MADISON, Wis. (9/8/08)—If your home was damaged by Hurricane Gustav—or any recent disaster—it pays to be diligent when you file a claim, and know where to go for help if your claim is denied.
Expect to pay a larger share of the losses, according to a Sept. 3 press release from the Consumer Federation of America (CFA), Washington, D.C. Insurers have been raising deductibles and imposing other policy limitations following the devastation of Hurricane Katrina in 2005. Some of those restrictions may be buried in the fine print.
Know the steps involved to get a fair claims payment from your insurance provider:
Document it. Start a notebook immediately after you experience any kind of property loss. Include all contacts you make with your insurance company, an inventory of your possessions, repair estimates, receipts from emergency repairs, and receipts from temporary housing expenses.
Double-check your deductible. If you agreed to a $1,000 deductible and your damages are $975, you won't be able to dispute a claim that's denied for that reason.
Read the fine print. Look for "hurricane deductible," which may be a percentage of the value of your home, and which may not have been disclosed to you properly. CFA advises you consult an attorney if you think you've been misled.
Look for replacement-cost restrictions. Some policies contain a limit on replacement cost payments if your house is destroyed. For example, you may be restricted to receiving 25% above the face value of the policy if a major storm caused a high demand for insurance payouts, leaving you short if construction costs are higher than the capped amount to which you're entitled.
File the claim. Contact your agent immediately, separate damaged from undamaged property, make a list of all items that are damaged or lost, and then file the claim. For floods, file a "Proof of Loss"—your official claim for damages—within 60 days of the flood. Go to FloodSmart.gov for more information.
If your claim is denied or if you believe the offer is too low, CFA recommends you:
Talk to senior staff. If you've kept good records, the insurance company will know you're serious--and you're in a better position to push for a better offer.
Contact your state insurance department. Share your detailed notes and ask if the state will intervene on your behalf. Find contact information for your state insurance department in the Consumer Resource Handbook at consumeraction.gov/viewpdf.shtml.
Get a lawyer. You may be entitled to additional compensation if the insurance company acted in "bad faith" when determining your award, or if you were treated particularly badly.
In addition, the Federal Emergency Management Agency (FEMA) can answer questions you may have. Visit the website at fema.gov, or call 800-621-FEMA (800-621-3362).
Even if you haven't been a victim of a disaster, check your policy. Determine if your belongings are insured for actual cash value—replacement cost of an item minus depreciation—or replacement cost. Although it costs more, replacement cost allows for the amount it would take to replace items at current prices. You may decide that purchasing replacement cost coverage is worth the extra cost. Talk to your insurance agent.
For more information, read, "Use Software to Create Property Inventory," in Plan It: Retire Ready Toolkit.
courtesy of cuna.org