 Insurance IssuesIt would take volumes of information to cover every damage scenario, wind, hail, flood, theft, etc. But there are some basic rules that apply to almost all insurance damage claims. Here are a few, the most important of all is KNOW YOUR COVERAGE!!!!
THE POLICY
 Having to deal with an insurance claim can be frustrating at best but with some basic knowledge, and a plan, you can ease the pain. Start by reading your insurance policy, you know the one that is in that security box that you don’t look at until you need it and certainly haven’t read. If you do not understand what it says, make an appointment with your insurance agent and make him explain ALL OF IT. Not only what is covered but especially what is not covered. Remember, not all homeowners insurance policies are the same, it depends on the insurance company the policy is written with.
Very few homeowners update their coverage to meet today’s economy. By that we mean that many homes are UNDER COVERED. An example of that would be a policy which was written several years ago and based on what labor and materials cost at that time. As we all know both have increased dramatically.
In so many situations a home was destroyed by a hurricane or tornado and even when the policy limit was paid, there was not enough money to rebuild the home. Guess who pays the difference? That’s right the homeowner. Not only does this apply to the structure but to the personal property limits as well.
THE CLAIM
When suffering damage to your home, have a plan. First, call your insurance agent or, if available, the 800 # to file your claim. When the claim is filed it is categorized by severity, based on the extent of damage. The severity codes are normally from severity 1 major damage, usually uninhabitable, to severity 3 minor damage. What makes your home uninhabitable is dependent upon many things, but as a general rule if by staying in your home it would cause hazard to you and your family. There are other factors which could cause you to have to seek temporary housing, such as allergies to building materials, paint, etc., while repairs are being completed. If you have “away from home” coverage your policy will pay for the temporary housing.
If there is water damage ask your insurance agent if your can remove all water saturated materials, carpet, sheetrock, etc. in an effort mitigate any further damage. In some cases the insurance company will want you to keep what you tear out until the adjuster can look at them. Always make notes from every phone conversation you have with everyone representing your insurance company, name, time and details of conversation.
Always take pictures of the damaged area, whether your tear them out or not. If you have lost power during a storm, the contents of your refrigerator and freezer are probably ruined. Inventory and take photos of the contents of these items prior to throwing them out. KEEP TRACK OF YOUR TIME AND MATERIALS USED TO MITIGATE DAMAGE. In most cases your homeowners policy will pay you for your work, just as if a contractor did it.
The next call should be to three contractors to obtain an estimate for the repair of the damage. Make sure that the contractor that you choose is local and has a good reputation in the community not a storm chaser. The last thing you need is to have a problem with an out of state contractor. The best reference you can get is from friends, neighbors and relatives who have used a contractor and has first had knowledge of his work and reputation.
The contractor should be able to provide you with his insurance documents and references and is willing to work with your insurance company. The contractor should not charge you for the estimate and if you choose him will only ask for a small deposit. Never pay the contractor the full amount of the contract until the work is completed meets with your approval.
Once your claim is filed it will be assigned to a claims adjuster. Normally the adjuster will contact you to provide you with his contact phone number and schedule an appointment to assess the damage. Explain to the adjuster that you are going to retain a contractor and you would like the adjuster to schedule his appointment when your contractor can be there too. This affords the insurance adjuster and the contractor to be on the same page as to the repair of your home. Remember, your insurance policy is designed to put your home back the way it was before it was damaged. Any upgrades will be at the homeowners expense.
THE INSPECTION
Make sure that all parties are present during the inspection of your home. The most common estimating program used by insurance adjusters and some contractors is Xactimate. As with most computer programs the output is dependent upon the input. This is why a good video of the interior and exterior of your home is critical. Depending upon the extent of the damage you can’t always tell what the home looked like prior to the damage.
THE PAYMENT
If you have a mortgage on your home and the settlement payment is $7,500 or more the law requires that the mortgage company or lien holder be on the settlement draft with the homeowner. There are also what is referred to as “Dollar One” mortgage companies. These are mortgage companies who require that their name be on the settlement draft no matter how much the settlement may be. This will require all parties to sign the draft in order to cash it. You will need to contact your mortgage to find out what their policy is. It will do no good to call your insurance company, it’s the law. Depending upon your lien holder’s policies, you may be required to place the funds into an escrow account and the lien holder releases the funds as the repairs are completed. Unfortunately you have no options they hold all the cards.
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