Hurricane Loss FAQ’s
A policy of insurance is a contract. Like other contracts, the terms of the policy dictate the rights of the contracting parties, except when a statute overrides the language of the policy. It is therefore difficult, if not impossible, to provide answers which are correct in all circumstances. This information is intended to be a general guide, not an absolute statement of your rights.
Q. My house was damaged by a hurricane; what is my first step?
A. Contact representatives of all carriers insuring your home. Unlike fire and most other losses, hurricane damage to your home may be caused by different forces; these are, generally, wind and flood water. The manner by which your home is damaged is important because different insurers insure different risks. However, you should never fail to call, for example, your windstorm insurer because it appears that only flood damaged your home. To be safe, put all potential insurers on notice, and confirm in a letter to them. Also, take reasonable steps to protect your property from further damage, and, if possible, have a contractor inspect your property and prepare an estimate on the scope and cost of repairs.
Q. I contacted my insurer several weeks ago, but have not heard from anyone . . . what should I do?
A. This is inexcusable conduct by an insurer. Insurers have catastrophe plans and should be prepared for storms causing widespread damage. You may wish to consult with an attorney or a public adjuster, or both.
Q. Can I depend on my insurance agent for assistance?
A. Maybe. If your claim falls under your normal homeowner’s policy, your agent may be able to assist you. Remember, most insurance agents are in the business of selling insurance policies. They are typically not in the business of adjusting claims or making determinations of coverage under policies.
Q. How long does the insurance company have to pay my claim?
A. Most insurance policies have a provision which states a time frame for payment of claims. However, if you review these provisions they will typically read as follows:
- “We will pay your claim within 20 days of the date you and we reach an agreement in writing
- or 30 (or 60) days after entry of an appraisal award or entry of a final judgment”.
The foregoing language may not be the precise language of your policy, but it does contain the essence of the policies often seen in Florida. The catch here is there must be an appraisal award, a final judgment, or an agreement in writing between the insurance company and the insured. Therein lays the crux of the issue. If you submit a sworn statement in proof of loss (a sworn to statement reflecting the cause of loss and the amount claimed) seeking a certain amount of money and the insurance company doesn’t agree, there is nothing about the foregoing provision which indicates that you must be paid. There is some law which suggests an insurance company may be required to pay within 60 days of the submission of the proof of loss. However, if the insurance company disagrees with your numbers, it does not seem likely that any court would require the insurance company to pay simply because you have filed a proof. Beware of individuals (even lawyers) who tell you that an insurance company is required to pay within a time certain if there has been no final judgment, appraisal award, or agreement.
Q. Is the insurance carrier required to give me an advance?
A. The answer under the vast majority of policies is “no.” Many insurance companies do give you an additional living expense (“ALE”) advance (usually indicated as a personal property payment) so that you can find a place to stay immediately after the storm event, assuming that your house is not livable. Unfortunately, some insurance companies seek to avoid this by decreeing that your house is livable even if it doesn’t have basic plumbing and electricity. This is usually the work of your adjuster or his or her supervisor. If this happens, you should seek professional advice immediately. However, remember that where additional living expense coverage is available, it is typically an “incurred” coverage which means you must first spend the money or obligate yourself to spend the money before the insurance company is obligated to pay it. You must also remember that the policy must have additional living expense coverage and that the loss which damaged your home is covered under the policy providing the coverage. Finally, under almost all policies, the ALE benefits are limited. If you exhaust your ALE benefits too quickly, you may have none left while your home is being repaired.
Q. What kind of adjusters are working hurricane claims?
A. In widespread losses such as hurricanes, you will probably find the following adjusters in the field:
- Company adjusters. These people are employees of the insurance company and are typically licensed as adjusters in Florida (although they may be on temporary duty from another state).
- Independent adjusters. These are adjusters who adjust for a living, and although they are called “independent”; in fact they are contracted to work for the insurance company, not you.
- Catastrophe (or “cat”) adjusters. The background of these individuals vary . . . some have little experience . . . some are highly trained. But they all work for the insurance company.
- SIU adjuster. “SIU” stands for “special investigative unit”. If your adjuster identifies himself/herself as “SIU”, you can be assured that your insurer suspects that you or someone associated with your claim has committed or attempted to commit fraud. In this event, you should immediately seek assistance of competent counsel.
- Public adjusters. These are licensed adjusters who work for you.
Q. I have a homeowners policy issued by XYZ Insurance Company for fire and other losses except hurricane; I have a windstorm policy from Citizens Insurance Company and I have a flood policy also issued by XYZ. Are my rights the same under all policies?
A. No, not at all. Virtually all standard homeowner’s policies exclude flood (including storm surge) and the fact that you have separate windstorm insurance indicates that your basic homeowner’s policy doesn’t cover for either. This probably means you live close to the coast. You may wish to consult with a competent attorney or experienced public adjuster to learn more about your policies.
Q. What are my rights and obligations under the various policies?
A. There is no easy answer to this question and certainly this is not the forum for a complete answer. A detailed policy review is required. However, some things may be stated as generalities.
- Homeowners Policy. Typically, your homeowner’s policy will cover all aspects of hurricane damage except certain types of water damage. If your homeowner’s policy insures against wind (and most do) your property is covered for all damages caused by wind and for all damages caused by rain entering your house through an opening created by wind. However, each individual policy must be reviewed to determine the scope of this type of coverage. Many insurers attempt to exclude loss caused by “wind driven rain”, which means rain that is driven under the door, around windows, etc., without an opening being created in the envelope of the house. Such an opening can be caused by the wind itself, as in the case of a blown out window, or by projectiles or trees being blown into or onto your home. Some policies only exclude damage to contents caused by so called wind driven rain. Others attempt to exclude it completely. It is almost a universal truth that standard homeowner’s policies exclude flood coverage, which includes storm surge associated with hurricanes.
- Windstorm insurance policies issued by Citizens Insurance Company. A citizen is a creature of statute. Its wind policies provide coverage for wind caused damage (when your homeowners excludes damage by windstorm). When a Citizens policy is issued as a windstorm policy only, it covers against loss by windstorm and will only cover interior rain damage if the rain enters your house as a result of wind damage. An opening must be created in the envelope of the house in order for this to be covered.
- Flood insurance. The vast majority of flood insurance policies are issued pursuant to a federal flood insurance program. Although you may have a flood insurance policy issued by the same insurance company which issued your homeowners policy, it does not mean that insurance company is making final decisions on your claims. In fact, most flood insurance policies issued by homeowners insurance companies are issued pursuant to a “write your own” program, a federally created program which has been in effect for several years and which has many strict requirements with which you must comply in order to recover. In such instances, the homeowner’s insurance carrier is nothing more than an administrator of the claims even though their claims personnel may be called upon to adjust the loss. Your rights under a flood insurance policy are substantially limited, as the typical policy provides only limited replacement coverage for structure loss and actual cash value contents loss, far less than your standard homeowners policy. There are no “bells and whistles” on the federal flood insurance program, such as additional living expenses, other structures coverage, replacement cost coverage (contents), and ordinance or law coverage (some insured’s are eligible for I. C. C. funds). Furthermore, if you have to bring suit to enforce your rights under a flood insurance policy, you must do so in federal court and you have no right to a trial by jury. Finally, and perhaps most frustrating, you cannot recover attorneys fees even if you prevail 100%. This means that you must pay fees out of your pocket.
Q. Are all flood insurance policies issued pursuant to the national flood insurance program?
A. No. Some carriers write flood insurance and/or excess flood insurance outside the program. In such cases, these insurers are treated just like any other insurance company. Your agent should be able to assist you in determining whether your flood insurance policy was written pursuant to the national flood insurance program. Any competent attorney or public adjuster should also be able to assist you as well.
Q. My house was damaged/destroyed by some combination of wind and storm surge. Who pays and how much?
A. This is a question which cannot easily be answered without all the facts. For partial losses (no matter when they occurred) and for total losses occurring after June 1, 2005, the damage will be apportioned between your wind and flood coverage. This will initially be done by the adjuster or adjusters assigned to your claim. If the same adjuster is adjusting both your wind and flood claims, be extra cautious. We see this as an irreconcilable conflict of interest, but it is a practice which is widely utilized by the insurance industry with the excuse that there is a shortage of adjusters. How your losses are apportioned is important because your flood coverage may be substantially more restrictive than your wind coverage. You do not have to accept the apportionment made by the wind and flood adjusters. If you have a situation like this, you need to consult with competent counsel or an experienced public adjuster.