As a result of Hurricane Irma, people and businesses will begin to take stock of the damage suffered and evaluate potential recovery assistance promised by property insurance.
We urge those affected to seek professional help and guidance; insurance policies are complicated documents.
We suggest some simple steps that should be followed in finding the right help and guidance, and to assist in getting paid fairly and promptly:
|Make your claim
Insurance policies have time limits on when and how a claim should be made. More than 50 years ago, the Florida Supreme Court observed that most folks don't read their insurance policies until disaster strikes — get the policy and review it now. If you need help interpreting what you need to do and when, check with your agent or broker. A good agent or broker can and will help you with the mechanics of providing notice of a claim.
Document your claim
Always keep careful track of the extent and expense of your claim. All insurance policies require you to mitigate your damage to prevent more loss, but don't try to fix anything unless lots of pictures are taken. If paying in cash, get a receipt. Insurance companies expected to make a large claim payment need an equally large amount of paper to justify the payment.
Even if something is not covered by the policy or there is a large deductible, there may be tax reasons to keep all of that paper — consult a professional to tell you what may or may not be covered and why. If it is a large loss, keep a diary of every conversation, meeting, etc. Do not make it an emotional appeal — just the facts and when and with whom.
|Hire the right help
We are going to be flooded with people offering help for a price. In time of disaster, public adjusters are legally capped on the percentage they can charge to represent you in presenting a claim. Before signing someone up, check with the Florida Department of Professional Regulation to confirm licensure, to check disciplinary history and to verify experience. You may be asked to sign a form — don't until you have had it reviewed by a lawyer.
Bear in mind the percentage cap is the maximum — you can negotiate the rate and should on large or complex losses. Ask who is going to write the estimate — the public adjuster herself, or a third party whom the adjuster hires. The fee for the third party can be a hidden cost which you may have to bear. The same advice applies to contractors: they should be licensed, insured and experienced.
Contractors may ask for a written assignment of the claim proceeds directly from the insurer — again, don't sign a document unless you have it reviewed by a lawyer. Some assignments allow the contractor to contr ol the settlement of the claim, then ask you to pay the difference in value between what the contractor billed and what the insurance company paid.
A destroyed home is shown in the aftermath of Hurricane Irma, Wednesday, Sept. 13, 2017, in Big Pine Key, Fla. (AP Photo/Alan Diaz)
|Cooperate and never exaggerate
All insurance policies require you to cooperate in documenting and proving the loss and its value. For example, most policies contain a requirement that the insured provide a proof of loss under oath within a certain period of time after the loss occurs. The proof of loss form itself can vary by insurer (though standard Acord forms are available).
Accurately gather and present your proof, labelled and organized. Keep a copy of each and every communication with the insurer. Do not exaggerate or your entire claim can be denied, even those parts honestly and fairly made.
|ACV vs. RCV
ACV is short for actual cash value — basically, replacement cost of a thing less depreciation (an old roof is worth less than a new one). RCV is replacement cost value — full replacement with like kind and quality. Most policies won't pay RCV until repairs are actually made, and many policies contain a time limit on when that important benefit must be claimed and proven.
Obtain an estimate as quickly as possible and present it to the insurer with a proof of loss (if required) and request the insurer to advance the funds needed to do the repairs on a draw basis as repairs are performed in order to preserve the RCV claim. Many insureds lost their RCV benefits following the '04-'05 hurricanes by failing the understand how to manage this feature.
|Business Interruption claims and important cause of loss features
A restaurant is damaged by the storm, or a curfew prevented it from opening and serving hungry patrons dying of boredom after the cable went out. And the building code changed after the restaurant was built. Business losses can have many features designed to restore the business to its pre-loss condition (and financial strength) even though physical loss of or damage to the building itself can be a common requirement.
Following 9/11, many of the requirements to recover BI were tested in court decisions and in circumstances following urban unrest. Business interruption, contingent business interruption, law and ordinance, ingress and egress, code upgrade and other issues need to be examined promptly after Irma — your accountant will be a focal point for documentation and discussion. Be aware of the time limits on making these claims and how to document them.
This is not an exhaustive list, and implementing these suggestions will be driven by the facts of the claim and the insurer's behavior. Get help if you need it — ask lots of questions — and good luck.
R. Hugh Lumpkin is managing shareholder at Ver Ploeg & Lumpkin, a Miami-based law firm that represents individuals and corporate policyholders in disputes with insurance companies. He can be reached at [email protected].
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