DSNews.com, June 13th, 2017
Finding safe refuge during a dangerous hailstorm or hurricane can pose its own set of challenges, but the greater difficulty often presents itself once the storm subsides. How do you handle the aftermath and resulting property damages?
For homeowners, storm preparedness requires more than keeping a few cases of water on hand, though that is certainly a start. But the need for proper preparation definitely doesn’t apply only to homeowners. Damages can reach well beyond a storm’s physical path to impact all parties involved with a property. What steps can you take as an investor, aggregator, bank, or servicer to protect yourself and your interests this hail and hurricane season?
The first line of defense is to arm the people actually living in the homes with a thorough storm-preparedness plan, like the one I’ve detailed here. Take note, and then share these tips with your clients as well to ensure everyone is prepared for safe practices and a smoother recovery should a storm hit.
As a licensed adjuster, my best piece of advice is to know what you have up front—in detail and with thorough documentation. Make sure you take photographs of every angle of your assets. Inventory any upgrades and investments in appliances, including HVAC systems. If repairs have been made in recent years, it’s best to save copies of invoices, before and after photos, and any documentation proving capital improvements have been made. These items are crucial during the claim filing and settlement process.
And I do mean photo document everything, from cars to barbeque grills to the exterior of the home. Also, having predamage photos updated at least once a year is important for getting claims paid quickly and accurately. This is a sunny-skies step, as proper preparedness begins well before the weather changes.
Ride Out the Storm
Hailstorms are particularly disastrous because they can cause serious physical damage. Stay indoors away from windows, and prepare to go without basic services for at least 48 hours.
Electricity is the first utility to go, aside from our beloved internet and Wi-Fi connectivity. Make sure you have fresh batteries, candles, and several cases of bottled water on hand. Keep canned and dry goods stocked as well to carry you for a few days if you lose power because that, in turn, can make you lose the food in your refrigerator.
If that happens, also take a photo of everything in your refrigerator because some homeowner’s policies include coverage for food spoilage. But you won’t be paid for it if you don’t claim it!
Hurricane preparedness is a much more complex topic that I can’t cover completely here, but I will begin with this: Prepare for the worst. I grew up in New Orleans and experienced Hurricane Katrina. I was totally not prepared then, but I’ll share what I know now.
Stay informed before, during, and after the hurricane. Keep your television, radio, phone, or other device with news access turned on. Stay abreast of changes in storm track, intensity, and severity. This will help you and your family make safety-minded decisions.
Purchasing a two-way radio is a sound investment if you live in an area prone to widespread catastrophes like hurricanes. Some of these radios have the ability to tune into the National Oceanic and Atmospheric Administration to get updates directly from the National Weather Service. If you’ve lost power, water, and cellular connectivity, these radios can prove lifesavers not only for getting information in but also for reaching out for help.
For those in hurricane hot spots, a good rule of thumb is to have a week’s worth of food and water for each person in the home. Local services like police and fire become overwhelmed in hurricane situations, and you could face a long wait before help arrives. Likewise, knowing CPR and having a first aid kit could make the difference in your or someone else surviving or not.
Plan for Evacuation
If your local news, weather, and government agencies are telling you to evacuate, it’s probably best to heed their warning. When it comes to hurricanes, higher ground means dryer ground. Evaluate potential evacuation routes; plot out potential areas of risk where local lakes, streams, and rivers could rise; and overprepare your food and water rations. Remain aware of your surroundings, especially after you’ve evacuated your home. Again, documentation is important. Take pictures of your surroundings whenever possible.
If you have family or friends who don’t live in a coastal area, set up a pre-emptive plan of action to relocate to their residence in the event of a catastrophic hurricane. Outstaying your welcome should not be a problem if you have good homeowners insurance, as the insurer will pay for additional living expenses (ALE), allowing you to stay in temporary housing and/or hotels if an actual weather event severely damages your property or otherwise prevents you from returning home.
ALE doesn’t allow for you to live at a high-end resort in Hawaii, of course, but it provides additional funds needed above and beyond what you would normally spend to live comfortably outside of your home. Save your receipts.
Know Your Rights
In the unfortunate event that a hailstorm or hurricane hits a property you own or are servicing, make sure you are aware of your rights to recover and your duties as an insured. If you purchase a policy on a home you own, your rights to recover are very similar to the rights of an investor or bank servicer. As the purchaser of the policy, you have the right to file claims for damages to your home and personal property as the result of sudden and accidental losses.
The same applies for investors and bank servicers, but only the structure and permanent attachments as lienholders, they may only claim. The lienholder may also have a special set of duties or conditions under the policy, so make sure you or your claims recovery company is aware of these special conditions. As an insured or additional insured, you have the right to request a certified copy of the policy, which will detail all coverage, endorsements, and exclusions applicable to your specific policy.
Hailstorms and hurricanes are sudden, accidental, and considered acts of God. The good news: Damage from these types of severe weather are generally covered under homeowners insurance. If you have a basic dwelling policy in place, you do not have adequate coverage. Basic dwelling policies, also known as DP-1s, are referred to as fire policies because that’s all they cover. This is much like minimum liability auto coverage. Make sure you have the right coverage in place for all circumstances.
Fulfill Your Duties
To make claims as an insured or additional insured (lienholder/mortgagee), you also have to be aware of your duties under the policy. These generally include three main provisions listed in the policy as duties of the insured.
First, pay any premium due. If you don’t pay for your insurance policy, you’re likely not going to have any coverage.
Second, notify the insurer of any change in risk or occupancy. If you’ve moved, this is considered a change in risk that the insurance company needs to know about, as premiums may need to change. The insurer may also decide to cancel the policy if your asset does not fit with the underwriting requirements (i.e., many insurers don’t like to extend coverage for vacant property, or many insurers will drastically change what is covered or not for vacant assets). For investors or servicers, when the property is first known vacant, you must notify the insurance company, or claims will not be paid.
Third, submit a proof of loss within 60 days of the event. The proof of loss is a statement detailing what happened and summarizing your loss. This is usually notarized and includes a sworn statement surrounding the facts of the loss. This is done to prevent fraud and to clearly depict the loss in its entirety.
Also listed in most policies are duties to protect and preserve your property in the event of a loss. What this means is that you are responsible for protecting your property to prevent further damage and to make any reasonable repairs to prevent further loss.
This is all under the pretense of reasonable, which means that if you are able and willing to board up or tarp a damaged roof or can hire a contractor to handle emergency repairs, the insurance company will reimburse you for any reasonable costs associated with these temporary repairs. In layman’s terms, if you pay a contractor $1,000 to tarp a roof that would otherwise allow water to pour into the home, insurance will reimburse you because it may save them $10,000 or more in additional damages you helped prevent.
Obtain Good Insurance, Better Advice
Before storms hit, make sure you’ve got the right policy in place to fit your budget. It’s best to work with an insurance agent to ensure you get the right coverage for your situation. Make sure to endorse (add or remove coverage for) any high-value items and document the kind and quality. This may help with specialty items that are hard to replace or provide additional coverage above and beyond what your normal insurance policy covers.
Don’t be afraid to ask for help. If you need help navigating policy language, duties, and responsibilities, find a good public adjuster or hazard claims recovery company. You may pay a small fee for their services but will often gain a huge knowledge base and ensure equitable settlements.
The devil truly is in the details, and experienced public adjusters know what to look for and what carrier adjusters often miss when providing loss settlements. Claiming everything up front might eliminate costly delays associated with supplemental claims and guarantee maximum dollar for your claim. Obtaining sound advice and a quality homeowners policy are essential to protecting your insurable interests.