As Hurricane Matthew leaves the East Coast, the next storm will be a blizzard of up to $7.5 billion in insurance claims for wind damage from homeowners, according to the Consumer Federation of America (CFA).
The CFA has been keeping a wary eye on the insurance industry for a generation, and has this advice. “Be vigilant,” warned its Insurance Director J. Robert Hunter, “or you run the real risk of being shortchanged.”
Flood damage, which is covered by the federal government’s flood insurance program, must be purchased separately. But the CFA expects most of the 100,000 insurance claims that could be filed will be for the that Hurricane Matthew brought ashore in places like Cape Canaveral, Florida.
In some instances, policyholders may be surprised to learn that the roof that blew off or the windows that shattered may be their responsibility and not their insurer’s.
“Families will have to dig deeper into their pockets because insurers have been steadily increasing hurricane wind coverage deductibles and imposing other policy limitations,” said Hunter. “This liability shift to consumers may take some by surprise, since disclosures are often buried in renewal paperwork that consumers may not understand or even read.”
The CFA offered the following advice from past experience – and the mistakes policyholders made after 2005’s Hurricane Katrina and 2012’s Superstorm Sandy:
1. File your claim as promptly as possible, since insurance companies generally handle them on a first come, first serve basis.
2. Once your claim is reported, make sure to get your claim number and write it down. The easiest way for your insurance company’s claims department to locate your file is by your claim number.
3. Retain any receipts for expenditures related to immediate repairs made to secure your home, or living expenses such as hotels and meals if you could not return to your home in the wake of the storm. This could be reimbursable under the “Additional Living Expense” portion of your homeowners’ policy.
4. When your insurance company sends out an adjuster to survey the damage, ask if he or she is an employee of your insurance company, or an independent adjuster hired by them. If it is an independent adjuster, ask if they are authorized to make claim decisions and payments on behalf of your insurance company and try to secure the name of the in-house company adjuster to whom the independent adjuster is sending your information.
5. Many insurance companies have repair programs where they offer to send out one of their approved contractors to estimate your property damage. If you do obtain an estimate from their contractor you’re under no obligation to use them.
Your insurance company may encourage their use, since it is to their advantage. Contractors that participate in these programs have likely agreed to unit repair costs dictated by your insurance company or one of their vendors. These unit repair costs are provided to insurance companies by software vendors and are averages by geographic region that may or may not fully compensate you for your loss. Remember that your claim is unique and should always be treated as such by your insurance company.
6. Maintain good records. When you file a claim, you should immediately start a notebook documenting all contacts with your insurer. List the date, time and brief description of the exchange. If you need to complain later, this information will be vital (see below). If an adjuster says he or she will come and does not, write it down; if an adjuster is rude, write that down.
Find your inventory of possessions or immediately begin to list your possessions. If you took pictures of your possessions before the storm retrieve them from your safe place. If you don’t have any such pictures when filing your claim, remember that your family likely has pictures of rooms in your house (for example, holiday celebrations) that would be helpful in recreating a list of your belongings.
7. Obtain a repair estimate from a trusted local contractor to use as a guide when talking with the adjuster.
8. You may be entitled to money up-front for living expenses, such as hotel costs, if your home is deemed uninhabitable. Insurers are usually very good about initial payments. Problems with claims usually happen later on when bigger payments are sought.
9. If you and your insurer can’t agree on how much your loss is worth, don’t hesitate to file your claim. If it’s denied or the offer is too low, demand the reasons for your insurer’s decision. Once you know the reasons, your insurer is locked in and can’t change its story.
10. Before talking to a lawyer, go up the ladder. Ask to speak to higher management at your insurance company. Then complain to your state department of insurance, which will contact the insurer on your behalf. If you have a legitimate case and go to court, hold out, as you’re likely to wind up winning.
“Courts consistently rule that if an insurance policy is ambiguous, the reasonable expectation of the insured party will prevail, since the consumer played no part in writing the language of the insurance policy,” said the CFA.