03:40 PM CDT on Monday, September 12, 2005

Insurance Information Institute

Q: How can people with claims contact their insurance companies?

A: Many insurers are running ads in local media with claims contact numbers. A comprehensive list of 800 claims numbers is available at http://www.iii.org/media/updates/press.743044/ and http://www.disasterinformation.org/findins.htm . To file a flood insurance claim, contact the National Flood Insurance Program (NFIP) at (800) 621-3362.

Q: Are losses from flood covered under homeowners, renters and business insurance policies?

A: No. Homeowners insurance policies have never covered losses in the event of a flood. Flood insurance for homeowners, renters and businesses is readily available through the Federal Emergency Management Agency’s (FEMA) National Flood Insurance Program (NFIP). It is sold via the more than 80 participating insurance companies that write and service policies through a special arrangement with the Federal Insurance Mitigation Association (FIMA), as well as through thousands of insurance agents nationwide. For more information on water damage claims see the Home section.

HOME

Q: If my home was damaged or destroyed by Hurricane Katrina, will my homeowners insurance company pay to have it rebuilt?

A: The typical homeowners policy covers damage due to wind, wind-driven rain and fire (including arson), theft (including looting), vandalism and damage to your home caused by fallen trees. So if your home has been damaged or destroyed by windstorm damage or any of these named perils, your homeowners insurance company will pay to have your home repaired or rebuilt up to the limits of your policy. Homeowners insurance also covers damage to other structures on the premises, such as a garage or tool shed.

You are covered for flood if you purchased flood insurance from the federal government’s National Flood Insurance Program, a division of the Federal Emergency Management Agency (FEMA). The coverage has been readily available at affordable prices from the federal government since 1968.

Flood losses have never been covered under any homeowners insurance policy.

Q: Does my homeowners insurance provide any coverage for water damage from a hurricane?

A: Yes. Rain entering through wind-damaged windows, doors or a hole in a wall or the roof, resulting in standing water or puddles, is considered windstorm—rather than flood—damage and is covered by your homeowners policy. The NFIP flood insurance policy only covers damage caused by the general condition of flooding typically caused by storm surge, wave wash, tidal waves, or the overflow of any body of water over normally dry land areas. Buildings that sustain this type of damage usually have a watermark, showing how high the water rose before it subsided.

Q: How will insurers distinguish between wind and flood damage when settling the claim?

A: Each claim will be evaluated on a case by case basis. In some cases, losses will be apportioned between a flood insurance policy and a homeowners insurance policy.

Q: Will my homeowners insurance cover the contents of my home?

A: Yes. In addition to paying for damage to the structure, homeowners policies also cover damage to your furniture, clothes, appliances and other personal possessions up to the limits of your policy. Again, homeowners insurance applies to a covered event, such as wind damage, fire, theft and vandalism.

Q: Is there a limit on how much an insurance company will pay for the loss of my personal possessions, such as clothes, furniture and appliances?

A: The contents of your home—your personal possessions—are covered up to the limit set out in the policy, usually 50 or 75 percent of the amount of coverage you have on your home, depending on the type of policy. There are special limits on certain valuable items such as furs, silverware, cash and other items (e.g. coin collections). You can buy more contents coverage for such items.

Q: I can’t return to my home and am incurring expenses for housing and food. Does my homeowners insurance policy provide any assistance for these extra expenses?

A: If your home is damaged or destroyed you may have to live elsewhere while your home is being repaired. In that case, you're likely to incur additional living expenses.

If the damage to your home is covered, your homeowners, condominium or renters policy should also include Additional Living Expense (ALE) coverage that reimburses the costs of residing in a temporary location until you can return to your home. ALE coverage usually provides living expenses of 10 to 20 percent of the structural coverage on the home. For example, if the insured value of your home is $150,000, you may be entitled to $15,000 in ALE coverage. ALE coverage is not available under the NFIP flood insurance policy. Most policies have an ALE limit of one to two years.

Additional living expenses include items such as food and housing costs, and telephone or utility installation costs in a temporary residence. Also, extra transportation costs to and from work or school, relocation and storage expenses, and furniture rental for temporary residence are eligible under additional living expense coverage. If you're renting out a room in your house and sustain insured damages to your home, additional-living-expense coverage often pays for the loss of rental income.

You will be required to account for any covered expenses, so be sure to keep all of your bills and receipts for expenses associated with your relocation, such as emergency shelter, clothing and food.

All policies differ, so it is important that you contact your insurer or insurance agent directly for more information about ALE coverage.

Q: When can I get ALE reimbursement?

A: Many insurers will advance ALE funds immediately upon notification of a covered loss; others may reimburse policyholders at a later date. If you receive an advance payment, note that it will be deducted from your final claim settlement. Check with your insurer for more information.

Q: What about tree damage?

A: Most insurance companies will pay for the removal of trees (generally up to a $500 limit) that have fallen on your home but they won't pay to remove trees that have fallen but haven't caused damage to your home. They won't pay to replace trees, shrubbery or lawns that have been damaged in a storm.

Q: Are the costs of debris removal covered?

A: If it’s related to a covered loss, most homeowners policies will pay for debris removal. Check with your insurer on the limits of this coverage—usually a percentage of the insured value of your home.

Under a Presidential disaster declaration, the Federal Emergency Management Agency (FEMA) may provide assistance to State and local governments for costs associated with debris removal operations. (Debris removal operations include collection, pick-up, hauling, disposal at a temporary site, segregation, reduction and final disposal).

Disaster-related debris may be removed from private property if it is pre-approved by the Federal Disaster Recovery Manager, is a public health and safety hazard, and if the work is performed by an eligible applicant, such as a municipal or county government. The cost of debris removal by private individuals is not eligible under the Public Assistance Program; however, within a specific time period, a private property owner may move disaster-related debris to the curbside for pick-up by an eligible applicant. That time period will be established by FEMA in coordination with the State. (The cost of picking up reconstruction debris and normal garbage pick-up is not eligible for FEMA reimbursement).

Q: Must I pay a deductible for a hurricane loss?

A: Yes. All homeowners insurance policies include deductibles—a portion of the loss assumed by the policyholder. They can be a dollar amount such as $500 for a fire. However, for a hurricane loss this deductible is often a percentage of the insured value of the home or a dollar deductible that is higher than for other causes of loss. Companies usually offer a range of hurricane deductibles. You should check with your insurance company or agent about the exact deductible you selected.

Hurricane deductibles exist not only in Louisiana, Mississippi and Alabama, but also in 15 other states (Connecticut, Delaware, Florida, Georgia, Hawaii, Maine, Maryland, Massachusetts, New Jersey, New York, North Carolina, Rhode Island, South Carolina, Texas, Virginia) and Washington, D.C.

Q: I don’t have a copy of my policy, a home inventory or any documentation. What should I do?

A: Contact your insurance agent or company representative as soon as you are able. Your insurance company may send you a claim form, known as a “proof of loss form,” to complete. Or an adjuster may visit your home first. In either case, the more information you have about your damaged possessions—a description of the item, approximate date of purchase and what it would cost to replace or repair—the faster your claim generally can be settled.

Q: Is there a time limit for filing a claim?

A: Insurance policies place a time limit on filing claims which varies from state to state and company to company. Usually you have at least one year from the date of loss, but you should file a claim as soon as you can. Check with your insurer to see what the time limits are.

Q: My home was damaged by the hurricane, and my homeowners insurance premium is due in a few weeks. I will need the insurance after the home is rebuilt, but must I pay the premium before then?

A: Just as you have to continue making payments on your mortgage, so too must you continue payments on your homeowners insurance. If you can't pay your mortgage because of what happened, your lender may be able to help you. If you are at risk of losing your home because of the disaster, your lender may stop or delay initiation of foreclosure for 90 days. Lenders may also waive late fees for borrowers who may become delinquent on their loans. The same holds true for insurers. Contact your insurance company to determine requirements.

APARTMENT

Q: Will my landlord’s insurance pay for the damage to my personal possessions?

A: No. Your landlord is only responsible for the damage done to the structure of the building. Damage to your personal possessions is covered only if you have a renter’s insurance policy. Like a homeowners policy, your personal possessions are covered from loss from perils such as windstorm, fire, theft and vandalism, but not flood. The NFIP flood insurance policy is also available for renters.

Q: Who knows how long it will take for my apartment building to be rebuilt. What do you do in the meantime?

A: If the damage is covered under your renters insurance policy (i.e. wind damage, fire and theft) renters insurance will pay for any additional living expenses you may incur before you are able to return to your apartment. Within certain limits most policies will reimburse you the difference between your additional living expenses and your normal living expenses.

CONDO

Q: I live in a condominium and there is damage to my kitchen cabinets, clothes as well as the roof and elevator of the building. Just who is responsible?

A: Usually, your own condominium insurance policy provides coverage for your personal possessions, structural improvements to your apartment and additional living expenses. Flooding is not covered under a condominium policy but through the National Flood Insurance Program (NFIP).

There is also a “master policy” provided by the condo board which covers the common areas you share with others in your building like the roof, basement, elevator, boiler and walkways.

Sometimes the association is responsible for insuring the individual condo units, as they were originally built, including standard fixtures. The individual owner, in this case, is only responsible for alterations to the original structure of the apartment, like remodeling the kitchen or bathtub. Sometimes this includes not only improvements you make, but those made by previous owners.

In other situations, the condo association is responsible only for insuring the bare walls, floor and ceiling. The owner must insure kitchen cabinets, built-in appliances, plumbing, wiring, bathroom fixtures, etc. Your association’s bylaws and/or property lease will determine who is responsible for what.

If you have unit assessment coverage, it will reimburse you for your share of an assessment charged to all unit owners as a result of windstorm damage. For instance, if there is windstorm damage in the lobby, all the unit owners are charged the cost of repairing the loss.

CAR

Q: My car was flooded during the hurricane. Will the damage be covered?

A: Flood damage is covered under the comprehensive section of standard auto insurance policies. Not all drivers, however, (particularly drivers of older vehicles) purchase comprehensive coverage as it is not required by state law.

Q: My vehicle was vandalized after the hurricane—the windshield was smashed and items were stolen from the trunk. Am I covered?

A: If you have comprehensive insurance, your vehicle will be covered for theft or vandalism. So any damage or destruction of the vehicle due to looting in the wake of the hurricane will be paid. If you have homeowners, renters or condo insurance, the items in your trunk would most likely be covered under the personal possessions portion of that policy.

BUSINESS

Q: Is my business covered for property damage?

A: A typical business owner’s policy covers damage due to wind, wind-driven rain and fire. So if your business has been damaged or destroyed by one of these perils, your insurance company will pay to have your business repaired or rebuilt. Flood damage is usually excluded or very limited unless you have purchased flood coverage from the NFIP or a private insurer.

Q: I had to shut down my business. Will my insurance cover the lost revenue? If so, for how long?

A: Business interruption insurance covers the profits a business would have earned, based on its own financial records, had the disaster not occurred. The policy covers additional operating expenses incurred as a result of the disaster such as the extra expense of operating out of a temporary location, even though business activities have come to a temporary halt.

Reimbursement under business interruption insurance is usually triggered by some kind of damage to the property where the business is conducted, and only when the damage is the result of a covered peril such as wind. Evacuation orders do NOT trigger BI coverage. Acts of “civil authority” which preclude a business from reopening can trigger business interruption coverage if the declaration was the result of a covered peril. Generally, there is a deductible either in a flat dollar amount or a waiting time. If it is a waiting time, it is typically 24 to 72 hours, meaning that payments do not begin until the business has been disrupted for one to three days.

Most business interruption forms do not include coverage for perils such as emergency evacuation by civil authority or a major utility disruption, unless they were added by endorsement. Typically, when business interruption insurance is purchased, the timeframe for coverage is a year. The overall cost of BI is determined by the amount of coverage required during the period specified.

NFIP flood insurance does not provide coverage for business interruption.

Q: Can insurance help me keep my business going while it is closed?

A: If you purchased business income coverage, it will reimburse you for lost profits and continued fixed expenses during the time that the business must stay closed while the premises are being restored. If you have ordinance or law coverage it will help pay for the extra costs of tearing down the structure and rebuilding it.

Q: What about extra expenses incurred beyond normal operating expenses?

A: If you have extra expense insurance, it will reimburse your company for what it spends, over and above normal operating expenses, to relocate to avoid having to shut down during the restoration period.

Q: The contents of my business were stolen and the property was vandalized. Am I covered?

A: Business owners policies cover theft and vandalism, so any losses due to looting in the wake of the hurricane would be paid.