Here’s Why Your Homeowners Insurance Claim Might Be Denied After a Hurricane

You’ve survived a hurricane, but your house did not. Now it’s time to rebuild. But that could be far more complicated – and expensive – than you anticipate, especially if you run into problems with your homeowners insurance claim.

While it’s still too early to know to full extent of Hurricane Florence’s wrath, Corelogic, a property information company, estimates that hundreds of thousands of homes in North Carolina and South Carolina are at risk of damage from the storm. Storm-surge related insured losses could reach $5 billion. And those totals don’t include potential losses due to inland flooding, which experts say could be severe.

Hurricane damage -- Irma hits Florida Keys
A home destroyed by Hurricane Irma in Summerland Key, Florida.  | Joe Raedle/Getty Images

Some of those homeowners could be in for a rude awakening if their insurer denies claims, something that happened to tens of thousands of people after Hurricane Irma last year.

Insurance companies may deny claims after a hurricane for a number of reasons. Here are a few of the most common.

1. You don’t have coverage

You have a homeowners insurance policy, but if floodwaters damage your home, you might be out of luck. Standard homeowners and renters insurance policies don’t cover flood damage. To get coverage, you need to have purchased a separate policy either from the National Flood Insurance Program or one of a handful of private insurers.

Many people don’t bother to buy the extra coverage, especially those in inland areas who underestimate their flood risk. There were just under 130,000 flood insurance policies in North Carolina in 2016, according to the Insurance Information Institute. Fewer people in North and South Carolina have flood insurance today than they did in 2013, according to the Wall Street Journal.

Some policies also have an “anti-concurrent-causation” clause, noted the Consumer Federation of America. Even if your policy would normally cover damage from wind, that coverage might not apply if there’s also uninsured flood damage. Be sure to read your policy carefully to understand what is – and isn’t – covered.

2. You hit your coverage limit

Your homeowners insurance has a coverage limit, which caps the amount your insurer will pay out. If rebuilding your home costs more than that, you’ll be on the hook for the difference. According to some estimates, two-thirds of homes in the U.S. are underinsured.

Flood insurance limits are particularly skimpy. Policies cover up to $250,000 worth of damage to your home and $100,000 for your belongings. You won’t get coverage for living expenses if your home is uninhabitable or for anything outside the home, like a pool, and coverage for basements is limited. Purchasing excess coverage provides extra protection, but you must do that well before disaster strikes.

3. You didn’t meet your deductible

Your standard deductible might not apply if you’re filing a hurricane-related claim. Many insurers in hurricane-prone states have separate deductibles for hurricanes and windstorms. These are usually calculated based on a percentage of the home’s insured value. If your home is insured for $400,000 with a 5% deductible, you’d need to pay $20,000 out of pocket before insurance coverage kicks in. Check your policy to see if such a deductible applies to you.

4. You didn’t document the damage

Hurricane Ike damage, Galveston, Texas.
A woman pauses from cleaning out her flooded home to sort through some family photographs that survived the high water from Hurricane Ike on September 24, 2008, in Galveston, Texas.  | Dave Einsel/Getty Images

Experts recommend completing a property inventory before a disaster strikes so that you can prove the extent of your losses to your insurer. Putting together a complete list of your home’s contents or taking photos or videos will make it easier to show your losses after the fact.

Even if you didn’t do an inventory before the storm, you still need to show the extent of damage to your property. Take photos of all the damage as soon as it is safe to do so. Those photos, combined with receipts and bills for lost items, can help you get your claim paid.

5. You didn’t follow the rules

Before a disaster hits, make sure you check to see your policy is current. A missed payment could cause your policy to lapse and your claim to be denied.

After a disaster, file your claim promptly and pay attention to any deadlines. Make sure your paperwork is complete, make necessary temporary repairs to prevent additional damage, and keep copies of receipts and records of any correspondence. Stay in close contact with your insurer to make sure you’re doing everything you need to do to get your claim processed and paid as quickly as possible.

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