What To Do After A Loss
Know your coverages
It’s best to talk to an agent and understand what coverages you have, and what you may need.
“Actual Cash Value” vs “Replacement Cost”
The difference in what an insurance company will pay for your damaged home could be significantly different under an Actual Cash Value policy than a Replacement Cost policy. Your insurance company may offer both ACV and RC as options, or only one type. Check your coverage and make sure you understand what it means.
Replacement Cost compensates you for the actual cost of replacing property. If your camera is stolen, for example, a replacement cost policy will reimburse you the full cost of replacing it with a new camera of like kind. The insurer will not take into consideration wear and tear. Actual cash value is equal to the replacement cost minus any depreciation (ACV = replacement cost – depreciation). It represents the dollar amount you could expect to receive for the item, in this example, the camera, if you sold it in the marketplace.
Almost all auto policies are ACV policies. Some policies have “new car replacement” options available, or “gap coverage” options, that can pay above the market value of the car, but by and large, the insurer will reimburse the insured for the market value of the car, not the replacement cost.
In an insurance policy, the deductible is the amount paid out of pocket by the policyholder before an insurance provider will pay any amounts due under the policy. You have to pay your deductible with most claims, no matter how many you have per year or the lifetime of your policy. Your insurer only pays for damages above your deductible. For example, if you have $300 in damages and a $500 deductible, you would pay all of the repair costs. Also, if you total your car, your insurer will give you a payment for its current value, minus your deductible.
For homeowners policies, the deductible amount may be a percentage of the home’s dwelling value. For instance, if your home’s dwelling value is $300,000, and you have a 1% deductible, your deductible will be $3,000. Some homeowners policies have different deductibles for “wind and hail coverage” and “all other perils”.
Deductible amounts vary, and can affect the premium you pay, so you should consult with your insurance agent about what deductible amount is right for you.
Avoid Unscrupulous Contractors
Avoid contractors and others who are attempting to take advantage of your loss. This includes building contractors and unlicensed adjusters who enter town after a storm to take advantage of the situation. Work with building contractors who have built a good reputation, and don’t pay for repairs in advance of the work being done.
TDI has a hotline to report suspected fraud. Contact TDI or your insurance company if you suspect fraud with a contractor.
ICT has a separate page detailing other types of insurance fraud.
Understanding what is and isn’t covered under a policy is important. Some homeowners policies are “named perils” policies, while others are “all perils” policies. “Named perils” policies specify a list of things that are covered, and anything not specifically named is not covered, unless added by endorsement. “All perils” policies generally cover anything that can damage your home that is not specifically excluded in the policy. Endorsements are usually available that can expand what’s covered, such as adding coverage for jewelry, water damage, earthquake, mold, etc. Again, it’s best to talk to an agent if you have questions about what your policy does or does not cover.
Most homeowners policies do NOT cover flood damage. Flood insurance is a separate product, usually underwritten by the Federal Emergency Management Agency, or FEMA, through the National Flood Insurance Program. Some private carriers also offer flood insurance. You do not have to be in the flood plain to purchase flood insurance. Typically, there is a 30 day waiting period to purchase flood insurance, so plan ahead.
Commercial insurance has many of the same property protections available as homeowners insurance does in relation to Texas weather, although there are some unique coverages available to commercial policies. One such coverage is business interruption insurance. Business interruption insurance is a type of insurance that covers the loss of income that a business suffers after a disaster. The income loss covered may be due to disaster-related closing of the business facility or due to the rebuilding process after a disaster. This type of coverage is generally not sold as a stand-alone policy, but can be added onto the business' property insurance policy or comprehensive package policy such as a business owner's policy (BOP). Since business interruption is included as part of the business' primary policy, it only pays out if the cause of the loss is covered by the overarching policy.
- Talk with your agent or company to confirm that your coverage provides the needed protection for your property in the event of a catastrophic storm.
- Conduct an inventory of your personal property with your camera. Whether it is a fire, tornado or flood, your insurance company will need to verify what you lost.
- Know the name of your insurance agency and company, so that you can contact them promptly in the event of a damaging storm.
- Take photos and video of any storm damage and keep receipts of anything needed to prevent further damage to your home until permanent repairs can be made.
After a loss, make sure you have contacted your agent or insurance company before you start any major repairs.