1. I have reported my claim, now what should I do?

You should take all steps necessary to prevent further damage -- securing property, temporarily boarding windows and roof, drying out carpets and personal property, etc. If the insured does not do this and further damage results, it may not be covered.

You should not undertake any permanent repairs, nor dispose of any damaged property before an adjuster has been able to see the damage. In the case of perishable items (i.e., food) that must be disposed of, first take photographs of that property to substantiate the claim. If you do not comply with this requirement, some damages may not be covered. You should retain all receipts for emergency repairs and for items which might qualify under additional living expenses (such as water, ice, rental charges at another location if the home is uninhabitable, etc.).

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2. Is there anything I can do to speed up the claims process?

Although the adjuster will contact you as soon as possible, priority will be given to the most severe losses. Also be aware that larger claims will be settled in stages, not all at once. While waiting for the adjuster, there are a number of things you can do:

  • You may wish to secure a repair estimate (preferably at least two) for the adjuster to review. This will help the adjuster with the settlement process.
  • Take pictures of the damaged property. If you have pictures of the property before the loss, these should be provided to the adjuster.
  • Make a list of all damaged property, including a description, age, original cost, place of purchase and estimated replacement cost. Any receipts or canceled checks for these items should also be included.

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3. What if my home is so damaged I can't stay in it?

Under most homeowners and dwelling forms, coverage is provided for Additional Living Expenses. If the home is uninhabitable due to a covered peril and you must temporarily relocate, most policies will reimburse for the reasonable expenses incurred over and above your normal living costs. For example, it would probably cover all reasonable housing expenses since you will be paying a mortgage payment, but would only cover food expenses over and above what the policyholder normally would pay for food.

It is imperative that you retain all receipts for these expenses in order for them to be considered as a part of the loss. The expenses must be in line with normal living costs and must be a necessary and direct result of the loss.

Most policies limit recovery under Additional Living Expenses to a percentage of the amount of coverage on the home itself.

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4. What coverage is there for trees that are down?

There is no coverage under standard dwelling and homeowners policies for damage to trees by "weather perils" (such as wind). However, if the tree falls and causes damage to some other type of covered property (such as a house or fence), the damage to the house or fence would be covered. Separate windstorm coverage can be purchased as an added endorsement.

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5. Power was out for five days and the food in my freezer and refrigerator spoiled. Is it covered?

Generally, most residential policies do not cover food spoilage resulting from power outages due to the "Power Failure" exclusion. A small number of companies provide some very limited coverage (i.e., $250 - $500) as a coverage enhancement. Aside from this, coverage is generally not available.

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6. When power finally came back on, a power surge damaged some of my electrical equipment. Is it covered?

Most homeowners policies provide coverage as "sudden and accidental damage from artificially generated electrical current"; however, coverage does not apply to loss of transistors, computer chips and similar items. Therefore, damage from a power surge would not be covered for property such as televisions, VCRs, computers or similar items.

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7. The adjuster was here last week and I still haven't gotten my check. How long is this going to take?

After the adjuster has visited the insured, he must complete detailed paperwork on the loss which is subsequently submitted to the carrier for review. After everything has been checked, the carrier will issue the claims draft to the insured. If the adjuster is carrying a heavy claim load, there is often quite a delay in completing the paperwork by the adjuster, since they generally must do this at night, as well as the delay at the company as it deals with thousands of claims to review at one time. Often, an insurance agent can check with the adjuster to find out exactly when the paperwork was submitted to the carrier. If the papers have been sent in, the company may also be able to provide a status report.

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8. I've just received my claim check, and it's not enough.

If the check is for a lower amount than the insured expected, it is usually due to policy terms that require settlement on an actual cash basis with replacement cost being paid at the time repairs or replacement are actually completed. Check with your agent or company.

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9. What is the difference between Actual Cash Value and Replacement Cost Coverage?

If the policy indicates that settlement will be on a replacement cost basis, then payment will be made for the actual cost to repair or replace at today's prices, limited only by the total amount of coverage that was purchased. If the adjustment basis is actual cash value, settlement will be made by determining the replacement cost at today's prices and subtracting from that amount a reasonable amount for depreciation, age or obsolescence. Some policies provide coverage for the home on a "Guaranteed Replacement Cost" basis. In this situation, the carrier will pay whatever it costs to repair or rebuild the home, regardless of policy limits.

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10. I have a flood policy. What does it cover?

This policy covers only one peril -- damage from flooding (including rising waters, mud slides and certain damages from erosion). Not all flood policies cover both building and contents. Additionally, all flood policies carry a deductible that applies separately to both building and contents losses. There are many types of property that are not covered under a flood policy, including property in the open, certain property in basements, trees, plants and shrubs, driveways, foundations, piers, sidewalks, docks, etc. Also, there are other types of property for which coverage is provided for only a very limited amount (for example, $250 for jewelry, furs, silver, gold, fine arts and similar items). Reimbursement for additional living expenses are not provided under the flood policy.

Replacement coverage is provided under the flood policy for dwellings only if the home is the primary residence of the insured and is insured for at least 80% of its replacement cost (or the maximum available under the program). All other losses are adjusted on an actual cash value basis, including losses to contents, and losses to other items such as carpeting, antennas, awnings, appliances and miscellaneous outdoor equipment.

Unfortunately, many people discover they are not eligible for replacement coverage on their building due to under-insurance. Quite often, they only purchase this coverage at the time they are closing on a home because the lender requires it. Generally, they purchase only enough coverage to satisfy the mortgagee, rarely update this amount and often don't purchase coverage for their contents.

Founded in 1931, PIA is a national trade association which represents more than 180,000 member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses.

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SOURCE: National Association of Professional Insurance Agents

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