Top Tips for Dealing With A Disaster
Tip #1: Buy Insurance from an Insurance Company that has a Reputation for Good Claims Practices.
Here at the Center for Legal and Responsible Commerce we're amazed by the increasing tendency of insurers to only want to discuss price competitiveness. However, the premium you pay for the insurance policy is irrelevant if the insurer is going to deny your claim, or force you to sue to get more than their lowball offer. Further, you should not assume that because you are buying from a large insurance company that their claims practices are reputable. We recommend contacting your state's regulator of insurance companies and looking at the last few years of complaint statistics before you buy insurance. We're under no illusion that these records are perfect, but they at least provide some basis for comparison.
Tip #2: Don't Count on Your Insurance Agent.
This goes both for selecting the policy and when it comes time to file a claim. First, "your" agent is only interested in making the sale, and in order to be price competitive, they will quote you the most basic policy. This used to not be a problem, however insurers have recently been adding exclusions to the basic policy and forcing insureds to buy endorsements to remove those exclusions. While you may think this does not affect you because you've been with the same insurer for years, your agent may have switched you to a new policy in order to keep your premiums down. Further, an industry survey of licensed agents found that the majority of them did not understand the terms of the policies they were selling. Second, many insurers penalize agents for reporting claims. We have been contacted by individuals who have had their agent: (1) delay filing a claim with the insurer so as to stay within their monthly quota of claims; and (2) misrepresent that a loss was not covered, only to have the insurer's claims department admit that the loss was covered.
Tip #3: Read Your Policy When You Purchase First Purchase It.
Sure it is full of legalese and can make even some lawyer's heads explode, but you have to know if your policy actually covers what the agent and the brochure(s) claimed it covered. Not only are there exclusions, but there are limits on various categories of property. Many insurers will sell you hundreds of thousands of dollars of contents coverage, but when you examine the sublimits on contents claims, it becomes obvious that you (and most people) have been paying for contents coverage that they'll never be able to claim (e.g., many people have more than $2,500 of audio-visual equipment in their home, yet discover only after the loss that their insurer is only obligated to pay $2,500.)
Tip #4: Buy Full Replacement Cost Coverage.
While a few states require this, most allow insurers to sell policies that will only pay actual cash value. While it may be slightly cheaper, and should serve the purpose of insurance (i.e., to put you back to your pre-loss position); insurers are notorious for overestimating depreciation. Further, after a major catastrophe, it is unlikely that you are going to be able to find used items, let alone at the price the insurer claims they can get them for.
Tip #5: Create a Contents Inventory with Photographs, Model Number and Pricing, and then store it in a safe place.
Hopefully, you'll never need it, but if you do, you'll be so glad you created an inventory. Among the people we represent, some have had their insurer take property away under the guise of having it restored, only to claim that it never existed. Create the inventory now, be thorough, and try to keep a copy of the inventory off site! Having an inventory and pictures that were lost in the loss (i.e., fire, tornado, etc...) will just aggravate you further.
Tip #6: If you don't have insurance coverage for flooding and earthquakes, consider buying it.
Earth movement, earthquakes, landslides, and floods are not covered by most homeowner policies. You have to buy this coverage separately. It's worth finding out how much it would cost to add these items to your protection package. Especially flood insurance because it tends to be under priced, and insurers are usually generous when paying flood claims since it is the federal government that is the flood insurer. The insurer just sells and services the flood insurance policy.
Tip #7: Call Your Insurer Immediately After the Loss.
First, you do not want to have to worry about them claiming prejudice from delayed notice. Remember, unscrupulous insurers make money by not paying claims, and they will look for any excuse to deny your claim. Second, claims departments tend to be understaffed, so getting an adjuster to show up can take over a week even when there has been no catastrophe in your area.
Tip #8: Document, Document, Document.
Write down every contact you had with your insurer (and any of their employees or contractors) after a loss. Be specific as to the time, date, phone number called, and who initiated contact. Your notes should be made at the time of each communication, and written with enough detail to refresh your recollection years later.
Sure some of the foregoing tips seem cynical and oriented towards litigation, but given the trend most insurers have taken over the past two decades, it only makes sense to be prepared for litigation. Even if your adjuster(s) seems compassionate and competent, remember that they work for the insurance company; and many insurance companies evaluate adjusters on their ability to keep claims payments down. Some insurers have gone so far as to coach their adjusters as to how to put claimants at ease, so that they will let their guard down. It is better to be surprised by an honest adjuster, than scammed by the adjuster who you foolishly trusted. While you have an obligation to comply with the reasonable requests of your insurer, you are not required to compromise your ability to prove your claim in a court of law. Don't let the adjuster tell you otherwise.