cover the cost of replacig your mobile home. Check with local mobile home dealers to fid out what similar homes ow sell for. Policy limits Most isurace policies provide adequate coverage because they iclude a iflatioguard clause to keep up with icreases i local buildig costs. If you have replacemet cost coverage, your isurace compay will pay the full cost of repairig or replacig the damaged structure with a buildig of like kid ad quality. I other words, if you were adequately isured ad lived i a three- bedroom rach before the disaster, your isurace compay would pay to build a similar three-bedroom rach. Most isurace compaies recommed that a dwellig be isured for 100 percet of replacemet cost so that you have eough moey to rebuild if your home is totally destroyed. You may ot be fully covered, however, if you have made sigificat improvemets o your house, such as eclosig a porch to create aother room or expadig your kitche, without iformig your isurace compay of the chages at the time. Temporary livig expeses If you ca t live i your home because of the damage, your isurace compay will advace you moey to pay for reasoable additioal livig expeses. The amout available to pay for such expeses is geerally equal to 20 percet of the isurace o your home. This amout is i additio to the moey for repairs or to rebuild your home. Some isurace compaies pay more tha 20 percet. Others limit additioal livig expeses to the amout spet durig a certai period of time. Amog the items typically covered are eatig out, ret, telephoe or utility istallatio costs i a temporary residece ad extra trasportatio costs. Isurace policies ofte discuss additioal livig expeses uder the headig loss of use.
5 Rebuildig ad makig repairs If your home was destroyed, you have several optios. You ca rebuild a ew home o the same site. Depedig o state law, you ca sell the lad ad build or buy a house i a differet place, eve aother state. You ca decide that you would rather ret. If you decide ot to rebuild, the settlemet amout depeds o state law, what the courts have said about this matter ad the kid of policy you have. Fid out from your isurace aget or compay represetative what the settlemet amout will be based o. Cocerig repairs, if you dowgrade, for example, replace a expesive wood floor with oe usig a cheaper product, you are ot etitled to the differece i cash. Other factors Compliace with curret buildig codes: Buildig codes require structures to be built to certai miimum stadards. I areas likely to be hit by hurricaes, for example, buildigs must be able to withstad high wids. If your home was damaged ad it was ot i compliace with curret local buildig codes, you may have to rebuild the damaged sectios accordig to curret codes. I some cases, complyig with the code may require a chage i desig or buildig materials ad may cost more. Geerally, homeowers isurace policies wo t pay for these extra costs, but isurace compaies offer a edorsemet that pays a specified amout toward such chages. (A edorsemet is a additio to a isurace policy that chages what the policy covers.) Iformatio cocerig this coverage is foud uder ordiace or law i the Sectio I exclusio part of your policy. The use of public adjusters: Your isurace compay provides a adjuster at o charge. You also may be cotacted by adjusters who have o relatioship with your isurace compay ad charge a fee for their services. They are kow as public adjusters. If you decide to use a public adjuster to help you i settlig your claim, this service could cost you as much as 15 percet of the total value of your settlemet. Sometimes after a disaster, the percetage that public adjusters may charge is set by the isurace departmet. If you do decide to use a public adjuster, first check refereces ad qualificatios by cotactig the Better Busiess Bureau ad your state isurace departmet (See back cover for cotact iformatio). Also cotact the Natioal Associatio of Idepedet Isurace Adjusters (www.aiia.com). Compesatio for Damage Vehicles: If your car was damaged ad you have comprehesive coverage i your auto isurace policy, cotact your auto isurace compay. If your car has bee so badly damaged that it s ot worth repairig, you will receive a check for the car s actual cash value what it would have bee worth if it had bee
6 sold just before the disaster. Kelley Blue Book (www.kbb.com) or other such publicatios ca give you a idea of what your car was worth. Trees ad shrubbery: Most isurace compaies will pay up to $500 for the removal of trees or shrubs that have falle o your home. They will also pay for damage caused to isured structures ad their cotets up to policy limits, but they wo t pay to remove trees that have falle causig a mess i your yard. Water: While homeowers policies do t cover flood damage, they cover other kids of water damage. For example, they will geerally pay for damage from rai comig through a hole i the roof or a broke widow as log as the hole was caused by a hurricae or other disaster covered by the policy. If there is water damage, check with your aget or isurace compay represetative as to whether it is covered. The Paymet Process Disasters ca make eormous demads o isurace compay persoel. Sometimes after a major disaster, state officials ask isurace compay adjusters to see everyoe who has filed a claim before a certai date. Whe there are a huge umber of claims, the deadlie may force some to make a rough first estimate. If the first evaluatio is ot complete, set up a appoitmet for a secod visit. The first check you get from your isurace compay is ofte a advace. If you re offered a o-the-spot settlemet, you ca accept the check right away. Later o, if you fid other damage, you ca reope the claim ad file for a additioal amout. Most policies require claims to be filed withi oe year from the date of the disaster. Some isurace compaies may require you to fill out ad sig a proof of loss form. This formal statemet provides details of your losses ad the amout of moey you re claimig ad acts as a legal record. Some compaies waive this requiremet after a disaster if you ve met with the adjuster, especially if your claim is ot complicated. The choice of repair firms is yours. If your home was adequately isured, you wo t 10 11
7 have to settle for aythig less tha you had before the disaster. Be sure the cotractor is givig you the same quality materials. Do t get permaet repairs doe util after the adjuster has approved the price. If you ve received bids, show them to the adjuster. If the adjuster agrees with oe of your bids, the the repair process ca begi. If the bids are too high, ask the adjuster to egotiate a better price with the cotractor. Adjusters may also recommed firms that they have worked with before. Some isurace compaies eve guaratee the work of firms they recommed, but such programs are ot available everywhere. Make sure cotactors get the proper buildig permits. If you ca t reach a agreemet with your isurace compay: If you ad the isurer s adjuster ca t agree o a settlemet amout, cotact your aget or your isurace compay s claims departmet maager. Make sure you have figures to back up your claim for more moey. If you ad your isurace compay still disagree, your policy allows for a idepedet appraisal of the loss. I this case, both you ad your isurace compay hire idepedet appraisers who choose a mediator. The decisio of ay two of these three people is bidig. You ad your isurace compay each pay for your appraiser ad share the other costs. However, disputes rarely get to this stage. Some isurace compaies may offer a slightly differet way of settlig a dispute called arbitratio. Whe settlemet differeces are arbitrated, a eutral arbiter hears the argumets of both sides ad the makes a fial decisio. How you receive the moey: Whe both the dwellig ad the cotets of your home are damaged, you geerally get two separate checks from your isurace compay. If your home is mortgaged, the check for home repairs will geerally be made out to you ad the mortgage leder. As a coditio of gratig a mortgage, leders usually require that they are amed i the homeowers policy ad that they are a party to ay isurace paymets related to the structure. The leder gets equal rights to the isurace check to esure that the ecessary repairs are made to the property i which it has a sigificat fiacial iterest. This meas that the mortgage compay or bak will have to edorse the check. Leders geerally put the moey i a escrow accout ad pay for the repairs as the work is completed. You should show the mortgage leder your cotractor s bid ad say how much the cotractor wats up frot to start the job. Your mortgage compay may wat to ispect the fiished job before releasig the fuds for paymet. If you do t get a separate check from your isurace compay for the cotets of your home ad other expeses, the leder should release the isurace paymets that do t relate to the dwellig. It should also release fuds that exceed the balace of the mortgage. State bak regulators ofte publish guidelies for baks to follow after a major disaster. Cotact state regulatory offices to fid out what these guidelies are
8 Some costructio firms wat you to sig a directio to pay form that allows your isurace compay to pay the firm directly. The firm the will bill your isurace compay directly ad attach the form you siged. Make certai that you re completely satisfied with the repair work ad that the job has bee completed before sigig ay forms. If you have a replacemet cost policy for your persoal possessios, you ormally eed to replace the damaged items before your isurace compay will pay. If you decide ot to replace some items, you will be paid their actual cash value. Your isurace compay will geerally allow you several moths from the date of the cash value paymet to replace the items ad collect full replacemet cost. Fid out how may moths you are allowed. Some isurace compaies supply lists of vedors that ca help replace your property. Some compaies may supply some replacemet items themselves. Importat Phoe Numbers After your claim has bee settled ad the repair work is uderway: Take the time to re-evaluate your homeowers isurace coverage. For example, was your home adequately isured? Did you have replacemet cost coverage for your persoal property? Talk to your isurace aget or compay represetative about possible chages. Cosider takig a home ivetory to make the claims process easier i the future. The Isurace Iformatio Istitute offers free dowloadable home ivetory software at
9 State Isurace Departmets AK AL AR isurace.arkasas.gov AZ CA CO CT DC DE FL GA HI hawaii.gov/dcca/areas/is IA IL IN ID KS KY doi.ppr.ky.gov/ketucky LA MA MD ME MI MN MO isurace.mo.gov MS MT sao.mt.gov/isurace/idex.asp NC ND NE NH NJ NM NV doi.state.v.us NY OH OK OR PA PR RI SC SD TN TX UT VA VT WA WI WV WY isurace.state.wy.us 110 William Street NY, NY