How to Protect Your Sandy Insurance Claims

(Reuters) - For some homeowners, the aftermath of Sandy could bring a whole second round of troubles. After the storm passes, they may have to negotiate with their insurers to get the cash they need to repair wind and water damage.

Homeowners' insurance companies have gotten tougher as weather has become more cataclysmic. They've raised rates, carved out some coverage and tucked in new wind and hurricane exclusions and deductibles.

Homeowners need to play the game right if they want to get claims paid quickly and thoroughly. You can start early - here's what to do now and later.

FIND YOUR POLICY

If you've got your flashlights loaded with fresh batteries and your water bottles in a row, dig out your homeowner's insurance policy and see what kind of coverage you actually have. You may be unpleasantly surprised: After Hurricane Irene hit in August 2011, more insurers tucked hefty wind and hurricane deductibles into their policies. They run 2 percent to 5 percent of the insured value of your home, says Charles Hahn, an insurance agent in Little Falls, New Jersey, where "we're known for flooding a lot."

Keep in mind that many insurers have "anti-concurrent causation clauses" in policies now that say if you have damage from multiple causes, say wind and flooding, where wind is covered but flooding is not - they won't cover anything at all.

A new flood insurance law passed this summer requires insurers to use federal data to allocate the costs in cases where a home is totally destroyed by flooding and wind damage.

Homeowners who live near the shoreline do tend to have federal flood insurance; their mortgage lenders require it. But Hahn says he saw an uptick in inland purchasers after Irene. Nationally, some 5.65 million federal flood insurance policies were in place at the end of 2011 - that represents a 17 percent increase over the previous year, according to data from the Insurance Information Institute.

That's good, because so much rain fell during Irene that basements flooded in neighborhoods far away from rivers and streams. The same - or worse - is expected this time around.

Even if you don't have flood insurance, you might have extra protection from water damage if your insurance policy covers failure of your sump pump, says Richard Cohen, a property loss consultant at Clarke & Cohen in Bala-Cynwyd, Pennsylvania. This kind of coverage is generally included in some high-end homeowners' policies, although other policies may offer limited coverage.

One silver lining: If the water rises so high in your neighborhood it floods your car, you're probably covered by your comprehensive auto policy, reports the Insurance Information Institute.

TAKE PICS — NOW AND LATER

While you are waiting for the storm to hit in earnest, take your camera phone around your house and inventory all of your belongings, says Bob Hunter, director of insurance for the Consumer Federation of America.

Even better: video. "You can actually see everything before and after," Cohen says.

If your home is damaged, document it carefully before you move anything and get images as soon as possible. "When things dry, they can look a lot different," Cohen says.

Leave the damage as it is until an insurance adjuster arrives on the scene, if possible. However, Sandy is expected to hit a wide swath of the Northeast, so an adjuster may not make it to your home for a few weeks. "It all depends upon how significant the power outages are," notes Cohen. Keep all damaged items until the adjuster has had a chance to look at them.

EMPTY YOUR BASEMENT AND FRIDGE

Even if you have flood coverage, you may be disappointed to learn just how little it will cover. You're protected for structural damage and the cost of replacing basement utilities like electrical panels and heating units, Hahn says. But all the precious items you have stored downstairs? Not so much. Might as well haul them upstairs now if you're worried about a wet basement.

Homeowner Richard Dukas, a public relations executive from Teaneck, New Jersey, could see the floods from Irene coming and saved all of his possessions from his basement. He had flood coverage. He still ended up getting only $10,000 back from the insurance on $15,000 worth of damage.

Most homeowners' policies do cover the cost of food that spoils when the power goes out. But if that's your only loss, it will be subject to your policy's deductible of $250, $500 or more. That means that unless you have a large freezer full of meat or priceless truffles, you may not find it worth filing for.

FILE CLAIMS PROMPTLY

You may get faster attention if you submit a claim quickly. "Homeowners who get in line first have a better chance of recovery than those who make claims quite a bit later," observes Linda Kornfeld, a Los Angeles attorney with Jenner & Block who represents consumers and business owners in cases against insurance companies.

Federal flood insurance typically carries a 60-day deadline, though it often gets extended after extreme events. Miss that deadline and your flood insurance will be worthless.

CHOOSE YOUR WORDS CAREFULLY

Call your insurer as soon as you see damage and let them know if you need to spend money to make immediate repairs, says Kornfeld. But don't characterize the cause of the damage - the company could dredge up your remarks and use them to deny your claim. So, for example, say: "My window is broken, and there is water on my dining room floor and I am going to buy plywood to cover the window." Don't say: "Wind broke my window and my dining room flooded."

DRY OUT

Hire an emergency services company to dry everything out and dehumidify the area. Some big national chains include Servpro and Belfor. They'll bring in equipment, such as special fans, to get things dry again. Getting your stuff dry is really important because mold can be an even a bigger headache than flooding. "Insurance policies have limitations for mold," Cohen warns.

Check with your insurer before laying out large amounts of money for repairs, though. It may refuse to pay. They typically will pay small amounts for immediate fixes, such as a tarp to cover that gaping hole in the roof. Of course, keep all of your receipts.

GET A ROOM, BUT KEEP TABS

If you move into a hotel because your house is without power, that's on you. However, most insurers do cover hotel stays if your house really is uninhabitable, thanks to a gaping hole in the roof or a tree in your bedroom, for example. You may also be covered for meals and hotel stays if local or state authorities had a mandatory evacuation of your neighborhood.

If you need to leave your house because it is flooded, don't expect the same coverage. Federal flood insurance doesn't cover hotel bills and the like, according to the Insurance Information Institute.

KNOW THE RULES OF YOUR STATE

What the storm is called when it hits your house will affect your coverage, depending on your state of residence. If you are in New Jersey, for example, and the storm hits as a hurricane on the coast, but downgrades to a tropical storm by the time it hits your house, the higher hurricane deductible may still apply to your claim. "It was applied state-wide in Irene," Hunter says.

For some homeowners, that could be the final battering delivered long after the winds have died down.

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