Coverage Available for Homeowners
Hurricane coverage is comprised of separate insurance policies for wind and for flood. Wind policies generally cover damage caused by wind, including wind-driven rain. Flood policies cover damage caused by quick accumulation of surface water from any source, including storm surge. Insurance adjusters may try to determine whether certain portions of damage were caused by flood waters, and certain portions were caused by the wind itself.
Most wind policies provide several different types of coverage for damage caused by hurricanes:
· The most important coverage is to repair physical damage to a home (including a condominium).
· Wind policies also cover damage to personal property, such as furniture, rugs, clothing, and other items that are damaged or destroyed in a hurricane.
· Some policies may also provide coverage for “other structures” such as storage sheds and detached garages that are not physically connected to the insured building.
· There may also be coverage for loss of use, which covers additional living expenses that the insured incurs if their home is not habitable (such as hotels).
· Condominiums present special issues because certain portions of damage are covered by the unit owner’s wind policy (such as appliances, floor coverings, and electrical fixtures), and some are the responsibility of the condominium association (such as drywall). In the event of a hurricane-related loss, condo owners should contact their own wind insurer and the condo association. Florida Statute §718.11(f) describes the items covered by unit owner’s insurance and the condo’s master wind policy in more detail.
Flood policies offered through the National Flood Insurance Program (NFIP) provide coverage for physical damage to a building and the insured’s personal belongings. A list of items covered under NFIP policies may be found here, and instructions on filing a flood claim are here. Unlike wind insurance, flood insurance will not cover additional living expenses.
Coverage Available for Business Owners
Most commercial property policies include coverage damage to the business premises and business personal property caused by wind. Commercial property policies do not include coverage for flood damage, and a separate flood policy is required. Many commercial property policies also include coverage for lost business income and some extra expenses related to restoring operations after a property loss, including damage caused by wind.
Business income coverage is often defined as the net profit or loss before taxes, plus continuing normal operating expenses, including payroll. Coverage is usually limited to the loss of income incurred until the property is restored, or 12 months after the physical loss to the property (whichever is shorter). Coverage for payroll is limited to a shorter period of time. An insurer will most likely ask to see the company’s profit and loss statements to establish the income the business had been earning prior to the hurricane, and its usual expenses.
Extra expense coverage includes expenses incurred during the restoration of the business’ property that would not have been incurred but for the physical damage. It includes things like additional costs to keep the business operating at its insured location, operation at a temporary location while repairs are performed, to repair or replace damaged property, or replace papers and records.
The Claims Process
If there is damage to your home or business, contact your insurance company as soon as possible to report a claim. If you do not have a copy of your wind or flood policies, contact your insurance agent to obtain the policy number and contact information for your insurer. You can also find contact information for property insurers operating in Florida here.
If you make the claim over the phone, you should follow-up by submitting a written claim to your insurer as well. You should include your name, policy number, insured address, date the damage occurred (also known as the date of loss), and a description of the damage to your property.
Because of the high volume of claims and the shortage of qualified adjusters following Hurricane Harvey, it may take some time for an adjuster to inspect your property. Insurance policies often require an insured to mitigate their damages, or in other words, take steps to ensure that the damage does not get worse. If you do try to make repairs before the insurance company inspects your property:
· Document the condition of your property before any repairs were made.
· Take lots of photographs. Use rulers in the photograph to show scale. Consider including a newspaper front page to show the date the photo was taken.
· Keep receipts and contracts related to remediation and repair work.
· Gather old receipts for personal property that was damaged in the storm.
· If you had to leave your home because it is uninhabitable, keep receipts for the lodging, food, and other extraordinary living expenses you incurred.
· Before hiring a contractor, make sure that contractor is licensed, and carries both liability and workers’ compensation insurance. If you consider hiring a public adjuster, check whether he or she is licensed by the State of Florida here. The Florida Department of Financial Services, Consumer Protection Division, has identified additional scams related to hurricane recovery, such as fraudulent charities, persons impersonating FEMA officials, price gouging, and unlicensed contractors and public adjusters.
Your insurer may ask you to fill out a “Sworn Statement in Proof of Loss” such as this one and submit it within a certain amount of time. Your flood insurance may require you to fill out a separate proof of loss. Your insurance company may have its own form, and it is not required to help you fill it out. Proof of loss forms can be confusing, and some tips include:
· Do not hastily fill out the form, as your insurance company will hold you to the information you provide. You may need to get repair estimates in order to accurately complete the proof of loss.
· Make sure you comply with the deadlines for submitting the proof of loss, and if you need more time, request an extension from your insurance company (and follow-up in writing).
· If you have photographs, receipts, estimates, invoices, or an inventory of damaged personal property, you should attach it to the proof of loss to help support your claim.
· You need to have a notary sign the form. Many banks have employees that are notaries, or you can search the Florida Department of State database by typing in your zip code to find nearby licensed notaries. Do not sign the form before you meet the notary; you must sign it in front of him or her.
Your insurer may also ask you to sit for an examination under oath (EUO). At an EUO, a representative of the insurer (often an attorney) will ask you questions about your claim, and may ask you to provide documents. If your insurance company requests an EUO, you should comply with the request. You can ask your insurer to schedule the EUO at a mutually convenient time and location, and you can have an attorney present at the EUO to assist you.
If you disagree with the amount of money your insurance company is willing to pay for the damage, you may be able to demand appraisal under your policy. In the appraisal process, you may hire an appraiser who will negotiate with the insurer’s appraiser to reach a settlement. If the two appraisers do not agree, they will choose an umpire to determine the appropriate payment. The cost of the umpire is shared by you and your insurer.
Alternatively, homeowners may be able to participate in a mediation process offered by the State of Florida.
There are many resources available to homeowners and business owners to assist with the claims process:
· The ABA has checklists for submitting property insurance and business interruption insurance claims. These checklists offer guidance for the types of information to provide to an insurance company, and the insureds’ obligations to cooperate with their insurers.
· The Florida Department of Financial Services, Division of Consumer Services has a lot of helpful information regarding disaster resources, and a helpful guide to understanding homeowners insurance.
· The Florida Bar has a legal assistance hotline for Floridians who cannot afford an attorney, as well as other resources.
Danya J. Pincavage is founding partner of Wolfe | Pincavage in Miami.