Assurance through Insurance
Published 21st July 2006, 3:40pm
As Hurricane Ivan has so astonishingly demonstrated, the effects of a hurricane can be as devastating as a fire or any other natural or manmade disaster -- and insuring your property is usually the only way to recover a major part of the value of destroyed items -- that is, if you do your homework before you purchase a policy.
As many learned post-Hurricane Ivan, understanding your policy can make all the difference between further disaster and timely recovery.
Outlined below is some advice on assessing your insurance coverage needs and liaising with your provider before and after a catastrophe occurs.
As a policy holder, perhaps one of the first things you should do is consider the replacement value of your house in order to make sure you are adequately insured.
Many people presume that the valuation they used for buying their property will be adequate for providing a value for which they can insure. This is usually not the case. An insurance policy written on a reinstatement basis (which most homeowners' policies are) requires you to insure for the cost of rebuilding the house as new, without deduction for depreciation or wear and tear.
So you must ensure that the valuation upon which you are relying gives you a replacement value on a 'new for old' basis, unless your policy is written on an 'indemnity' basis. If you are in any doubt as to what type of policy you have, you should contact your insurer immediately.
Another potential pitfall concerning valuations is that the person doing the valuation needs to know exactly what needs to be included. Every insurance company has a different definition of what constitutes a building under their respective policies -- some will include walls gates fences and cisterns, whereas others may not.
Once you decide on and purchase your policy, it is wise to contact your insurance company before a named storm hits the island. Obtain telephone numbers and e-mail addresses from your insurer and let them advise you in advance what steps you should take following a hurricane, as you may encounter difficulties in contacting them afterwards.
Insurers themselves may have their own premises damaged in a hurricane, so you might not be able to make your claim at the same location at which you are accustomed to paying your premium. Insurance companies will also have notices placed on the damaged premises informing claimants of their new temporary location.
Policy holders should listen to the radio for bulletins on any insurer re-locations, where claims can be made and when their insurer's office is open again so that they know when claims can be made.
If your policy was bought via an insurance agency or broker, it is possible that where you make your claim will not be at the agency or broker's premises, but at the insurer's premises -- another reason you should call ahead of time -- giving you a better chance of getting your claim handled more rapidly.
After a storm, however, be patient when dealing with your insurer for pay-outs. Aggressive behaviour will not get your claim dealt with more quickly. Inappropriate and extreme behaviour towards insurance companies/loss adjusters can result in your being classed a "moral hazard," placing your future insurability at risk.
If you have a mortgage, your building claim cheque should be made payable to your bank and yourself. Contents claim cheques should be payable just to yourself unless the bank has a lien on your contents. If you do not understand what the loss adjuster has told you, or you do not agree with what he is offering you, DO NOT sign the Form of Acceptance. Once you have signed a Form of Acceptance, do not expect to be entitled to receive any further money over and above the sum agreed to.
Policies will carry an arbitration clause, which means if the amount of the claim is being disputed, the matter has to go to arbitration, not to court.
Furthermore, beware of employing persons to make your claim for you, especially those working for a percentage of the claim. If you need assistance, thoroughly check that they will advance and not complicate your claim.
Be aware as well that you are not entitled to be paid for the services of your own "adjuster" or "claims advocate" under your policy. So when using such persons you need to calculate whether it is worth it to have a substantial percentage of your claim paid to the person helping you make the claim.
Although insurance may not be affordable to everyone, there is really no substitute that will guarantee a speedier recuperation procedure.
The best solution to premiums which are not affordable is to spread the premium payment out over a number of months by way of premium financing. Most insurers will offer some form of premium financing or be able to point you in the direction of where such may be obtained.
All of these aspects of preparation should be done well in advance so that there is less stress and anxiety in post-disaster chaos. Simply knowing the ins-and-outs of your policy gives you more peace of mind in the event of a natural disaster.
Preparation BEFORE a storm strikes
It is important to check your insurance policy documents to see that your policy has not expired or will not expire at or around the expected time of the hurricane strike.
In addition, secure pens and enough paper or notepads to be able to list your damaged items. You should have a camera with the necessary batteries, cards and film that is to be kept in a place where it will not be lost or damaged in the storm. By taking photographs of all the hurricane damage, you can get on with cleaning up your premises to avoid developing health hazards such as mould, mildew, vermin, etc.
Without taking photographs, you will have to wait for loss adjusters to come to your premises and take their own photographs if you are to effectively prove your claim. This may or may not take a long time as the loss adjusters will have to attend hundreds of premises.
It also makes sense to go through every room or area in your building, list all the contents and put a value against each. Every time you buy something new, make sure you add the new items to your list. This list should be kept safe where it will not be lost or destroyed by a hurricane.
Even better would be giving your insurance company a copy of your contents list in advance. That way there is not likely to be any arguments about the value of your contents at the time of the claim.
GIS gratefully acknowledges experienced A.C.I.I. chartered insurer Don Kissoon, who assisted with this article.