Storm Updates

We apologize for any confusion or concern this may have caused.

SWORN PROOF OF LOSS

Standard language in a homeowner or wind insurance policy form states the Sworn Proof of Loss must be completed, signed and returned to the insurer within 60 days of receipt of the insurer’s request.  Note, this is NOT the Date of Loss (9/28/22). Clients who have not completed, signed and return the Sworn Proof of Loss to their insurer should do so as soon as possible, most definitely within 60 days of the date it was received from the insurer.    A copy of a misplaced Sworn Proof of Loss can be obtained from the adjuster or insurance company.

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Members of the Sanibel Island Next Door app community,
can also see our updates.

Thank you for being a Heidrick & Co. Insurance client.
Have a Bountiful Thanksgiving!

Chris, Holli, Kim K., Kim W., Tami, Antoinette,
Paul, Jessica, MJ, Lisa, Giselle, Cameron,
Emily, Rebekah, Denn, James, Kevin and Jesse

Overall, we are starting to see some progress with claims activity.  Insurance adjusters are out inspecting damage and many of us are now waiting to receive initial loss estimates.  Several steps of the process remain in our journey to a full recovery, as I’ll describe later in this update.

I want to say up front, however, how personally disappointed I am, in the lack of communication from most insurance companies.  My staff and I continue to receive a significant number of calls and emails from frustrated clients looking for updates. We share your frustration, with several of us experiencing this issue from the policyholder standpoint as well.  While Hurricane Ian created some unique challenges for insurers and insurance adjusters, this is no excuse for the insurers’ failure to provide transparency into the claim settlement process, acknowledge policyholder calls and emails and/or provide timely status updates and responses to questions.  Please know this lack of communication is not isolated to one or two insurance companies.  Rather, our clients are experiencing frustration with many insurance companies.  I am also hearing the same frustration from other insurance agency colleagues.  I have provided this feedback to executives at several insurers, and I will continue to do so long after all claims have been settled, in hopes the insurers will improve their communication in the future.

Below are updates on the most common questions we have received lately and those we anticipate in the coming weeks…

Loss Settlement Process

Generally, steps in the loss settlement process are:

1.      Claim is filed.  For most policyholders, this step is complete.

2.     Field Adjuster visits home to gather photos, measurements and data.  The Field Adjuster is usually an independent contractor, hired by the insurer, to be the eyes and ears of the Desk Adjuster.  The Field Adjuster usually does not have final authority, so whatever comments he/she may make to a policyholder while inspecting the loss is subject to approval of the Desk Adjuster or the insurance company.  Many policyholders have already seen or communicated with their Field Adjusters.  Most Field Adjusters should be done with their work within the next few weeks.

3.      Field Adjuster prepares report and submits to Desk Adjuster.  Field Adjusters are not all the same.  Some are harness-trained and specialize in roof inspections.  Others are not and may require a second professional to valuate roof damage.  The Field Adjuster will then compile all data into a report and prepare an initial estimate for the loss.  This estimate is based on the damage the adjuster can see and is calculated using industry standard, cost-estimating software.  Sometimes damage may be hidden, damage is missed and/or the cost data in the estimating software is inaccurate.  Any or all of these scenarios can lead to the need for a Supplemental Claim Payment (see the final step, below).  We often hear from policyholders who believe the initial loss estimate is a “low-ball offer.”  That’s unlikely, as the majority of Field Adjusters are independent contractors whose compensation is based on a percentage of the loss amount.  These Field Adjusters have no incentive to “low-ball” anyone and their compensation is NOT paid from the claims proceeds.  However, a Public Adjuster, hired by a policyholder, will assess a fee which will be paid from claim proceeds (not reimburseable by the insurer).

4.     Desk Adjuster reviews report and approves initial loss estimate.  This adjuster will ask the policyholder for additional information like a list of Contents lost (inlcuding value), receipts for an Additional Living Expense claim, a Sworn Proof of Loss (see below for this important requirement) and/or a recorded statement.  It can often take up to three weeks for the Field Adjuster to prepare his/her report and estimate, and another week or two for the Desk Adjuster to review.  For this reason, many policyholders currently feel abandoned, as they’ve had contact with a Field Adjuster, but have not received and any updates for several weeks. No question that better communication by the insurers would improve this process, but this delay is quite normal in the adjustment of catastrophe claims.  Note:  The Field Adjuster or Desk Adjuster may see a need to hire a structural engineer to inspect the home, which can extend the settlement process up to 60 days.

5.   Initial Loss Estimate is sent to policyholder with check for payment.  As mentioned above, this is an initial estimate.  Sometimes it may be accurate and complete.  In that case, the claim can be closed.  Other times, however, these estimates or payments are labeled as “final,” which is misleading.  They are not final and endorsing/cashing the initial check will not prohibit a policyholder from filing for, or receiving, a Supplemental Claim Payment.  Policyholders have one year from the Date of Loss (9/28/22) to file for supplemental payments on flood losses through the National Flood Insurance Program (NFIP).  For homeowners/wind losses, Florida Statute allows policyholders up to two years from the Date of Loss to file for supplemental payments.

6.   Policyholder or his/her contractor may provide additional documentation to either the Field Adjuster or the Desk Adjuster to support a Supplemental Claim Payment.  This may happen multiple times over the course of the claim.  Detailed documentation is the key to a successful Supplemental Claim.  An estimate or invoice from a contractor, a phone call between a contractor and the adjuster, a report from an engineer hired by the policyholder, additional photos and receipts are all examples of detailed documentation that is needed for an insurer to process a Supplemental Claim.

SWORN PROOF OF LOSS

Standard language in a homeowner or wind insurance policy form states the Sworn Proof of Loss must be completed, signed and returned to the insurer within 60 days of receipt of the insurer’s request.  Note, this is NOT the Date of Loss (9/28/22). Clients who have not completed, signed and return the Sworn Proof of Loss to their insurer should do so as soon as possible, most definitely within 60 days of the date it was received from the insurer.    A copy of a misplaced Sworn Proof of Loss can be obtained from the adjuster or insurance company.

FEMA 50% Rule

We have received many questions regarding the 50% Rule.  This rule was established by FEMA, and adopted into the Florida Building Code.  It requires a structure, with damage exceeding 50% of the market value of the structure, to be brought up entirely to the most current building codes.  In practice, this could mean a home must be elevated or demolished and rebuilt.

Several local municipalities have clarified how the cost of the damage (the numerator in the fraction) and the market value of the structure (the denominator in the fraction) can be determined.  These methods can vary from one municipality to another, so only your local Building Official can determine if your home triggers the 50% rule.

Loss of Use (LOU) and Additional Living Expenses (ALE)

We have received many questions regarding Loss of Use coverage (also referred to as Additional Living Expense or Loss of Income/Rents)  Whether or not LOU/ALE is paid requires two things:  (1) The policy contract contains this coverage and (2) The policy covers the cause of loss that makes the home uninhabitable.

LOU/ALE is not offered on NFIP flood policies, but is included on most homeowner/wind policies. For this line of coverage to apply, the adjuster will need to determine that the home is uninhabitable due to the damage caused by wind.  It is highly unlikely that any policy that excludes coverage for wind will pay an LOU/ALE claim from Hurricane Ian. Most policies covering wind damage for structures located in areas in which property owners were prohibited from accessing their property will likely to pay up to two weeks of LOU/ALE under the Civil Authority provision.  Insurers will make the final determination as to whether or not this applies.  Policyholders should be sure keep all receipts and thorough documentation to support this claim.  For a Loss of Rents claim, the documentation required may inlcude contracts, leases and or rental receipts from previous years.

Policy Renewals

We recommend policyholders accept renewal offers from their current insurers and postpone “shopping” coverages until all repairs from Hurricane Ian are complete.

The Florida Office of Insurance Regulation issued an Emergency Order requiring all insurers covering a personal-residential or commercial-residential structure damaged by Hurricanes Ian or Nicole to continue to cover those risks until at least 90 days after all repairs have been completed.  Moving to a new insurer removes the protection provided under the Emergency Order and can be detrimental if the new insurer’s inspection findings are problematic. For example, Bob is currently insured with ABC Insurance Company and moves to XYZ Insurance Company.  After binding the new coverage, XYZ Insurance Company inspects Bob’s home and finds something unacceptable to their guidelines or otherwise determines Bob’s home was not eligible for the coverage.  XYZ cancel’s Bob’s policy, leaving him without coverage.  Bob’s alternative could be a much higher premium, or more likley an inability to obtain replacement coverage at all.

Cancelling Coverage After a Loss

While it seems intuitive to immediately cancel insurance coverage after a total loss, prudence is required to avoid a costly mistake.  A policyholder should not even consider this option unless/until the insurer has declared the dwelling/building a total loss and paid him/her the policy limits.  If coverage is cancelled in anticipation of a total loss, and the insurance company disagrees, any new coverage will result in much higher premiums, or more likley, the inability to obtain replacement coverage.

Reducing Policy Limits After a Loss

Again, it may seem intuitive to do this, but this stratgegy could prove penny-wise and pound-foolish.  As stated earlier, an insurer must continue to provide a policyholder with coverage until repairs are complete.  As those repairs progress, the dwelling/building will be restored to the replacement cost, or likely even higher levels, than prior to the storm.  For this reason, many insurers will not agree to reduce Dwelling Limits.  If a company does agree, it will be the policyholder’s responsibility to increase those limits incrementally as the repairs move forward.

Buying or Selling Property

Other than the NFIP flood insurance companies, we are not aware of any insurance carrier willing to insure a home with an open claim and/or existing damage.  All claims on the home must be closed before new coverage can be obtained.  Even when the claims are closed, few, if any, insurers are willing to provide coverage for a dwelling/building with existing damage.

https://www.facebook.com/SanibelInsurance

Members of the Sanibel Island Next Door app community,
can also see our updates.

Thank you for being a Heidrick & Co. Insurance client.
Have a Bountiful Thanksgiving!

Chris, Holli, Kim K., Kim W., Tami, Antoinette,
Paul, Jessica, MJ, Lisa, Giselle, Cameron,
Emily, Rebekah, Denn, James, Kevin and Jesse