Answers to frequently asked insurance questions after Hurricane Florence

Answers to frequently asked insurance questions after Hurricane Florence

WILMINGTON, NC (WECT) - Long-time Wilmington Insurance Agent Don Bullard estimates that across coastal North Carolina, at least 200,000 insurance claims have been filed due to damage from Hurricane Florence. Nearly 6,000 of the clients from Bullard’s office alone have filed claims. Bullard sat down with WECT to share advice and answer some of the most common questions people with insurance claims for storm damage are asking.

Q: Is it okay to start drying out my home before the adjuster has seen the damage?

Bullard: “We recommend people do that, to mitigate the damage. So if you have a claim just take pictures. Don’t throw anything away. Just put it out in the yard or the garage so it’s there so the adjuster can see it, so we can tell what grade of carpet you had, for example, or what grade flooring you had. But you can go ahead and start that, and start drying out the house. We encourage people to go ahead and be proactive on claims but just take pictures.”

Q: Why does it take so long to see an adjuster and get my claim settled?

Bullard said just after the storm, roads were impassible and adjusters had a hard time getting here. He said at this point, about 98 percent of his clients have had seen an adjuster. About half of those clients, mostly those with relatively minor damage, have already settled their claims.

Bullard: “The larger claims for your houses that are uninhabitable, you had a tree all the way through it, those are going to take up to a year to settle, because it takes a while to get a contractor in there to rebuild the house. Having to tear out and rebuild takes longer than building from the ground up a lot of times.”

Q: Is it okay to reach out to contractors before the insurance company has agreed on a settlement amount?

Bullard: “When people get an adjuster out there, sometimes they disagree with the amount of the claim, but that’s a process. So we encourage people to go ahead and get your contractor, get him to get an estimate, and then let him talk to the adjuster because they know the language and how much it costs per square foot to do certain types of work. That saves a lot of time.”

Q: Some residents say they are having a hard time getting contractors to come out and give them estimates. What should they do?

Bullard: “Well, that is something your insurance company cannot control. The availability of contractors is another factor all together. We have a list of contractors that we give to our insureds that we have used in the past. We don’t guarantee their work but we say we have use them in the past and they’ve done good work. So that’s how we’ve been handling our book of business. Most insurance agencies will have people they can give you a list of, but again they are backlogged. You have to be very careful though when you are using out-of-state contractors that have just come in here for this catastrophe. The problem is, some of them might be very reputable, others sometimes take advantage of people. Don’t ever make an advance payment to an outside contractor, an out-of-state contractor, because you might not see them again. Make sure, if you are going to work with them, and you’ve got a contract with them, make sure they start doing the work and you pay them as they go along. Making an advance payment to somebody can be very dangerous.”

Q: If the insurance adjuster offers me a check on the spot, am I limiting my future ability to recover money for damages if I cash the check immediately?

Bullard: “First of all, adjusters, if he’s going to give you a check on the site, it’s an advance. It’s never going to be a total settlement. I’ve never seen that. So he’ll give you an advance just to kind of help you out, to get you kind of started in the right direction. But signing the check even if you got that, would not be a release of any for future settlements. Remember it’s an estimate. So we are estimating that that’s what the damage is. A lot of times we’ll write an estimate, and then the contractor gets out there and realizes there’s more damage than what the adjuster saw after he starts tearing out things. That’s why we recommend the contractor and the adjuster get together to find out what the actual final damages are, and what the final estimate is going to be so we can make the final payment.”

Q: What should you do if you feel like you got low balled by the insurance adjuster?

Bullard: “In order to get replacement cost on your house, you actually have to do the work or replace the item that was damaged, or the contents. Upfront they take depreciation. So let’s say you got a $50,000 loss. You’re going to receive maybe $30-35,000 and maybe even $40,000 upfront. Once the work is done, or the items that were damaged beyond repair are replaced, then you get the depreciation back. It’s just withheld until you actually get the work done, or replace it. Because to get replacement cost it has to be repaired or replaced.”

“If they feel like they got low balled, first off if they’ve got their contractor estimate, and it is considerably different and the adjuster and the contractor can’t work it out, then there is a couple of things they can do. First of all, they can get another contractor. Because a lot of contractors will overcharge in a situation like this because they’ve got more work than they can handle. So they try to go to the ones where they can make a higher profit margin. Sometimes we will send a second adjuster out because the adjuster could’ve been wrong to start with…. If it gets to a point where there is a tremendous difference and no one can work it out you go to mediation.”

Bullard says the mediation process, where a third party is called in to decide an appropriate settlement amount, is rare. It is involved, typically involves attorneys, and he’s only seen it happen twice in his 46 years in the business.

Q: Some homeowners say the insurance adjuster has been to their house, but days have passed and he still hasn’t filed a report. Is that a common problem?

Bullard: “All too often. Unfortunately because what the adjusters are doing is they’re going out and hitting five to ten houses a day, and five or ten houses [the next] day, and five or ten houses [the next] day. They do that for several days, then they have to go back to their office, and write up their estimates, and get them checked out thoroughly. It’s a pretty involved process, especially in your larger claims. Then they send it to the field adjuster. The field adjuster inspects it, double checks it, sends it to the company to issue the check. So there have been some delays on that with all the companies around here. And the NCJUA as well. It’s a process.”

“A lot of times we recommend if [the adjuster] can get [you a cash] advance to kind of get things moving, it doesn’t really matter quite as much. You want to get your estimate as soon as you can obviously, you want to get your settlement as soon as you can. But if you can get an advance and go ahead and get your contractor to start work they get things moving. Don’t always wait for the adjuster. Don’t always wait for the final check or things like that. You know it’s going to be paid, it’s just a matter of being processed.”

“If it’s been what I call an extraordinary long period of [time], two or three weeks and they haven’t heard anything from anybody after the adjuster has been out there, then you need to call your agent or call the NCJUA and see what’s going on. Things do get lost in the shuffle occasionally. I’ve had a lot of checks that didn’t show up and we had to stop them and issue new checks.”

Q: Some homeowners have been confused by their deductibles. Can you help us understand the different factors at play with a deductible after a hurricane?

Bullard: “If you’ve got a small claim, it might not exceed your deductible, because deductibles are much higher than they were 20 years ago. The average deductible is now close to $2,000. And then you got to remember you’ve got two deductibles. In many cases you’ve got a basic deductible for everything, and then you’ve got a wind and hail deductible that is normally going to be higher than your basic deductible.”

Editors note: Because Florence was a hurricane, the wind and hail deductible is being used in most cases, rather than the basic (“all other perils”) deductible listed on your policy. Wind and hail deductibles range from 1-5% of the total value of your house.

Bullard: “Most people have the 1- 2% [wind and hail deductible], and what that means is if your house is insured for $200,000 and you have a 2% deductible, you’ve got a $4,000 deductible. And a lot of the claims of course are going to be less than that. Unfortunately, most people don’t read their policy until they have a claim. And they call you and sometimes they are disappointed because they have a higher deductible then what they anticipated. But a lot of times they chose a higher deductible to keep their premiums down lower, but then they sacrifice the additional deductible when it comes time to handle a claim.”

“You have to decide what your risk tolerance is. If you have a lot of reserves in the bank and you can afford to pay $10,000 or $20,000 if you have a claim without bothering your insurance company, you can save maybe 3, 4, or $5,000 a year on your premium. So each person has a different risk tolerance and each person has a different savings account. So you make an individual decision upfront, and then you have to live with it later.”

Q: Many people are dealing with the North Carolina Joint Underwriters Association (NCJUA) for the first time since purchasing their insurance policy, and some have complained that the settlement offers they are receiving from NCJUA are significantly less than what is needed to make repairs. Is that typical when dealing with the NCJUA?

Bullard: “You don’t get quite as much coverage on the contents and you are going to almost always pay a much higher rate for the wind [and hail insurance] through the NCJUA then you would to have included it in your homeowner’s policy through a company that accepts wind [and hail insurance].”

Q: Can you get wind and hail coverage through other providers besides the NCJUA?

Bullard: “The NCJUA it’s designed, and it says in their charter, as a market of last resort. And so you aren’t really supposed to be in the JUA unless you cannot get coverage elsewhere. But what happened, many years ago, 20 years ago or so, a lot of companies decided that they did not want to have the exposure of wind, so they deleted the wind and hail coverage…. They started writing all of their policies through the NCJUA. And that’s why the NCJUA is now and has been for a long time, the largest carrier of wind coverage in North Carolina. But if you look at the charter, it says it is a market of last resort. People have options. You can go to any independent agents such as myself or another independent agent and we have markets for [wind and hail insurance] without going through the NCJUA. Now we have to put people through the NCJUA sometimes because they don’t qualify. Because maybe the age of the house, the condition of the roof, they could’ve had a lot of prior claims. We can’t qualify them, and then we use [the NCJUA] as a market of last resort. But if you go with just a captive agent that only represents one company, and his company doesn’t write wind and you are automatically going to end up in the NCJUA.”

Q: Some people have been upset that the loss of their contents was not covered by insurance because it was caused by wind driven rain. Why does it matter what caused the water damage?

Bullard: “Wind driven rain covers damage to the home itself, like your flooring which is a primary thing that would happen. But it doesn’t cover your contents. There has to be a break in the exterior wall, if your roof blows off, or your shingles blow off, and you have water coming in and your contents are damaged, that way [contents are] covered. But if it just blows in under your door, which it can very easily do, and your contents are damaged, that’s not covered.”

Q: Flood insurance has been a major source of confusion. Can you give us a basic overview?

Bullard: “Flood insurance covers basically external rising water, floods, and mudslides…. So flood insurance, if you don’t have flood insurance and the water rises and gets inside your house, you have no coverage. Period. And it basically has to get up to the first finished floor before you have coverage. If it’s just a garage level on the slab, things in the garage are normally not going to be covered. Flood insurance varies depending on what zone you are in. You’ve got a V zone which is the highest zone – and by the way, the most coverage you can get through the federal program is $250,000 on the residence and $100,000 on the contents. So if you’re in a V zone, your flood insurance on a brand new house is going to cost you anywhere from 8 to $10,000 a year. If you were in a A zone it can drop down to $2,500, and if you are in an X zone which means you are not required to carry flood insurance, anyone is still eligible to buy flood insurance, it’s going to run you around $450-500 a year.

“Problem is most people think because they are in an X zone and they are not required by the mortgage company to carry flood insurance, but they still can be susceptible to flooding. And that’s what happens around the rivers a lot especially. It gets out of the banks, gets into areas that aren’t considered flood zones or at least not the hundred year flood zones. And they have a flood and they have no coverage. And that’s where FEMA kicks in.”

Q: Some customers have complained that their mold coverage is not enough to cover the damage. Do all insurance providers limit the amount of mold coverage?

Bullard: “North Carolina has a $5,000 cap on the policies. They did not include mold damage at all until I think it was in the 90s, when we had a lot of mold issues here in Wilmington...The state then instituted some mold coverage, and it covers up to $5000.”

Q: Does homeowner’s insurance cover the cost of lost trees in my yard?

Bullard: “Trees are not covered unless they strike a structure. Then it pays for getting the tree off the house and up to $500 for debris removal of the tree, with a maximum of $1000 for debris removal.”

Q: What about landscaping and damage to my yard?

Bullard: “Shrubbery and trees are not covered. Anything to do with your landscaping, vegetation, that sort of thing is not covered, if just wind damages it. Now if a tree lands on the house, we will pay for getting the tree off the house and up to $500 for debris removal. If it lands on your fence, if it lands on another structure, we will pay for getting it off of the structure and again another $500 for debris removal with a maximum of $1,000 per policy. But if the tree just blows down in your yard, or your shrubbery blows away or gets wind burned and dies, no coverage on that. It is not designed to cover that.”

Q: Some customers have complained that the settlement offered for their boats that were ruined in the storm was not enough to cover the cost of replacement. Why is that?

Bullard: “There are two types of boat policies. There is an Actual Cash Value Policy. Let’s say you bought a boat for $50,000, and you insure it for $50,000 under an Actual Cash Value Policy, it’s going to depreciate every year. So when you have a loss and let’s say it’s about 10 years old, you’re probably going to get half of what you paid for it… Then you have an Agreed Value Boat Policy and let’s say your boat is insured for $50,000, and it sinks 10 years later, you are going to get $50,000. Because you agreed to that amount, and you paid an additional premium for it.”

Editor’s Note: While the Actual Cash Value Policy is in theory cheaper than an Agreed Value Policy, that’s only true if you request a premium decrease after the boat depreciates. If you don’t ask for it, the insurance company probably won’t offer a premium decrease to reflect the decreased value of your boat.

Bullard: “The companies will let you do that because they are only going to pay you $25,000 if the boat is 10 years old and it was $50,000 originally, so you can reduce the amount of coverage and keep your premium down. A lot of people, again, don’t review their policies.”

Q: We’ve had some questions about using “public adjusters” for people who have been delayed getting an appointment with the insurance adjuster from their own insurance company. Is it safe to use a public adjuster?

Bullard: “A public adjuster is an independent person who says he will represent you almost like an attorney. And he will get a contract with you and after that you are out of the picture. He is going to settle your whole claim for you with the adjusting company. We don’t recommend those because first off he’s going to take a commission, which means he’s going to get a part of your settlement. Now a lot of times they will profess they can get you a larger amount. But that generally isn’t true. We are going to pay everything a person is entitled to. No more, no less. That’s part of the contract. Getting a public adjuster involved maybe in some rare cases might benefit somebody that was dealing with a company that was taking a hard line, but as a general rule we don’t recommend public adjusters. It just kind of slows the process.”

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