According to the World Health Organization, natural disasters kill 90,000 people every year. Nearly 160 million people around the globe are impacted annually by natural disasters. In 2016, disasters caused $175 billion in damage.
For many people, experiencing a natural disaster is not a matter of if, but when. And when the unthinkable happens, your insurance is a crucial component to returning a semblance of normalcy to your life.
When dealing with a devastating disaster, filing an insurance claim may not be your top priority. But it's a necessary first step in rebuilding. In this article, we will help you prepare to file a natural disaster claim.
Are You Covered?
First, are your damages covered by your insurance? We hope so. Not all insurance plans are created equally. Your policy type and details will dictate the scope of your claim.
Homeowners and renters insurance
|Dwelling & personal property||Dwelling||Personal property||Dwelling/ personal property|
|Fire or lightning||x||x||x||x||x||x||x|
|Windstorm or hail||x||x||x||x||x||x||x|
|Weight of ice, snow or sleet||x||x||x||x||x|
|All perils except for those specifically excluded.||x|
|HO-1, HO-2 and HO-3 refer to standard Homeowners Policies
HO-1 has been discontinued in most states
That's right: no policies cover floods, earthquakes, and land movements by default. You have to purchase additional coverage to for these events. If you live in an area prone to any of the disasters listed above, make sure you're covered for them.
Was your car is damaged in a natural disaster like a flood or from falling tree limbs after a windstorm? If so, the comprehensive coverage on your car insurance policy will pay for necessary repairs. Beware: comprehensive insurance isn't part of a standard plan – especially on older vehicles.
Finding out what your policy covers is the first step you should take after a natural disaster.
First Steps to Take After a Natural Disaster
When your car or home is impacted by a natural disaster, you get an enormous to-do list. From finding temporary housing to repairing the destruction, you will have a lot on your plate.
It's vital to act quickly, especially when dealing with insurance. Don't drag your feet. After a natural disaster, insurance companies are swamped with claims. "In the event of a mass disaster like the hurricanes in the Gulf, the insurance companies can't sustain the volume of claims getting processed," says C. Bennett Long, partner at the law firm of Long & Long. If you wait, your claim will take considerably longer to process.
Here are the immediate steps you should take after a natural disaster.
- Stay safe: This can't be overstated. As important as your home and possessions are, nothing matters more than your personal safety. Don't put yourself in danger trying to stop damage. Possessions are replaceable, but your safety and health are not.
- Check your policy. Ask questions: Once the disaster has passed and you're safe and aware of the extent of damages, it's time to talk to your insurance company. Hopefully you know what your policy does and doesn't cover, but if not, it's time to refresh. Ask these questions:
- Is this damage covered? Many companies exclude certain damage types, unless you purchase extra coverage. For example, standard policies don't cover flood damage. That includes car insurance.
- Is there a time limit to make a claim? "Your policy provides a certain period of time for you to notify the insurer of your claims. Don’t risk payment of a valid claim for failure to comply with the notice period," says Donna Childs, founder and CEO of Prisere, a disaster risk reduction consulting company. Be aware of any restrictions.
- How long will it take to process the claim? Normally, processing a claim takes a few weeks. However, after natural disasters, insurance companies deal with tons of claims. Your claim may end up taking several weeks, or even months. Ask your insurer for an estimate of how long you will need to wait.
- Does your policy include temporary living expenses? Most home insurance plans provide money for housing, food, and transportation if your home is rendered unlivable.
- What else do you need? Your insurance company may request extra information like photos, receipts, estimates, and inventory lists. They will likely send out an adjuster to assess the damage. Find out what they need from you to speed up the process on your end.
- Photographs: Take pictures of damage. If possible, use a camera with time-stamps and geo location data. Most smart phones include this information in their photos.
Establishing a paper trail is very important. Comprehensive photos illustrating all damage help your case.
Make the photos as detailed as possible. For example, if your car is damaged, try to include the license plate in the photos. Irrefutable proof of damage will help your claim down the road.
Don't wait to take pictures. Damages may look less serious if you wait.
"Getting evidence of how much water damage you actually had is going to be extremely important when filing a flood claim or getting financial assistance from FEMA," says John Espenschied, Agency Principal, Insurance Brokers Group. "After the water has receded it will be more difficult for an adjuster to visualize the magnitude of the damage."
- Temporary repairs: If you can make quick repairs to stop further damage, do it. Natural disasters cause damage for multiple days, even after the worst has passed. For example, earthquakes can cause tsunamis. Hurricanes often come in bunches – especially in tropical zones. And floods can lead to fires.
Don't be fooled into thinking the danger is done once the weather improves. Be prepared for more damage. If you're facing flooding, sandbag the perimeter of your home – especially the basement. For hurricanes and windstorms, block your windows off, even if they just shattered.
Since repeat disasters are common, don't make any extensive repairs until you're sure the risk for additional disasters is minimal. You'd feel pretty silly if you replaced all your broken windows after a hurricane, just to have another hurricane break your new windows.
Additionally, it's risky to make repairs before an adjuster can note full damage levels. If you make repairs before the damage amounts are assessed, there may be discrepancies down the line. Make sure damages are extensively documented before you make any changes.
- Documents: Stay on top of all paperwork. If you haven't already, create an inventory list of all your possessions – particularly damaged ones. Gather any receipts you have.
After filing a claim and starting repairs, maintaining paperwork remains vital. Keep written track of all communications with your insurer. Get documented estimates of all repairs. Be as thorough as possible.
- Relocate: When your home sustains enough damage, you need temporary housing. If you relocate, let your insurance company know your temporary address. Also, most insurance plans provide temporary living costs. Contact your insurer and find out.
Once you've taken care of the basics, it's time to find out the exact details of your policy.
What Type of Policy Features Do You Have?
When making home or renters insurance claims, there are a few details you need to consider:
Replacement cost or actual cash value
When your possessions or car is damaged or destroyed, insurers use one of two methods to decide their worth: replacement cost or actual cash value. Replacement cost is the market price to replace an item without accounting for depreciation. Actual cash value (ACV), on the other hand, takes depreciation into account.
Imagine that your couch is destroyed in a house fire. You bought the couch three years ago for $1,000. With a replacement cost policy, your insurance will reimburse you for the original $1,000 cost. With an actual cash value policy, your insurer will calculate the couch's depreciation. There are several different methods to calculate ACV. That $1,000 couch might only have a market value of $600.
Find out what type of policy you have to prepare for your claim. ACV policies are somewhat subjective. If you have an ACV policy, you may disagree with your insurers valuation of your items. Be prepared to negotiate. Remember: paperwork and photos help your case.
Guaranteed or extended replacement coverage
A typical home insurance policy includes replacement coverage. In the event that your home is destroyed, your replacement coverage will pay to rebuild it. It's recommended that you have enough replacement coverage to rebuild your home from the ground up.
But the cost to rebuild your home rises over time due to inflation. And after a natural disaster, construction costs soar due to shortages in labor and materials. Your original replacement coverage may not actually be enough when it's time to use it. Fortunately, insurance policies allow you to plan for that.
An extended replacement policy covers those additional construction costs. This policy pays a certain percentage (usually 20 to 50 percent) over the original insured amount.
Guaranteed replacement coverage pays all extra costs, with no cap. It's the best replacement coverage you can have. It's especially helpful when dealing with inflated construction costs.
Even if you don't have guaranteed or extended replacement coverage, you're not completely out of luck. Many policies include inflation-guard clauses to account for those rising costs over time. Find out what type of replacement coverage you have when filing a claim.
Additional living expenses
After enough damage, your home is uninhabitable. Your home insurance company can help you pay for temporary housing and other expenses. Most policies set aside about 30 percent of your home's total structure coverage for additional expenses. If your home is insured for $400,00, your temporary living expenses will be $80,000.
Temporary living expenses cover more than just housing. You can use the funds to pay for food, transportation, and more.
Normally, that money will come with a time limit to spend it. The limit is usually between 12 and 24 months. If your home is completely destroyed, it can easily take over a year to rebuild it. Find out what your policy's limit is and make sure to budget properly.
Since you don't own the building you live in, renters insurance only covers the contents inside the walls. As a renter, you don't need to worry about structure or dwelling claims. Be aware that your landlord's insurance does not cover your possessions. Hopefully you signed up for renters insurance ahead of time.
Preparing for the Claims Adjuster
Once you complete all the steps listed above, you're ready to file a claim. Remember, being thorough is key to getting the most out of your claim.
When you file a home or car insurance claim, your insurer will likely send an adjuster to assess damages. To prepare for their visit, make a list of all damages. Include descriptions of items, their value, the date of purchase, and any information you have. Remember, the more thorough you are, the better.
Before the adjuster arrives, look through every nook and cranny in your home. Study the foundation, the attic, and the basement. You can point out potentially damaged areas that the adjuster may not notice on their own.
Try to accommodate the adjuster's availability: "After a natural disaster, adjusters have to inspect many properties and their schedules are very tightly packed," says Stacey Giulianti, Chief Legal Officer at Florida Peninsula Insurance Company.
"The claims adjuster will be working 12 to 14-hour days, seven days a week, for 30 to 90 days straight," says Espenschied. "They want to resolve your claim as quickly as you do, and adjusters are generally the most agreeable to settling claims when there’s a natural disaster."
After filing a claim, your insurance company will likely require a 'proof of loss' document. This formal statement is a standard part of the claims process. Insurers generally require the document within 60 days of the loss. It's possible to extend the deadline, but make sure you get permission in writing.
Be present during the adjuster's inspection. You can point out any areas or items that may be damaged. The adjuster will inspect and document the damages and send a scope of loss report to the insurance company. They will judge your claim based on your policy and the adjusters report.
Let the insurer do their job. They are trained experts. "Identify the losses and don’t attempt to diagnose the cause of the loss unless you are qualified to do so," advises Childs.
Ask for a copy of the adjuster's inspection report. You will need it if you disagree with your insurers decisions. After your claim is reviewed and the damage is assessed, your insurance company will either deny your claim or present a settlement offer.
Hiring Your Own Adjuster
A common tactic to get a better claim outcome is to hire your own adjuster. There are three common types of adjusters:
- Company: Employees of the insurance company.
- Independent: Adjusters who work for themselves or for an independent adjuster firm. They are typically hired on behalf of the insurance company.
- Public: Similar to an independent adjuster, but hired on behalf of the property owner.
If you're not convinced by the insurance company's adjuster, consider hiring a your own. "Public adjusters work on your behalf to get you paid for a claim," says Espenschied. "They work on a commission based on the amount of the total claim amount paid." They're insurance experts and can navigate the complexities of a claims process.
Hiring an adjuster is a good idea. Usually, an adjuster will inspect your damages for free to determine whether your claim has merit. If the claim is worth pursuing, the adjuster will charge a percentage fee of your claim total – usually around 10 percent. "It may not seem fair, but it beats getting nothing if the insurance company is refusing to pay or paying very little," says Espenschied.
Adjusters can handle communication with the insurance company on your behalf. After a natural disaster, this is an enormous benefit. You can focus on rebuilding and repairing your home while your adjuster deals with the insurance minutia.
When choosing an adjuster, it's vital that you do your research. Focus on these areas:
- Certification: Only work with adjusters that are fully certified. Are they a member of the National Association of Public Insurance Adjusters?
- Referrals: Research the adjuster's reviews. Ask for the contact information of previous clients.
- History: Has your adjuster worked on similar claims? Do they have the right experience for your particular needs?
- Communication: Will your adjuster work directly with the insurance company? Or do you want more personal involvement?
- Price: How much of a cut will they take from your claim? Experienced adjusters charge more, but they can get you a better payout.
- Personality: You will be working with your adjuster and they have a big responsibility. Make sure you and your adjuster have good chemistry. Don't rush to hire the first adjuster you find.
You might think that hiring an attorney is better. But most attorneys end up hiring adjusters to verify the case facts. Hiring an attorney, if necessary, should be one of your last steps. Before that, your adjuster will help you get the most out of your claim.
Don't Accept a Denied Claim or Bad Settlement
It's an unfortunate reality that insurance companies will look for reasons to deny your claim or offer smaller payouts. After all, paying out a claim is expensive. That's especially true after a natural disaster.
Claims are denied for many reasons:
- Damages that aren't covered
- Faulty documentation
- Negligence by the policy holder
- Insufficient evidence
- Missing the filing deadline
- Late premium payment
- Improper damage mitigation
There are many steps you can take if your claim is denied. Reread your policy, study the claim denial notice, and examine your damages. Insurance companies and adjusters make mistakes. It's very possible that your claim was erroneously assessed.
You can dispute a denied claim by appealing the decision made by your insurance company and the adjuster. Again, you will need documentation and photo evidence. Always get all statements in writing.
"In many states, an insured can request a non-binding mediation, at which the insurance company sends a representative and both parties attempt to resolve the dispute with the help of an independent mediator," says Giulianti. "I would always encourage people to give the carrier the opportunity to resolve the matter first."
Even if your claim isn't denied, you might not agree with the settlement offer. Insurance companies use their own valuations to price your items and your home. It's normal to have issues with their methods. If you disagree with your insurance company's valuation, take these steps:
- Contact your insurance company and explain your grievances. Get their responses in writing
- Hire a public adjuster or contractor to assess damage and provide estimates. Use a certified adjuster.
- Present a counter offer.
- Request a mediator for arbitration.
- Call your state's insurance commissioner and file a complaint.
- Seek legal help. Make sure any prospective attorney has insurance experience.
Be aware that a dispute with your insurance company will take lots of time. This is especially true after a natural disaster, because insurance companies are swamped with claims. Disputing a claim can last for years.
While negotiating a settlement, you may agree with parts of their offer. For example, you may want to access your living expenses fund, even though you are disputing their offer for your belongings claim. "Ask if the insurance company can advance you the undisputed portion of your claim, as long as you don’t have to waive your rights to the disputed sum," says Childs. "That way, at least you will get some cash in your pocket right away."
Do You Need to File a Claim?
In case you're not aware, your insurance rate almost always goes up when you file a claim. If you file too many claims, your insurance company may refuse to renew your policy – they may even drop you altogether.
Deciding whether or not to file a home insurance claim is an important question to answer. On average, homeowners only file one claim every ten years. Filing a claim is not a decision to take lightly.
"Don't call in your claim until you're sure that you have damage," warns Giulianti.
A basic rule of thumb for filing claims is to let the small stuff slide. Ideally, you have a rainy-day fund to pay for emergency repairs. But statistics show that, unfortunately, isn't true.
Deciding whether or not to file a claim takes a bit of guess-work and risk management. You need to estimate how much your rate will raise if you file a claim. Compare that to your deductible, and the amount you would spend out of pocket.
Here's a sample equation to consider: imagine that a tree branch falls on your roof. A contractor estimates that a repair costs $2,500. You have a $1,000 deductible, and you pay $1,000 per year for insurance. Do you file a claim?
If you have filed a claim within the last few years, consider paying for repairs out of pocket. You can experience a considerable rate jump if you file too many claims.
After your first claim, your rates can jump by as much as 20 percent. Add a second claim into the mix, and you may be looking at 40 percent rate increase. Your $1,000 per year policy is now $1,400 per year.
Spread that out over a five-year period, and that's $2,000 extra on insurance. That more than covers the $1,500 your insurer would have paid for the $2,500 in damage from the tree branch. And every claim you make increases your chances of being dropped by your insurer.
Of course, this is a hypothetical scenario. Your situation will differ, from your deductible to the damage amounts. If you've never made a claim and the damage is severe, filing a claim isn't the end of the world. Just be aware of the rising premiums.
Floods and Water Damage Are Not Covered
Insurance companies have struggled for decades with floods and water damage. Flood insurance was once part of a standard homeowners insurance policy. But after seeing significant losses, companies began excluding flood coverage.
It became absurdly expensive or even impossible to purchase flood insurance in flood-prone areas. To address this, the National Flood Insurance Program was established in 1968. NFIP is overseen by >FEMA. It provides government-backed flood coverage and floodplain management at a more reasonable price.
Homes in America are 25 times more likely to suffer flood damage than fire damage. The insurance industry was not able to successfully address flood coverage through the free market.
Hopefully you purchased flood insurance before you needed it. Insurance companies usually require a 30-day waiting period before your flood coverage kicks in.
Whether you have private flood insurance or FEMA coverage, filing a claim is a similar process. As always, be thorough, ask questions, take pictures, and be prompt.
Use Licensed Contractors
After completing the claims process, it's time to repair and rebuild.
Your insurance company may provide you with contractors. In some cases, you receive funds and the onus of finding a contractor is on you. Remember, you don't need to use the insurance company's contractor.
In that case, make sure you use licensed contractors. After a natural disaster, there are many predatory scams including unlicensed or unscrupulous contractors. Check with your state's Contractors Licensing Board before signing any contractors.
If your insurance company provides their own contractors to give an estimate, get another estimate from an independent contractor. Compare the estimates for discrepancies. Remember, construction labor and material costs skyrocket after disasters. Demand for skilled labor increases exponentially while supply drops. The shortage of dependable help is part of why post-disaster scams are so common.
It's also part of the reason why a guaranteed or extended replacement cost policy is so valuable. These policies help you pay for inflated costs.
Some construction companies will deal directly with your insurance company. They will handle the payment process. Pay close attention to the repairs and do your due diligence before signing off on any paperwork.
Insurance Companies With Best Claims Process
J.D. Power releases annual studies on how satisfied consumers are with the claims process. Their studies focus on the following metrics:
- First notice of loss
- Service interaction
- Estimation process
- Repair process
According to J.D. Power, these are the ten home insurance companies with the best overall claims satisfaction:
- Amica Mutual
- The Hanover
- Auto-Owners Insurance
- COUNTRY Financial
- Erie Insurance
Similarly, these are the ten best car insurance companies based on overall claims satisfaction:
- The Hartford
- NJM Insurance Co.
- Erie Insurance
- Auto-Owners Insurance
- American Family
- Amica Mutual
- Auto Club of Southern California Insurance Group
After Filing a Claim
Once the dust has settled and your claim is complete, hopefully you're satisfied. But millions of Americans find themselves unhappy with their insurers in the wake of a disaster.
Revisit your insurance policy after your claim. Were you satisfied with the customer service? Were they prompt and attentive? Do you feel that the claim and settlement was handled fairly? Were your coverage levels adequate?
The main goal of insurance is to protect yourself, your belongings, and your finances from the unexpected. If your insurance company didn't hold up their end of the bargain, switch providers.
When your is claim is paid out, you will generally receive two separate checks: one for structure coverage and one for your belongings. If you have a mortgage, the check is also made out to your mortgage lender. They are entitled to the funds to ensure that their investment (your home) is properly repaired.
After completing the claims process, you may feel that you are underinsured. Many people don't have enough insurance when disaster strikes. If you're one of those people, support systems are available.
If you need help, you're not alone. Check with FEMA. They provide numerous outreach services and programs in the wake of a disaster. Similarly, United Policyholders can connect you with assistance and helpful resources.
Watch What You Tell Your Insurance Company
Are you still deciding whether or not you should file a claim? If so, you may be tempted to call your insurance company to answer your questions.
Imagine that a hailstorm damages your roof. You call your insurance company to try to figure out if filing a claim is the right idea. Even mentioning the damage may cause the customer service person to put a damage report on your file. That may be enough reason to raise your rates during your next renewal period.
Frequently Asked Questions
Q: My car was damaged by a natural disaster while on my property. Do I file a claim on my home insurance or car insurance policy?
A: This is a tricky one. Your auto insurance usually handles any car claims. For example, if a tree falls on your car, your car insurance will foot the bill. Well, that's assuming you have comprehensive coverage on your policy.
Your car insurance is your best bet for reimbursement -- even if the tree came from your neighbor's property. One exception is if the tree fell due to your neighbor's negligence.
Q: Am I covered for this damage?
A: It depends on the peril that caused the damage. There are plenty of common natural disasters, only some of which are covered.
A standard home insurance policy usually covers fires, hurricanes, hail, falling objects, volcanoes, lightning, and tornadoes. However, floods, earthquakes, landslides, and negligence aren't covered. Special riders and extended coverage is available for those events.
Similarly, car damage caused by natural disasters is paid for by your comprehensive coverage. Comprehensive coverage essentially covers all 'acts of God,' like fire, water damage, hail, earthquakes, and more.
Study your policy to find out what is and isn't covered. If you're still not sure, call your insurance company for more information.
Q: When do I file a claim?
A: As soon as possible.
But first, make sure that filing a claim is the right move. Remember, your insurance rates almost always rise after you file a claim. There are some situations where paying for damages out-of-pocket will save you money in the long term.
If you decide to file a claim, act quickly. It's important to get the ball rolling early as soon as possible. After a natural disaster, your insurance company will be overwhelmed by calls and claims from other policy-holders. The sooner you file a claim, the better.
Q: My claim was denied. What do I do? Can I fight it?
First, read your claim denial notice. It should clearly outline the reasons why your claim was rejected.
Second, read your policy. Compare the claim denial notice to your policy. Is your insurer using sound logic? Or was a mistake made?
Do you still feel wronged after reading the denial notice and policy? If so, gather all your damage documents including photos, repair receipts, estimates, and any other paperwork. Then file an appeal with your insurance company.
If your appeal fails and you still don't agree with the insurance company's decision, you can speak to the insurance commissioner's office. They handle consumer complaints. Unfortunately, unless your insurance company acted unscrupulously, you have a slim chance of reversing your claim denial.
Q: I don't agree with the adjuster's findings. Should I hire an adjuster?
A: When assessing a claim, your insurance company will send a company adjuster. They analyze the damage and decide whether or not your claim has merit.
Disagreeing with the adjuster's conclusion is not uncommon. If you find yourself in that position, contact a local public adjuster. You can find one by searching through the National Association of Public Insurance Adjusters' member directory.
Public adjusters usually provide a preliminary screening of your damage for free. If they feel that your dispute has merit, they will take your case in exchange for a percentage fee of your claim payout. If you feel wronged by your insurance company's adjuster, you should certainly speak with a public adjuster.
Q: My insurance company offered a small settlement. Can I counter-offer?
A: If your insurance company sent you a payout that you find unsatisfactory, you should absolutely send a counter offer. Don't deposit the check or use the funds. Review the adjuster's report and look for missing items, inaccurate measurements, lowball costs, or mistakes.
After a natural disaster, insurance companies are swamped with claims. Mistakes will naturally happen. You have to be diligent. Read through your policy, see what's covered, and compare it to the insurance company's findings.
If you disagree with the insurance company's offer, reject the settlement and send a counteroffer letter. Make sure that all communication is in writing. You might speak with a sympathetic employee over the phone, but their words mean nothing if they aren't in writing.
Outline your case – why you disagree with their offer, and how much you think you are entitled to. Remember, photos, receipts, estimates, and all documentation will help your case. Get a public adjuster to help your case.
Q: I don't have an inventory list. Can I still file a claim?
A: Yes, although it will make your job more difficult. The NAIC says nearly 60 percent of consumers don't have an inventory list, so you're not alone. Fortunately, you can create an inventory list after the damage.
Make a list of every damaged item. If you happen to have receipts, copy the prices down. If you don't have receipts, try to find the item's value online. You can also consult bank or credit card statements to find how much you spent on specific items.
Q: How long will it take to settle my claim?
Your experience will vary, especially if it involves a large-scale disaster. A straightforward claim can easily be settled in a few weeks. But claims for serious damage can stretch beyond a year – especially when total rebuilds are necessary.
Ask your insurance company for an estimate on how long you should expect your claim to take.