After the Catastrophe, Settling Your Insurance Claim
Whether it’s Harvey or Irma, a flood, tornado, earthquake, or fire, it can take years to resolve a major insurance claim and to restore your property. Today’s column is a must-have guide to follow if you have a major insurance loss on your home.
If you or your clients have sustained a loss from Harvey (or if you sustain a major loss in the future). Here are some things recommended to do.
1. Be Safe
In places like Houston, New Orleans, and Florida, it only takes 3-5 days before serious mold problems begin to develop. If your property has been flooded or has sustained any other type of major water damage, you will need a respirator and a facemask to safely enter the property. Don’t underestimate the seriousness of mold. The inspector told me the first apartment building he had inspected had water damage that had soaked up the walls and across the ceiling! That means there will be mold even in the ceilings in some cases.
The flood waters also carry serious bacteria and viruses that can put your life at risk (http://www.newsweek.com/hurricane-harvey-infectious-diseases-flood-water-bacteria-viruses-656093) as well as the risk of being electrocuted by downed powerlines that are not visible. As much as you may want to go home, avoid moving back in until after any mold, asbestos, or other toxic substances have been removed. Your safety and health come first.
By filing your claim right away, you are more likely to settle your claim quickly and to find a quality, local contractor. The sooner your claim is settled, the faster you can get your life back to normal. To file your claim, contact your local agent, call the special 800 number the company sets up, log into your online account, or visit a mobile claims center.
Flood insurance is separate from your homeowner’s policy and is issued through the National Flood Insurance Program (NFIP). If you have purchased flood insurance, your insurance agent will generally assist you in beginning the filing process.
Unfortunately, if your home was flooded and you did not purchase flood insurance through the National Flood Insurance Program (NFIP), you have no coverage. Nevertheless, there may be government assistance programs available. Visit DisasterAssistance.gov and FloodSmart.gov. for more information.
The good news is that if you purchased “comprehensive” coverage on your vehicle insurance and your vehicles sustained flood damage, they should be covered.
Ideally, you have already taken pictures and videos of every aspect of your home (especially the roof) as a routine part of keeping your home insurance up-to-date.
If you haven’t taken pictures/ videos of your home in the past, take them now and update them annually!
The reason? If you change insurance carriers and have a claim, it’s common for your current insurance carrier to argue that your damage happened before their policy became active. Having a set of annual photos/videos provides documentation to support which insurance company is responsible for handling the claim.
If your home is damaged and you don’t have videos or photos, you can verify its pre-loss condition using holiday photos, MLS photos if your property has been listed, an inspection report, or even a recent appraisal. If you have receipts for your furniture, appliances, and any other work you have done, those are also useful.
After you have documented the condition of the property with photos/videos, Friedson advises that you can start the cleanup, but do NOT make any repairs. Doing so constitutes “spoilage of evidence.” The insurance company has the right to investigate the loss. Move furniture away from walls or other places where there is damage to make viewing it easier.
To “mitigate damages” means taking steps to prevent any further damage. For example, if there’s a hole in the roof, you must have the roof tarped until you can have it repaired. In the case where there is substantial water damage, contact a water damage specialist to remove the wet sheetrock, insulation, drywall, carpets, flooring, etc. Please note that with severe flooding, the water may seep up the walls and even across the ceiling.
If you own an older home, there may be asbestos in the flooring, inside the walls, and near stoves, fireplaces, and heaters. Asbestos removal is highly regulated due to the health issues it poses. Only hire people who are experienced experts in this area. Improper removal, whether it’s mold or asbestos, can cause serious illness as well resulting in even more expensive remediation.
The good news is that most states require insurers to reimburse mitigation expenses within 30 days.
If you’re home has major damage, you may be unable to live there while it is being repaired. Most insurance policies provide for living expenses, but these seldom last beyond one year. This often means that the homeowner is in a race to finish their repairs before their living expense money runs out. Again, if you didn’t purchase flood insurance, you’re not covered for flood-related living expenses.
When you do contract to have the work done, Friedson recommends that you only work with vetted local contractors who are willing to warrant their work. If you hire one of the transient contractors that show up after major disasters and there’s an issue with their work, you have little or no recourse when they leave the area.
Regardless of whether your home is damaged or not, check your current insurance policy to determine if you have “cash” or “replacement” value when you have a claim. A “cash value” policy only pays on the depreciated value of your property. A “replacement value” policy provides you with the full cost of replacement and is definitely the best choice. If you don’t have replacement value coverage, it’s smart to add it now and here’s why.
If you have a 20-year roof that is five years old and you have a “cash value” policy, your roof would have depreciated 25 percent. If you had to replace the roof, you would only receive 75 percent of the replacement cost less the deductible. If you have “replacement value,” the deductible is your only cost.
Also, any settlement check you receive will be made out to you and to your mortgage lender. The lender will visit the property to verify that the work has been completed before they countersign the check.
State regulations determine the fees PAs can charge. In most states, the maximum is ten percent of the entire claim. If the homeowner has been partially reimbursed before hiring the PA, the PA can charge a higher percentage of the remaining balance, but it can never exceed ten percent of the total claim.
Avoid Bad Apples
As in any profession, there are good and bad apples. To avoid hiring the wrong PA, here’s what to do:
Recovery Support (http://www.insuranceclaimrecoverysupport.com)described what a PA does:
Like your CPA who attends your IRS audit on your behalf, a good PA will be your advocate with the insurance company and will negotiate on your behalf to settle your insurance claim. In fact, a study by the Florida Legislature (http://www.oppaga.state.fl.us/MonitorDocs/Reports/pdf/1006rpt.pdf) showed that those who worked with a PA to settle their claims, received higher settlements than those who did not.If you or your clients have sustained a loss from Harvey (or if you sustain a major loss in the future).