What can I expect from my Insurance after a catastrophic loss to my property?
Most everyone doesn't give a second thought to their insurance covering their property or business until a catastrophe occurs destroying their business or home they have spent a lifetime investing in and paying off. This is an overview of the claims process that happens after.
The Initial ShockSometimes, you can plan for a storm. Hurricanes and tornados can have warning sometimes days in advance, but most of the time, its an unexpected shock from a fire burning your whole business down to a windstorm ripping half of your roof and belongings out of your house and everything in between. Your home or business that you have spent countless hours of time, effort, and money to sustain has just suffered major damage without warning. It takes some time to mentally and physically process the situation that you, your loved ones, and even employees have unintentionally been thrown into. So, let yourself process the situation while getting your family and yourself into safe accommodations where you have time to make a plan and set a course of action.
Report your claim and Get your Insurance PolicyAfter you have yourself, your family, and your important belongings in a safe place, you need to contact your insurance company to make a claim. Don't extrapolate on why or how your think the damage occurred if you don't know. Don't make assumptions about anything and only state the facts of the damage. Remember to ask for a copy of your certified insurance policy. The is THE most important document of your insurance claim. This is your contract with the insurance company that spells out how much they will pay, what coverage they insure for, how they pay, etc. The good part is that you are ALWAYS entitled to a certified copy of your policy, whether you call and ask for it or obtain it online, you must always get a copy of your certified policy. Otherwise, you don't have the information to determine how much you should be getting paid and for what.
So, for the bad part...the insurance policy is a complicated confusing document to read and understand. On the Flesch Reading Ease test which measures the ease and simplicity to understand a document on a scale from 0-100 with the higher the score, the easier to understand. A Flesch score of 0-50 requires usually a college level education or higher to understand. The Bible has readability score of 67, Einstein's Theory of Relativity has a readability score of 18, and an Insurance Contract has a score of less than 10. What this tells us is, your insurance policy is most likely harder to read and comprehend than Einstein's Theory of Relatively. So, what can you do about this? Once you have an actually copy of your policy which includes your Declarations page and any endorsements or exclusions, read through it and mark the parts that are pertinent to your situation. Look for any endorsements or exclusions that may change the coverage for your loss. Going in armed with the information that you are reading a complicated contract, may help you really take your time evaluating every word for its meaning. Any questions you have, make sure to jot those down to ask to someone well versed in insurance policies. This may be your agent, or claims adjuster, but remember they still work for the insurance company and may not have your best interests at heart when explaining. A property insurance lawyer or public adjuster that has had experience with many types of claims and policies may be an invaluable source of information when you have questions.
Documentation, Documentation, Documentation!Once you are armed with your policy (or its on its way to you), you need to compile your own documentation instead of only relying on your insurance company to do so. Take plenty of photos. Photos of interior damage, exterior damage, contents damage, ect. Document the weather conditions that were happening or any causes that contributed to the damage. If you were not around when the damage occurred, ask any neighbors or witnesses that may have any information. Taking as many pictures and videos as you can as close to the time of loss is very important to save that documentation before it is gone.
Estimates, Negotiation, and SettlementAfter you have called and reported your claim, the insurance company will follow up with you by sending an adjuster to come see the damage and take photos and ask questions. They will use this information to then create an estimate of the damage whether it is for your dwelling, personal property or contents, or any other coverage you may have. This can take some time for the insurance company to create the estimate. Once you have the estimate, it will show a line by line itemization of each component damaged and the cost to replace it along with depreciation taken for each line. Depending on what type of coverage you have (Replacement Cost (RC) or Actual Cash Value Cost (ACV)) will determine then the amount you are owed according to the insurance companies estimate. But, irregardless of whether you have RC or ACV, most policies will only pay the ACV amount until the actual item or building is replaced, then you are owed the rest of the money they held back in depreciation. Your options can be limited at this point if you don't agree with the insurance estimate. You can attempt to go line by line with the adjuster if you disagree with either their amount of depreciation or their replacement cost, but many people don't have the expertise or knowledge to back up what they may be arguing.
Most policies have a provision similar to arbitration called "appraisal" where the insured picks an "appraiser", the insurance company picks an "appraiser" and they try to work out the discrepancies in the numbers. If they cannot agree, then either side can ask a Judge to appoint a 3rd as the "Umpire" who then can sign off on an appraisal award that has to only be signed by 2 of the 3 appraisers or umpire. Once an "appraisal award" is signed, the insurance company and you as the insured are then bound to that number as the settlement amount of money for your claim.
So, whether a value of your claim is arrived upon through negotiation, agreement, or appraisal, the insurance company will issue you a check for your damaged personal property, but only for the depreciated amount, until you provide receipts or documentation of replacing the property and only until the amount of personal property limits is exhausted. The settlement check for the dwelling is a different animal if their is a mortgage holder on the property. The check most likely will be issued not only in your name, but also in the name of the mortgage holder. This is to protect the mortgage holder's interest in your property to make sure it is repaired. You then contact your mortgage holder and see what their procedure is for an insurance check, and follow their process which varies all over the board depending on the amount of damage and which company it is. This check also is only for the ACV depreciated value of the damage to the dwelling. The RCV amount can only be recovered once the property is replaced and receipts submitted to the insurance company. That amount of the Replacement Cost also only gets paid up to the policy limits.
Where can I turn for help?Many times the claims process may seem like a totally foreign transaction that you are being forced into undertaking through something that happened from no fault of your own. It can be confusing, stressful, and outright exhausting. Most of the time, you have to depend and have trust in your insurance company for the whole process because you haven't been through anything like this before and the policy that outlines your contract is too confusing to fully understand. There are options though for places and people to turn for help and advice.
Public adjusters are adjusters that work for the insured, you, instead of the insurance company. They, most of the time, write their own estimate of the damage to your property and submit it to the insurance adjuster. Then the public adjuster will negotiate with the insurance adjuster on your behalf to try and obtain a higher settlement.
Property Insurance Lawyers are lawyers that do just what it sounds like, handle property insurance disputes. This can range from residential property damage to business interruption and income loss claims. While property insurance isn't typically something most lawyers straight out of law school are well versed in, there are adjusters or insurance professionals that have gone to law school and now represent insureds for their claims that understand the nuances of insurance policies and claims that other lawyers may not. Hiring a lawyer that has a background as an adjuster can be a huge benefit to you as they not only have the ability to interpret and understand your policy, write an estimate on your behalf, and negotiate on your behalf for a higher settlement, but also have the power to file a lawsuit if the disagreement comes to that point. Property Insurance lawyers and Public Adjusters are both paid out of the settlement proceeds they obtain on a percentage anywhere from 5% up depending on many various variables like location, type of loss, amount of loss, if money has already been paid or offered yet and other factors. The most important thing is to discuss all fees and costs upfront and read the contract thoroughly before signing.
Other places online have advocacy groups for policyholders, such as United Policyholders, where they will give information and others where you can ask questions, just like Avvo.
Your home or business is usually your biggest investment in life. When you have suffered a catastrophe to such a huge investment in your life, it's the time to take it seriously and seek help if you don't feel you are being treated fairly. There are resources and people out there to help you so you don't have to feel like you are going at it alone.