In the Wake of Isaac, the I.I.I. Provides Answers to the Most Common Insurance Questions Following a Hurricane

September 6, 2012
FOR IMMEDIATE RELEASE
New York Press Office: (212) 346-5500; media@iii.org

NEW YORK, September 6, 2012 — Insurance companies have deployed claims adjusters in the Gulf region following the destruction caused by Hurricane Isaac. Those who have suffered the most damage will be given the first priority. In addition to settling claims, adjusters are answering questions about how insurance works following a natural disaster. The Insurance Information Institute has outlined some of the most frequently asked questions below.

1. Is damage from hurricanes covered under my homeowners insurance policy?
Standard homeowners insurance policies cover damage to the structure of your home and to personal possessions from windstorms such as hurricanes, tropical storms and tornadoes. There is also coverage for storm damage to a garage, deck, gazebo, shed, swimming pool and other structures on your property.
 
2. Does my renters insurance cover damage from hurricanes?
A renters policy provides coverage for personal belongings damaged by a hurricane. Damage to the apartment’s structure, such as walls and floors, is covered under the insurance policy of the building owner.
 
3. Are flood losses covered under my homeowners or renters insurance policy?
Flood damage is generally not covered under standard homeowners and renters insurance policies. Flood coverage is available from the National Flood Insurance Program (NFIP) and from a few private insurers. Flood insurance covers losses resulting from heavy or prolonged rain, coastal storm surge and failure of levees or dams. The NFIP provides coverage for up to $250,000 for the structure of the home and $100,000 for personal possessions. Excess flood insurance is also available from some private insurers if you need additional insurance protection over and above the basic NFIP policy. For more information about flood insurance, watch the I.I.I. video, Water and Flood Damage: What Is Covered and What Is Not.
 
4. I live in a condo/co-op. Am I covered for hurricane damage to my unit?
If you purchased a homeowners policy tailored to a condominium or a co-op, you are covered for damage to the interior space of your home as well as to your personal property. Some co-op/condo associations are only responsible for covering the bare essentials such as the walls, floor and ceiling. As the owner, you may be required to insure the plumbing, dishwasher, dryer, wiring, fixtures, etc. The condo association’s insurance should cover the common areas of the building such as foundations, roofs, slabs, perimeter walls, boiler rooms, corridors, laundry rooms, common stairs, building lobby, trash areas, utility rooms and water mains. Obtain a copy of the condo or co-op association’s insurance policy tounderstand what it covers and talk to your insurance professional to make sure there are no gaps in coverage.
 
5. Is flooding covered under a condo/co-op insurance policy?
Flood damage to the building is covered only if the condo/co-op association purchased a separate flood policy, either from the NFIP or through a private insurance company. This type of flood insurance covers the structure itself, including common areas; the condo/co-op flood insurance policy will not pay for damage caused by flood waters to the personal belongings of individual owners in the building. Owners of a condo or co-op need to get a separate flood insurance policy for their personal possessions. 
 
6. My car was flooded in the storm. Does my auto insurance cover that?
Flood damage to vehicles is covered if you have purchased comprehensive coverage, which is optional with a standard auto policy.
 
7. The power went out during the storm and food in my refrigerator and freezer was spoiled. Is that covered?
Some insurance policies include food-spoilage coverage, usually for a set amount that can range from $250 to $500 per refrigerator or freezer, but check with your insurance professional as each company is different.
 
8. If I make temporary repairs to my home, will I get reimbursed?
Most insurance policies have a provision to reimburse you for the expenses of reasonable and necessary repairs that protect against further damage—up to a specified dollar amount. Find out what that amount is from your insurance professional and save all the receipts from purchases relating to the repair.
 
9. If a tree hits my house, am I covered?

If a tree hits an insured structure such as your house or garage you are covered for the damage the tree caused to the house and any contents within. There is also coverage for the cost of removing the tree, generally up to about $500 to $1,000, depending on the insurer and the type of policy purchased. If the fallen tree did not hit an insured structure, there is generally no coverage for removal of trees and branches that fell in your yard. However, some insurance companies may pay for the cost of removing the felled tree if it is blocking a driveway or a ramp designed to assist the handicapped. Ask your insurance professional about the specific coverage in your policy. In some situations where the felled tree was located on a neighbor’s property, the policyholder’s insurance company may try to collect from the neighbor’s insurance company in a process called subrogation. This sometimes occurs if the tree was in poor health or not properly maintained. If the insurer is successful, you may be reimbursed for the deductible. For more information, watch the I.I.I.’s video, Trees and Insurance: Tips on What Is and Is Not Covered.

Cars damaged or destroyed by falling trees are also covered under the optional comprehensive portion of a standard auto insurance policy.
 
10. My home is uninhabitable due to the hurricane. Does my policy cover temporary living expenses?
Most home and renters insurance policies cover what is known as Additional Living Expenses (ALE) if your home is unlivable because it was damaged or destroyed by an insured disaster such as a hurricane. The amount is generally 20 percent of the insurance you have on your home. Some insurers pay more than 20 percent; others limit additional living expenses to an amount spent during a specific time period—usually one year to two years, though some companies may offer longer periods or a higher amount for an additional cost. Others have no time limit until the home is fixed or the insured has a new permanent residence. You must have a physical loss to your home in order to be eligible for ALE coverage. Check with your insurance professional to be sure you understand the time or dollar limits on your ALE. And keep all your receipts to document your expenditures.
 
11. I evacuated due to the storm. Are my evacuation expenses covered?
It depends on what is stated in your insurance policy. Mandatory evacuation expenses may be covered under certain conditions. Typically, there has to be physical damage to the home before coverage is triggered.
 
12. I have a percentage deductible for hurricane damage. How do I know what my out-of-pocket costs are?
The declarations page of your insurance policy details the exact dollar amount of your hurricane deductible. Whether a hurricane deductible applies to a claim depends on the specific trigger, which varies by state and insurer and is usually linked to wind speeds. Hurricane deductibles are incorporated into many of the homeowners insurance policies issued in the 18 Eastern and Gulf Coast states and the District of Columbia. Check with your insurance professional to be sure you understand what the trigger is and the exact percentage of your hurricane deductible.
 
13. As a homeowner, can I get a low-interest disaster loan from the Small Business Administration (SBA) or is that only for businesses?
The SBA provides low-interest disaster loans to homeowners, renters, businesses of all sizes (including landlords) and private nonprofit organizations for disaster damages not fully covered by insurance or other compensation.
 

RELATED LINKS

Facts and Statistics: Catastrophes
 
 

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Insurance Information Institute, 110 William Street, New York, NY 10038; (212) 346-5500; www.iii.org