Hurricanes, historic winter storms, tornadoes and more have all wreaked heavy damage in the past year, and the trend towards more and stronger storms is expected to continue.
A study released in February 2023 by First Street Foundation, a nonprofit that analyzes climate risk, indicates that the risk of hurricane damage is pushing further north and further inland than ever before.
The difficulties of increasing storm damage are worsened in some areas by insurance companies closing their doors. Both Florida and Louisiana have seen issues with insurance companies leaving the state or going out of business,
“Most (insurance) companies are already covered this year with reinsurance for catastrophic events, so they’re good through the summer of (2023),” says Danny Sands, owner of Brightway Insurance, based in Jacksonville, Fla. “But if a company is struggling, when it comes time to re-up their reinsurance, we could see more companies being pushed out of business.”
What does that mean for homeowners, and how should you proceed with filing a home insurance claim if a natural disaster damaged your home? Fortunately, your homeowners insurance should cover your claim.
With so much damage, you should expect a lengthy claim process. Here’s what you need to know to get the process started.
- Contact your insurance provider as soon as possible to start the claims process.
- Providers usually establish toll-free numbers for disasters and set up mobile claims centers.
- Be on guard against the shady contractors who inevitably emerge to take advantage of people when they are most vulnerable.
First steps: What should you do if a natural disaster impacts your home?
After taking a moment to breathe and ensure your loved ones are as safe, it’s important to take the first steps to begin recovery. Not sure where to begin? Start by picking up the phone.
“The first step toward recovery is filing your insurance claim and getting the claims process started,” says Logan McFaddin, vice president of state government relations for the American Property Casualty Insurance Association (APCIA), based in Tallahassee, Fla.
- If possible, have your policy number ready to expedite the process.
- Photograph or videotape the damage to share with your insurer and keep a copy for your records.
- Determine what is covered under the terms of your policy and how long you have to file a claim. Most policies require claims to be filed within one year from the date of the disaster, according to the Insurance Information Institute (III).
- Find out your deductible and whether you’ll need estimates for repairs.
What if you can’t reach your insurance company?
It may be entirely possible that in the wake of a hurricane or other major storm, your area may be without cell or internet service, and it is simply not possible to reach your insurer.
In such a case, keep detailed records of all damage incurred.
- Keep track of all lost or damaged property, and take photos of the damage where possible.
- Keep notes about your inability to reach the insurance company, when service was restored, and the action you took. The information may be unnecessary, but it could prove useful if any disagreements must be resolved in court.
When a disaster like a hurricane is predicted, many insurance companies will reach out prior to the event to provide contact information, such as toll-free numbers, where mobile emergency units will be located, and the best ways to contact them.
Sands with Brightway says many of his clients received emails from their providers with such contact information before Ian hit. Providers will staff up to prepare for the ensuing calls. “Even so, you have to keep in mind that in such events, there is likely to be more damage than there are adjusters,” he says.
After contacting your insurance provider, what’s next?
You should take reasonable steps to protect your property from further damage at this stage. Your policy requires you to do so and will reimburse you for reasonable costs.
- Make temporary repairs if it is safe to do so. If there are holes in your roof or broken windows, cover them as quickly as possible to prevent further damage.
- Save receipts for any materials purchased to handle repairs. Reimbursement will be part of your claim.
- Don’t throw away damaged items until an adjuster visits your home. Once you have reached an adjuster, they may provide you with virtual means, such as submitting photos or videos electronically, to keep the process as efficient as possible.
Be on guard against shady contractors
Homeowners are at their most vulnerable in the wake of a disaster; unfortunately, there are always those looking to capitalize.
McFaddin with the APCIA says to beware of contractors who ask for large amounts of money upfront or whose bids seem surprisingly low.
“Before signing any contracts for repair work, talk to your insurer first to make sure the damage is covered and then find a licensed, reputable contractor to do the work,” she adds.
What can you expect to be covered?
A homeowners policy will cover your home, any other structures on the property, and your belongings. Your policy has a replacement cost amount listed for the home, but there are different coverage levels depending on the policy type.
Ultimately, the coverage you can expect from your provider will depend on your policy type. A guaranteed replacement cost policy will cover rebuilding your home, regardless of the cost.
On the other hand, extended replacement cost policies pay a stated amount over the policy limit, often 25% or more. If building costs are higher than expected (as they often are following disasters), you will have extra funds to cover the bill.
Actual cash value means the claim is paid using a replacement cost minus depreciation calculation. If, for example, your eight-year-old washing machine is damaged beyond repair, an actual cash value policy would only pay a part of the replacement value because it has eight years of wear and tear.
Most homeowners policies cover the dwelling at replacement cost and personal property at actual cash value.
What else does homeowners insurance cover?
Other expenses to talk to your adjuster about may include:
- Temporary living expenses. If you can’t live in your home because of the damage, your provider will pay for reasonable additional living expenses. Among items typically covered are, eating out, hotels, services (such as phone, utilities), and extra transportation costs.
- Compensation for collateral damage. If your vehicle is damaged, this will most likely be covered by your auto insurance policy. If trees or shrubs or outlying buildings have been damaged, you will have some coverage. Discuss this with your adjuster.
- Water damage. Most policies don’t cover flood damage; however, rain coming through a hole in the roof or a broken window caused by a storm is covered.
You must file a separate claim for flood damage if you have flood insurance. In addition, if there has been a Presidential Disaster Declaration, additional disaster assistance will be available through FEMA.
Apply for assistance and file claims as soon as possible, as the overwhelming need after a disaster creates backlogs and slows the process.
Sources:
- Insurance Information Institute: Settling insurance claims after a disaster
- First Street Foundation. "Highlights from 'Worsening Winds'". Accessed February 2023.