Hurricane Insurance Claim FAQ
What's the difference between a hurricane and tropical storm? Does the difference affect my ability to collect insurance money?
A tropical storm forms at sea with a large low-pressure center and numerous thunderstorms that produce strong winds and heavy rain. Even though it is not a hurricane, a tropical storm can still inflict heavy damage due to wind, rain, storm surges, mud, mold, and debris.
A tropical storm becomes a hurricane when the winds reach at least 74 mph. Using the Saffir-Simpson Hurricane Scale, forecasters can measure a hurricane’s intensity and convey the potential impact of hurricanes. Based on this information they are placed into one of five categories. A Category 1 hurricane is the weakest, packing 74-95 mph winds, while a Category 5 storm is the strongest, with winds in excess of 155 mph.
Regardless of whether your property damages are inflicted by a hurricane or a tropical storm, your insurance policy may cover repairs and rebuilding costs. However, the Houston-based hurricane insurance lawyers at Arnold & Itkin LLP will review your policy in close detail and let you know of any potential issues.
Has the Gulf Coast recently been hit hard by hurricanes?
Yes. In 2005 and 2008 the Gulf Coast was hit by two of the most devastating hurricanes in U.S. history. Hurricane Katrina struck in 2005 and left 1,800 people dead in its wake, with financial losses estimated at close to $110 billion. Three years later Hurricane Ike swept through, causing an estimated $30 billion in damage.
The residents of Texas, Louisiana, Mississippi, Alabama, Georgia and Florida have experienced unusually active and destructive hurricane seasons for the last five years with forecasters at the National Hurricane Center predicting that this uptick in storm activity is part of a natural cycle that could last 20 years or more.
Insurance companies have been required to pay out billions of dollars in claims. As a result, they have become more aggressive in denying, delaying storm-related claims or settling them for less than they are worth.
Do insurance companies really try to avoid paying the full value?
Many people believe that denying, delaying or making lowball settlement offers is a prevalent practice throughout the insurance industry. In fact, a lawsuit was filed by the Louisiana Attorney General in the aftermath of Hurricane Katrina, based on allegations that a study advised one insurance company to put up a fight when policyholders fought low settlement offers. The lawsuit alleged that insurance companies had “coerced their policyholders into settling their claims of damages for less than their value by editing engineering reports, by delaying payment and by forcing policyholders to litigate claims to receive full value.”
What damages will my insurance policy cover if my home is hit?
The scope of property damage that is covered by a homeowner's policy will vary. Some policies cover damage to just the home, while others extend to outlying structures, including garages, sheds or pools. Some policies also include coverage for personal property, such as furniture, clothes, TVs and jewelry and also provide expenses to cover the cost of staying elsewhere while your home’s storm damage is being repaired.
Most homeowner’s insurance policies exclude coverage for flood damages. You must obtain that coverage through the Federal Emergency Management Agency’s Flood Insurance Program. In our experience, many insurers will attempt to interpret policy provisions as narrowly as possible or try to split damages between your covered and non-covered losses in a way that minimizes how much they must pay you.
What damages will my insurance policy cover if my business is hit?
Most business insurance policies include language that mentions specific business concerns, such as coverage for equipment, machines, computers, supplies, inventory and business records, in addition to coverage of the same types of physical damages extended to homeowners. The policies may also include “business interruption."
Business interruption policies can provide coverage for extended periods and cover diminished income after a business reopens. Other coverage includes contingent business interruption coverage (when the loss is caused by damages to a third party supplier), ingress / egress coverage (when access to property is cut off) and coverage for measures taken prior to a hurricane’s arrival, such as putting up plywood.
If my home has been damaged in a hurricane, what should I do?
Taking care of your basic physical needs is important to ensure no one in your family becomes sick or injured from unsafe food, water, structures or facilities. You can also take appropriate steps to protect your property from further damage by having professional contractors, inspectors or appraisers review the extent of damages.
Then, you should contact a lawyer, who can review your policy and help you to determine your coverage and policy terms. The attorney may send notice to the insurance agency about your damages. Sending a notice letter to the insurer on your own can potentially harm your ability to make a successful claim. Insurance companies may use the contents of that letter to either wholly or partially deny your coverage.
Some of the damages to my home were caused by wind and the rest by storm surge. How will I know what is covered by my policy?
Generally, homeowners' insurance policies will cover wind and rain damage but exclude floods. Flood damage is typically covered in a separate policy through the National Flood Insurance Program administered by the Federal Emergency Management Agency. Without this you likely will not receive any money. This means the damages to your home will need to be apportioned between covered and non-covered losses.
I’m confident that the roof and window damage to my home from the hurricane will be compensated by my insurance company, but what about my TV and stereo system that were destroyed?
If you have a homeowners’ insurance policy that covers personal property damage, you may be entitled to payment for the loss of many of your personal possessions, including your electronics such as your TVs and stereo. In addition, your policy may also cover your jewelry, clothing, furniture and even an automobile. You should check your files right away to find any receipts or other documentation indicating the cost of your items -- insurance companies are reluctant to pay any amount and will certainly give your claim scrutiny.
An “SIU adjuster” has been assigned to my claim. What does this mean?
Insurance companies employee various types of adjusters including company adjusters, independent adjusters and public adjusters. All of these have the ability to review insurance claims. An "SIU adjuster" is from the special investigative unit. This adjuster may be assigned to a case when an insurance company suspects insurance fraud.
If you have been contacted by an SIU adjuster who is assigned to your case, it is possible that your insurance company believes you have submitted a fraudulent claim. Another possibility: the SIU adjuster may by trying to intimidate you into quickly accepting a low offer for your damages to settle your case. Regardless of the reason, if an SIU adjuster is investigating your case, you should immediately obtain legal assistance.
It has been months and I still haven’t received compensation. Is there anything I can do to receive my payments?
When you file a legitimate claim and there appears to be no progress after weeks or months, contact your insurance company to find out the status of your claim. The law protects you against "bad faith" insurance practices, including the failure to affirm or deny the coverage of your claim within a reasonable time period.
You have the right to question the company’s delay in disbursing your payments. The law provides several potential remedies if the insurer is found to have acted improperly, including:
- Breach of contract
- Breach of the duty of good faith and fair dealing
- Statutory penalties that can include money damages and attorney’s fees.
If my business is slower after I reopen following a hurricane, can I file a claim with my insurance company for lost revenue?
Most businesses have “business interruption” insurance which is designed to cover:
- Profits you would have earned had you not been closed due to the disaster;
- Operating expenses, such as water and electricity, you may incur even if closed; and
- Expenses for temporary premises.
If you have a business interruption policy, you may be entitled to compensation for the “extended period of indemnity.” This period starts once you have completed your repairs and reopened your business and extends for a period specified in your policy, which can be several months or as long as a year. The payments you could be entitled to would be equal to the difference between your pre-storm revenue and your post-storm revenue, based on your financial records. You will need to have documentation to show what your business earned.
If the supplier for my business is unable to fulfill its obligations, will my insurance policy cover the additional expenses?
If you have contingent business interruption coverage, then you may be entitled to compensation when your business operations are affected due to the interruption of service by a company in which you rely for goods. This type of policy covers losses that are directly caused by damage to a “contingent” business.
Your insurance company will probably require that the loss be of the same type covered under your own business interruption policy and that the result was a significant disruption or suspension of your business operations. It is important to review your insurance policy to determine how coverage would be affected.
For several days, my business was forced to close. After the storm, the local area was blocked. Can I recover damages?
If your business insurance includes "civil authority" or "ingress and egress" clauses in your policy, you may be eligible to receive coverage for losses due to the inability to operate your business from a forced closure or for the inability of customers or goods to access your business. Civil authority clauses cover your losses due to the mandated closure by the local government. Ingress / egress will take effect if your area is blocked by the fire department; there is no actual government closure, but business may be slowed or halted.
It has been years since a hurricane. If my insurance company refuses to pay the full value of my claim, can I file a lawsuit?
Gulf Coast states each have an applicable statute of limitations dictating by when a claim must be filed. If your state has a limit of two years or less, then your claim will be time-barred and you will have lost the ability to file a claim. There is a provision, however, that permits the statute of limitations in a particular case to be "tolled."
If you had extenuating circumstances, such as an illness or injury, that prevented you from filing your claim, then the time would not run while you were incapacitated. Even if you can’t bring a lawsuit, you may be still able to receive payment of a claim from your insurance company, especially if any statements by a company agent, employee or adjuster caused your delay.