Natural disasters can leave a trail of destruction in their wake, and for homeowners with insurance, the recovery process can still be long and arduous. With more than 60% of U.S. homeowners underinsured, many people may not have enough funds to rebuild after a catastrophe. To protect yourself, it’s essential to review your insurance policy and understand how your insurance provider handles claims. Here are some of the most important things to keep in mind.
1- The Importance of Acting Quickly
When your home sustains damage during a natural disaster, time is of the essence. Insurers handle claims on a first-come, first-served basis, so it’s crucial to contact your agent and report the damage as soon as possible. In the chaos of a natural disaster, it may be challenging to know who to call or how to reach them. Check with your insurance provider to see if they have a catastrophe claim number for your area that you can use to expedite your payout. Additionally, having your policy information accessible electronically can help you review important details whenever you need them.
2- Delayed Assessments and Waiting for Claims
Assessing the damage to your home can take time, especially if the area is blocked off due to safety concerns. Floodwaters, downed power lines, and mandatory evacuations may make it impossible for an insurance adjuster to reach your home promptly. In such cases, it could take several days or even weeks before your claim can be evaluated. Unfortunately, waiting for your insurance claim to be processed isn’t ideal, but it may be your only option. Be patient and understand that many people may be filing claims at the same time.
3- Understanding Your Policy and Estimating Replacement Costs
Insurance companies do not always calculate rebuilding costs accurately, leaving policyholders to cover the difference in cost. It’s essential to update your policy after making renovations and to keep an inventory of your home’s belongings to ensure that you receive adequate coverage. With many homeowners rebuilding simultaneously, recovery expenses can increase significantly in a region affected by a natural disaster. These added costs for labor and building materials usually aren’t factored into coverage. However, some policies offer an extended replacement cost policy that increases coverage by a certain percentage, usually 25% or 50%. Check your policy’s fine print to see if this is an option. Remember that you can appeal your insurer’s initial offer if you’re unsatisfied, but using any funds from your insurer may release them from further liability.
4- Don’t Be Obligated to Use Your Insurer’s Contractor
Although insurance companies will provide a list of contractors, you don’t have to use them exclusively. While it’s often a good idea to work with professionals your insurer approves, shopping around and hiring your own contractors is an option.However, beware of unscrupulous contractors who take advantage of disaster victims to make quick money.
5- Additional Living Expense Coverage: A Lifeline After a Natural Disaster
Additional living expense coverage can make a difference between living out of your car or living comfortably. It provides reimbursement for hotel stays, temporary home rent, and incidentals while you’re displaced during the reconstruction of your home.However, it’s important to note that even with additional coverage, out-of-pocket expenses may still be extensive. This was evident in the recent Napa and Sonoma wildfires, where timely rebuilding is unlikely due to the size of the affected area and labor shortage.
Be Aware: Your Claim Money May Not Go Directly to You
Insurance companies issue payments to all parties who have a financial interest in your property, which may include your spouse, partner, guarantor, or mortgage provider. You cannot cash the check without everyone’s signature.If the check comes to you, you’ll have to endorse it and send it to the other parties involved. If it goes to a bank or mortgage company, they become responsible for sending the money to you. It’s crucial to stay informed about homeowners and natural disaster insurance, whether you’re filing a claim or buying your first home. Not knowing your rights and coverage could put you at risk when disaster strikes.