Know Your Insurance Rights

It's now been two weeks since Hurricane Katrina savaged the country's Gulf Coast. While some still struggle just to survive, many residents have begun the arduous task of accounting for what was lost: assets like homes, businesses, and automobiles.

As part of The Early Show's series, Rebuilding Your Life, Vera Gibbons offers information on how you can go about recovering your losses from the insurance company. Gibbons is a special correspondent for Kiplinger's Personal Finance.

According to the Insurance Information Institute, insurance companies could have to pay up to $60 billion in damages to home and business owners, making Katrina the worst natural disaster ever handled by the insurance industry.

But who gets what, and how much is difficult to determine now, as the insurance companies are still trying to find out how much damage was caused by wind and rain, which are covered by most insurance policies, and how much damage was caused by floods, which is only covered by special insurance purchased through the Federal Emergency Management Agency. The answer will have a tremendous impact on those still reeling from Katrina.

So Gibbons says that the sooner victims get the process started, the better. "There is no reason to delay, but one main reason to get going is to see whether you're eligible for additional living expenses," she explains. "If you have homeowners or renters insurance, you could get reimbursement for living expenses, such as food and clothes."

Here is Gibbons' advice on how to start the process:

Claiming Your Insurance

• Call your insurance company or walk into a mobile claims office. These are temporary offices that have been set up in the affected areas. Let them know the extent of your damage.
• You should have a list of what's been damaged (property and personal items) and you should be keeping receipts of everything you spend on living expenses.
• For those who have been displaced, it is important to let the insurance company know where you can be reached and the severity of the damage. "It's up to you to substantiate the loss," Gibbons says.

Gibbons explains a typical homeowner's policy covers wind-driven rain, fire, vandalism, theft, and damage to your home caused by fallen trees. Floods and earthquakes are two big ones not covered.

In fact, flood losses are not covered under any homeowner's policy. To claim damage for floods, homeowners would have had to purchase a separate flood insurance policy offered by the federal government.

However, homeowners still should file for flood damage anyway, because there's a good chance that rain and wind had lot to do with the damage and they could collect on that. For example, if rain entered your home through wind-damaged windows, that's considered windstorm and that's covered with homeowners insurance. It will be up to the adjustor to decide what caused damage on a case-by-case basis.

It is important to know that if you have comprehensive coverage, you are covered for everything, including floods.

A standard business owner's policy doesn't cover floods. But big companies may have a commercial insurance policy and depending on the size of the business, it may include flooding.

The following resources offer further information on how hurricane victims can get help:

• Call FEMA (800-621-fema) or visit their Web site at fema.org.
• Visit the Insurance Information Institute.