Last Updated Oct 6, 2016 2:45 PM EDT
There are many ways in which Hurricane Matthew, now barreling toward the Florida, Georgia and South and North Carolina coasts, can ruin people’s lives.
Flooding is one of the biggest, especially since most homeowners don’t carry this type of coverage. And, for those without it, this could prove to be disastrous.
Global property analytics firm CoreLogic estimates that nearly two million homes in these four states are “at risk” if Matthew remains a Category 4 storm.
Figures for the anticipated damage caused by Matthew, which could pack a probable 145-mile-per-hour punch when it makes landfall in Florida and rolls up the coast, vary as wildly as the winds themselves. Estimates ranging from $5 billion to $15 billion have been bandied about. And uncovered homeowners could wind up bearing the brunt of that.
A poll by the Insurance Information Institute (III), which monitors the property insurance industry, showed that only 12 percent of Americans had a flood insurance policy in 2016, down from 14 percent in 2015. The percentage of policyholders this year was highest in the South, but still only 14 percent.
It’s too late now to purchase such a policy that could have provided $250,000 for the structure of a home and $100,000 for personal possessions. There’s a 30-day “prior requirement” before the storm to get it, said spokesperson Loretta Worters of the III.
Flood insurance is only one issue. Floridians have been encouraged by insurers and the state to “harden their homes” against wind damage by securing the roof to the walls and installing impact-resistant shutters. In some instances, insurers and state agencies are even willing to reimburse for these fixes.
“This will be a test of whether Floridians used the past 11 years to mitigate damage from storms,” said Lynne McChristian, who represents the III in Florida. She warned particularly about trees located next to homes. “They don’t live forever, and the weak are grounded by the winds.”
Residents trying to buy coverage to protect their homes from wind damage are now also out of luck. “Florida insurance companies are permitted to suspend the binding (the process of securing coverage) a few days prior to the approaching storm and continue to disallow coverage to be secured until a few days after the storm has passed,” said Worters.
Worters pointed out that there are “no set rules,” and while one company may limit coverage beginning five days out, another could allow buyers to obtain coverage within three days of a storm.
But here’s one wrinkle: if you were closing on your house before Hurricane Matthew came ashore, check with your insurance agent to see if your application for coverage was completed. In this case, you may still get coverage, Worters said.
Travelers who were headed toward Florida or the other affected states, could still have time to act. Like flood and property insurance, you can no longer buy travel insurance to cover Hurricane Matthew.
But if you had a policy in place before the storm was “named,” you may be able to cancel your trip, be covered for missing a portion of it, and have meals and hotels paid for because of any delay, said spokesperson Rachael Taft of SquareMouth, an online comparison shopping site for travel insurance.
“Look under the Hurricane & Weather benefit in most cancellation policies,” Taft said.
Your insurance may also provide for additional transportation to catch up with your cruise or tour if it passed through a hurricane-affected area like Miami.
And a “cancel for any reason” policy would allow you to cancel the trip even without that hurricane clause. But you would have to do so at least two to three days before your departure and you’d only get back 75 percent of your trip cost, said Taft.
In addition to homes and travel, businesses such as Disney World in Orlando, Florida are closing to avoid damage and protect patrons. Business interruption insurance kicks in to provide coverage for lost revenue, rent and utility costs and the cost of operating from a temporary location. An estimated 25 percent of all businesses hit by catastrophes like Hurricane Mathew go out of business within a year, said the III.
Disney World, with its massive size, is not likely to be one of them, however. And a business must have direct physical damage in order to claim this benefit.
When the hurricane is over and you’ve returned home, it’s important to provide “prompt notice” to your insurance carrier about any damage that you have sustained, said Christopher Loeber, a partner in the Lowenstein Sandler law firm, who litigates claims for policyholders against insurers.
“Damage and memories can both fade over time,” he warned, “and insurers require you to notify them as soon as practicable.”
Another unpleasant prospect: if you don’t have flood insurance, but do have wind coverage, you and your insurer will have to figure out what damaged or destroyed your home. Try to resolve this before it becomes contentious, as it did for many Louisiana and Mississippi residents after the 2005 Hurricane Katrina.