After Hurricane Sandy devastated the East Coast, many homeowners found that navigating their insurance coverage was another disaster entirely. In New Jersey alone, over 6,000 flood-insurance claims were rejected, and another 1,500 cases ended up in litigation.
New Jerseyans aren’t alone: In 2019, natural disasters accounted for $52 billion of the total $60 billion in insured losses globally. These cataclysmic events present a unique threat to homes because typical home insurance policies do not cover most of the damage caused by them. Even when homeowners do have catastrophe insurance, many are either underinsured or don’t understand their coverage.
With climate change increasing the frequency of natural disasters, it’s never been more important to get on top of your insurance. HomeLight asked industry experts their top tips for getting the most out of a natural disaster insurance claim.
You need additional insurance to file a natural disaster claim
Home insurance is ubiquitous, in large part because lenders require it when buyers apply for a mortgage. What many homeowners don’t realize is that home insurance isn’t all-encompassing. Most home insurance policies cover interior and exterior damage, loss of personal assets, and injury that occurs on the property; but the damage caused by so-called “acts of God”— defined as an uncontrollable event like a hurricane, earthquake, tornado, or flood — are typically excluded from these policies.
That’s where natural disaster or catastrophe insurance comes in. These are separate policies that specifically cover damage caused by acts of God. Unlike home insurance, there isn’t a one-size-fits-all when it comes to catastrophe insurance. In most cases, homeowners will need to buy specific policies to cover the natural disasters they are at risk for, whether it be flood, wind, fire, or all of the above. While this may sound a lot like Hazard Insurance — a part of most home insurance policies that cover home structure damage — catastrophe insurance policies offer more comprehensive coverage that includes both natural and man-made events.
1. Choose the best policy for your natural disaster risks
Just like home insurance, most lenders will require you to buy flood insurance if your home is in a flood-risk zone. This policy may not provide you all the protection you need, though. Follow these steps to get the most out of your natural disaster coverage.
Research your home’s risks
When it comes to getting the most out of your natural disaster insurance claim, the best thing you can do is to choose a policy that protects against the damage your home is most at risk for. For example, Teresa Cowart, an expert real estate agent with 15 years of experience with a whopping 1,100+ homes sold, shares that flood and wind insurance are a must for her area in Coastal Georgia.
“I am continuously telling people: ‘Protect your investment,” she says. “We have tropical storms all the time, and we have hurricanes that pass by us all the time . . . Unfortunately, if it is a named storm, your regular insurance doesn’t always cover that, and if it does, now your deductible is much higher.”
Cowart is referring to the named storm trigger in most home insurance policies. The World Meteorological Organization began naming tropical storms, cyclones, and hurricanes in 1953 in order to streamline communications around these potentially devastating events. After the record-breaking damage caused by Hurricane Andrew in 1992, insurance companies began using the naming of a storm as a benchmark for an event that was an “act of God,” and that they could not assume the typical level of risk.
This is where disaster insurance kicks in. When you bought your home, the previous owners should have provided you with a Natural Hazard Report detailing the known natural disaster risks in your area. Review the report and start researching which policies to purchase that match your home’s risks.
Consult an expert
When researching natural disaster insurance, your real estate agent is a great resource, especially if they’re local to your area. Cowart, for example, has a list of insurance vendors she recommends.
“I just know that these folks are reputable and stand behind what they sell, and that’s important to me. And if I’m gonna put my name on it, it’s going to be somebody who’s going to help you.”
Cowart has the experience to back up her recommendations, too. After a hurricane flooded her home, Cowart says her insurance company “was amazing. I had a check-in like three days and had things moving along, but that isn’t always the case.”
Find a local insurance ace
Just like you researched and vetted your real estate agent when buying or selling your home, you’ll want to do the same with your insurance agent. These experts are your most valuable resource when assessing the policies that will best suit you and your home’s needs.
Luis Quintero, an insurance agent in San Diego, California, with both national and local policy experience, recommends finding an insurance agent who is local to your area. He points out that national insurance brokers are often too far away to give clients the attention they need.
“Sometimes you just call an 800-number, and you’re not ever talking to the same person. It’s always a different conversation and a different story,” he says, “Local agents are better able to assist clients. They know the local market where the home is located, so they know the risk better than someone on the other end of the phone who’s potentially not in the area . . . There’s more accountability on the agent.”
When vetting potential agents, Quintero recommends:
- Go local and find an agent who works at a branch near you.
- Choose a company with good financial standing. You can do so by researching their AM Best Rating.
- And, above all else, “look for an agent who is going to be there when you have a question.”
Conduct an annual review
Many natural disasters are seasonal. For example, the Atlantic hurricane season is from June to November, and the Southern Plains tornado season typically lasts from May through June. If your home is at risk for one of these seasonal natural disasters, schedule an annual review of your coverage with your insurance agent before the start of the high-risk season to ensure your home has the best protection available. Just make sure to give yourself enough time for any new or adjusted policies to go into effect; some policies take as many as 30 days to begin after signing.
If your home is in a risk zone for a non-seasonal disaster like earthquakes or volcanic eruptions, it’s still a smart move to review your coverage every year. Not only will this ensure that your policies are up-to-date and serving your needs, but it will help establish a relationship with your agent, which is vital if ever disaster strikes.
2. Take a home inventory now in preparation for a disaster
After a natural disaster, one of the first things you’ll need to do is document the damage to your home. Make it easier on yourself by taking a detailed inventory of your home and belongings beforehand.
Take a video
If going through your home item by item sounds too tedious, Quintero has an easier method. He tells his clients:
“‘You probably don’t know what you have — you have a lot, you’re not gonna remember you have it because you’re in a stressful situation [when filing a claim]. But take your video camera or your phone, and whenever you settle in, walk through your house and record how everything looks. Save it somewhere in the cloud and your email somewhere, so that you can go back if you have a loss, and you can remember it.”
For an air-tight inventory, narrate what you see as you record. Detailed, verbal descriptions can help you with the specifics if you ever need to file a natural disaster insurance claim. For example, as you walk through your kitchen, name the appliances as you film them and state their brand, model, and purchase date.
List names and serial numbers
While photo documentation is an important step in your inventory process, you’ll need to record additional information, too. Include the name brand, model, and serial numbers for your high-ticket belongings to ensure that you are reimbursed the appropriate amount. If you simply say “refrigerator” when filing a natural disaster insurance claim, you may find that your insurance approves a $300 replacement for your $2,400 KitchenAid model.
Don’t forget to inventory outside
While most of your inventory is likely inside your home, don’t forget to document the resources you store outside. Most policies offer coverage for personal property inside and outside the home, so including these on your inventory is a must if you want to file a claim for them in the future. Outdoor inventory may include costly appliances like your brand new propane grill, children’s swing set, or patio furniture.
Keep in mind, though, that insurance may not cover additional structures like fences. Ask your insurance agent about insurance options if you feel these structures are at risk.
Save duplicates of your inventory documentation
Documents are at a considerable risk of damage and destruction from natural disasters. The last thing you want when trying to file a claim is to find that your scrupulous inventory was lost, too. To ensure that you have access to this vital resource, consider using an offsite storage solution like apps that store your inventory in the cloud. Sortly is an ideal inventory app since you can access it from any computer, tablet, iOS, or Android device.
If, however, you’re committed to doing things the old-fashioned way with pen and paper, remember to take your inventory with you if you evacuate, and consider keeping duplicates in a safe deposit box or with a trusted out-of-state family member.
3. Document the damage immediately with photos and notes
After you’re able to return to your home safely and before you start cleaning up, document the damage. Just like you did before the disaster, take a video walkthrough of the exterior and interior of your home while narrating the damage that you see — and don’t forget to record the insides of cabinets, closets, and any other niches in your home.
If you took an inventory before the disaster, going through it item-by-item and noting what has been lost or damaged is a good next step. This amended inventory will be a critical resource for you and your insurance agent when filing your natural disaster insurance claim.
And if you don’t already have an inventory, you’ll still need to record name brands, models, and serial numbers for your large appliances and pricier items that have been damaged.
4. When disaster strikes, call your insurance immediately and salvage what you can
After Hurricane Irma, the most common insurance complaints were delays in handling claims. Not only do these delays keep needed resources out of homeowners’ pockets, but they can turn into exhausting back and forths with insurance companies, or worse, legal battles. The best thing a homeowner can do to prevent a delay in their claim is to immediately contact their insurance representative.
Quintero says, “make sure your family is safe and then call right away because a lot of the time policies have additional living expenses included.” Your policy may cover the cost of hotels, food, and any other necessities lost in the disaster. Your insurance agent can also help walk you through the steps you’ll need to take to get started on your claim.
Once you’ve contacted your insurance agent and formed a plan about the next steps in your natural disaster insurance claim process, salvage what you can. Throw out food and other supplies that may have been compromised by the disaster, open cabinets to air them out, move any property out of harm’s way if possible, and dry out any areas of your home that may have been flooded. This final task is critical; most insurance policies will not cover damage caused by mold, so taking steps to prevent mold immediately is necessary.
5. Don’t hire-out any work that you want the insurance company to cover
Waiting may seem like the last thing you want to do after your home has been devastated by a natural disaster, but it’s essential to delay repairs until your insurance improves them to ensure they reimburse the costs. Your insurance must assess the damage before they approve a settlement amount. That doesn’t mean you can’t contact a contractor, though; obtaining estimates on damage from licensed experts can give you more leverage with your insurance company if they offer you a lower payout than expected.
Just like you did with your real estate and your insurance agents, start researching contractors immediately. Once your insurance approves a settlement, you can begin rebuilding straight away. Contractors are often in high demand after an emergency, and the sooner you’re able to get in touch, the sooner they’ll be able to start the job.
Start preparing now to get the most of your natural disaster claim
Even if a natural disaster feels far away, the best thing you can do to get the most out of your catastrophe insurance is to start preparing now. Any damage to a home is stressful for a homeowner, and the added upheaval of a catastrophic storm only adds to the duress. But taking these steps today can make the process easier, more efficient, and help you get back to normal faster.
Header Image Source: (Nikolas Noonan / Unsplash)