Ten Disaster Insurance Claim Tips for Businesses and Homeowners
By Ray Bourhis

1. Understand your coverage before talking to your insurer.

As soon as you contact your insurance company to report your loss, and before you discuss your claim in detail, it is important that you get a copy of your policy and understand:

a) What your homeowners or business insurance coverage is.

b) What you are entitled to recover for.

c) What your obligations are under the policy.

If the policy was destroyed, get a copy from your insurance company or agent.

2. Do not give any recorded or written statements to your insurer until you are sure you understand your coverage.

It is not uncommon for a policyholder to make statements inadvertantly or on tape that turn out to be harmful to their course.

Never say anything about a claim without knowing how it might be interpreted by the insurance company and used against you.

3. Take and keep good notes of conversations.

Take and keep detailed notes of all conversations with insurance company representatives; get names, phone numbers, and job titles of people you speak with, including their supervisor's name. Keep a diary throughout the claims process.

Be prepared to deal with more than one claims adjuster. Firmly assert your rights as a premium-paying policyholder. You may encounter frustration with having to repeat information to a string of adjusters. Don't accept rudeness or unreasonable requests for information, but always attempt to cooperate.

4. Remember--you do not need photos or receipts to recover for destroyed property.

In most cases, written or photographic proof of destroyed items will also have been destroyed in the event causing the loss. Your descriptions of lost items, along with descriptions given by witnesses, family members, neighbors and friends, will suffice and your company must reimburse you according to your policy.

5. Be prepared to distinguish between replacement coverage and actual cash value.

Insurers sell different types of policies, including "Actual Cash Value" policies, "Replacement Cost" policies, and "Replacement Guarantee" policies. Generally, an Actual Cash Value policy provides the least amount of coverage, and you are limited to the face amount on your Declarations Page.

If you have a "Replacement Cost" policy, your insurer generally will only pay the actual cash value, (synonymous with "Fair Market Value"), of your property until you actually replace the items. Once you replace them, you are entitled to the balance of the purchase price. So, don't accept any checks marked "Final Payment" for your personal property loss unless the amount covers the cost to actually replace your property. You can accept a check marked "Partial Payment" if the amount is for the "Actual Cash Value."

If you have "Replacement Guarantee" insurance, your company should reimburse you for the entire amount of your loss, regardless of the amount stated on the Declarations Page of your policy.

6. Be sure you understand your "additional living expense" coverage.

You should arrange for temporary housing that is consistent with your standard of living. If your home was totally destroyed, obtain an estimate from a realtor of what your home would have rented for. That is generally the amount to which you are entitled for your Additional Living Expense, (ALE). ALE coverage generally has a time limit, so make sure you know what the limit is. If you need an extension, ask for it!

7. Be extremely cautious about the rebuilding of your home. You are entitled to "like kind and quality."

Your insurance company may try to get you to accept their contractors cut-rate repair estimates. You are entitled to like kind and quality, and, if you have replacement cost coverage, you are entitled to have the same quality and style home rebuilt by your insurer, even if the cost of rebuilding exceeds your policy limits.

Note: Your policy may not cover extra rebuilding costs due to compliance with Building Codes enacted after the house was built, and that therefore are not of "like kind and quality" to your former home. If your agent sold you a replacement policy but did not sell you "Code Coverage" to avoid this problem, you may have been misled and should request the coverage on a retroactive basis.

8. You may hire your own contractor and you do not have to accept the insurance company's contractor.

a) Beware of "low ball" estimates from insurance company adjusters and contractors.

b) Beware of inferior workmanship and building materials.

c) Have a contractor of your own choosing prepare a detailed written scope of needed repairs and submit it promptly to your insurer.

9. Do not sign any releases or waivers of any kind until you obtain legal advice.

Read the front and back of all drafts and checks carefully to see whether they contain the words "Partial" or "Final" payment.

10. If your business was destroyed -- all the above apply -- plus, you are entitled to coverage for business interruption.

But...Beware -- business interruption coverage only lasts a specified period of time. Check your policy. Make sure the contractor completes repairs before your business interruption coverage is exhausted.

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