Settling Insurance Claims After a Disaster

Make temporary repairs: If your home is badly damaged but can be repaired, do what you can immediately to prevent further weather related damage. Cover with pastic or board up holes in the roof, walls, doors, and windows. Be careful not to risk your own safety in making the repairs. Your insurance company will reimburse you for the cost of repairs, so keep the receipts for any material you buy.

Call your insurance agent or insurance representative. Most homeowners policies cover additional living expenses as well as repairs to your damaged home and your personal possessions. Your insurance company will advance you money if you need temporary shelter, food and clothing because you can no longer live in your home and your clothes have been ruined. It will also advance you money if you need to replace major household items immediately to continue living there. The payments will be part of the final claim settlement. Let your insurance company know where you can be reached so that the claims adjuster can give you a check. Keep receipts for what you spend.

If your car was damaged and you have “comprehensive” coverage in your auto policy, you should also contact your auto insurance company. Some companies use a drive-in-claims center where an adjuster will assess the damage and often pay the claim immediately.

Prepare for adjuster's visit

Personal property: The claim process may begin one of two ways. 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, before you're asked to fill out any forms. (An adjuster is a person professionally trained to assess the damage). In either case, the more information you have about your damaged possessions – a description of the item, date of purchase and what it would cost to replace or repair – the faster your claim generally can be settled.

Make lists of the damaged items. If possible, take photographs of the damage, and put together a set of records – old receipts, bills and photographs – to help establish the price and age of everything that needs to be replaced or repaired. Write down brand names and model numbers of applicances and electronic equipment. Don't forget to list items such as clothing, sports, sports equipment, tools, china and linens, outside furniture, holiday decorations and hobby materials.

Don't throw out damaged furniture and other expensive items as the adjuster will want to see them. If your property was destroyed or you no longer have any records, you will have to work from memory. Try to picture the contents of every room and then write a description of what was there. Try also to remember where and when you bought each piece and about how much you paid. It may also speed up the settlement of your claim if you find out how much it will cost to replace the destroyed itesm.

Building Damage: Identify the structural damage to your home and other buildings on your premises, like a garage, tool shed or inground swimming pool. Make a list of everything you would like to show the adjuster when he or she arrives – for example, cracks in the wall, damage to the floor or ceiling and missing roof tiles. If structural damage is likely even though you can't see any signs of it, discuss this with your adjuster. In some cases the adjuster may recommend hiring a licensed engineer or architect to inspect the property. You should also get the electrical system checked. Most insurance companies pay for such inspection.

If possible, get written bids from reliable, licensed contractors on the repair work. The bids should include details of the materials to be used and prices on a line by line basis. This makes adjusting the claim faster and simpler. Also keep copies of whatever peper work your insurance company gives you.

Determining the claim settlement amount

Settlements for the damage to your dwelling and the contents of your home may be based on replacement cost or actual cash value. The settlement amount will depend on which type of policy you bought.

The difference between replacement cost and actual cash value: Replacement cost is the dollar amount needed to replace a damaged item with one similar kind and quality without deducting for depreciation – the decrease in value due to age, wear and tear and other factors. An actual cash value policy pays the amount needed to replace the item minus depreciation.

Guaranteed Replacement Cost: If your home was damaged beyond repair, a typical homeowner's policy will pay to replace your home up to the limit of the policy. Where the value of your insurance policy has kept up with the increases in local building costs, a swelling like the one that was destroyed generally can be rebuilt for an amount that's within the policy limit. However, some insurance companies offer a guaranteed replacement cost policy that will pay whatever it cost to rebuild your home as it was before the disaster, even if it exceeds policy limit. If you have guaranteed replacement cost policy, and building costs suddently go up because there's a shortage of building materials or construction workers, for example, your insurance company will pay the money to cover the unexpected jump in costs. But it won't pay for a house that's better than the one that was destroyed.

Additional living expenses: If you can't live in our home because of the damage, your insurance company will advance you the money to pay for reasonable additional living expenses – the amount that it costs your household to live somewhere else while your home is being repaired or rebuilt minus what you would have normally spent if you had been living at home.

Among the items typically covered are extra food costs, increased housing costs, telephone or utility installation costs in a temporary residence, extra transportation costs, to and from work or school, relocation and storage expenses and furniture rental for a temporary residence. Insurance companies often discuss additional living expenses under the heading "loss of use".

The choice of the repair firm is yours: The insurance company won't pay for you to upgrade your home. But if your home was adequately insured, you won't have to settle for anything less than you had before the disaster. Be sure the contractor is giving you the same quality materials.

Don't get permanent repairs done until after the adjuster has approved the price. If you've received any bids, show them to the adjuster when he or she arrives. If the adjuster agrees with one of your bids, then the repair process can begin.

If you can't reach an agreement with your insurance company: If you and your adjuster can't agree on a price, whether it involves a minor repair job or the complete rebuilding of your home, first contact your agent or your insurance companies claim department manager. Make sure you have figures to back up your claim for more money.