Insurance and Natural Disasters
When a disaster occurs, most major insurance companies establish disaster hotlines for their policyholders. The lists of insurance company hotlines are generally posted on the websites of the various state departments of insurance. Also, major insurers often set up mobile disaster units close to affected areas. The contact information for the insurance departments is as follows:
- Texas Department of Insurance (www.tdi.state.tx.us) 1-800-252-3439
- National Association of Insurance Commissioners (www.naic.org) 1-816-783-8300
If anyone claims that they are working on behalf of the government, the Texas Department of Insurance, or your insurance company, and asks for money to help expedite your claim, be careful. Demand to see official photo identification and immediately report this to your insurance company or the State of Texas Department of Insurance for verification.
You may be approached by a "public adjuster" who will offer to assist you in handling or expediting your insurance claims in return for a percentage of your insurance benefit payments. Only attorneys can represent third parties in claims against insurance companies and only attorneys are allowed to collect a percentage of your payments. Be sure this contract with your attorney is in writing and you understand exactly what expenses, if any, you are agreeing to pay over and above the contingency fee.
Most insurance companies will only reimburse for the reasonable cost of repair. If prices quoted for repairs appear inflated, get another estimate and obtain your insurance company’s agreement before undertaking repairs. Remember that your claim will only be approved to the extent that it does not exceed your policy limit. If you undertake repairs at an inflated price, you may reach your maximum policy limit very quickly.
Remember that all of the following information and answers to FAQs do not substitute for the four corners of the insurance policy. It is important that you read your insurance policy very carefully.
FEMA oversees the National Flood Insurance Program. All flood insurance policies require you to give prompt written notice of loss. Contact your insurance company or insurance agent to find out how to file your notice of claim. Typically, you will file a claim for damages under your flood insurance policy by submitting a signed Proof of Loss to your insurance company. The Proof of Loss must be in the hands of the insurance company within 60 days after the loss occurs. However, in cases of severe catastrophe, FEMA may authorize Proof of Loss extensions for everyone in your area.
You will need to submit a list of lost or damaged contents. To the extent possible, include on the list the quantity of each item, a description, brand name, cost, model and serial number, and your estimate of the loss amount. An insurance adjuster will prepare an estimate of damages and provide you with a copy. You and the insurance company can then agree on the amount of the damages to be paid. If you do not agree, then you can appeal the insurance company’s decision. Please refer to your policy for more information on claims payment and the appeal process.
Q. 143 My car was flooded. How does the insurance companydetermine if mycar should be totaled?
- Whether your car will be totaled is determined on a case-by-case basis. Typically, when the cost of repair plus the salvage value equals or exceeds the actual cash value of the vehicle prior to the loss, it will be considered a total. A primary factor is the amount of water in your car. Generally, if water covered your dashboard or electrical components, the car will be totaled.
Q. 144 My car was totaled due to flood damage and I have full coverage on it. The company is going to pay the Blue Book value but I still owe substantially more than that. Doesn’t the company have to pay what I owe on the auto?
- No. The company is only obligated to pay the current market value of your vehicle. You can request that the adjuster explain to you how the value was derived to ensure that all of the vehicle’s equipment, features, upgrades and recent work was considered in determining the value. To cover the difference between the market value of your vehicle and what you actually owe, you would need an endorsement or separate policy, to provide Guaranteed Auto Protection (GAP) coverage.
Q. 145 What will happen to the vehicle’s title if my car is totaled?
- If you own the vehicle outright, you will have to sign the title over to the insurance company. In exchange, they will give you a check for the market value of the vehicle. If you still owe on a car loan, the insurance company will coordinate with you and your lender to have the title signed over to them. In most cases, the insurance company will establish contact with the lender and be advised of the amount owed on the loan. If the insurance company has determined that the market value of the vehicle is $10,000 and the amount owed the lender is $8,000, the insurance company will issue a check for $8,000 to the lender to release the lien on the car. The insurance company will then issue a $2,000 check to you to obtain your signature on the title.
Q. 146 The insurance company requested that I tow my flooded vehicle to a specific location for inspection. Am I responsible for the towing charges?
- No. The insurance company should pay the towing expense by reimbursing you or paying the tow truck operator once the vehicle is delivered at the inspection site. You should not be responsible for the expense since you are assisting the insurance company in a prompt inspection of your vehicle, as well as protecting it from further damage.
Q. 147 The insurance company agreed to repair my vehicle. Can the company require the use of used parts?
- In some cases, used parts and after market parts may be permissible, depending on the age, condition, and mileage of the particular vehicle. Most Texas personal automobile policies require the insurance company to pay the lesser of the following: actual cash value of the property; the amount to repair or replace the property with other of like kind and quality; or the amount stated in the declarations page of the policy.
Q. 148 Since my car was flooded, I had to rent a vehicle. Does my auto policy cover the cost of renting a car?
- Your policy will provide coverage for renting another vehicle only if you have an endorsement on your policy for rental reimbursement coverage. Under this coverage, the insurance company will pay up to the limit shown on the endorsement for the reasonable amount of time it takes to repair or replace your vehicle.
Q. 149 Is my vehicle covered for flood damage?
- Only if you carry “other than collision” coverage, also called comprehensive coverage, on your policy. This information can be found on your policy’s declarations page. If you do not have a copy of your policy, you may wish to check with your agent or insurance company.
Q. 150 What if I do not agree with the settlement offered by the insurance company, particularly the market value amount for my totaled vehicle?
- Ask the adjuster to explain how the settlement amount was derived. You may also provide examples of vehicles for sale in your area that are in the same pre-loss condition to support the market value. If you still disagree, the personal auto policy allows you to demand an appraisal of the loss. There is a specific provision in manypoliciesfor appraisal which lists the responsibilities of both parties.
Q. 151 My car was washed away in the flood. How do I find out where it is now?
- Contact the Unclaimed Autos department of the area police department. Also, your vehicle may have been towed to a storage facility without your consent. If the vehicle was towed without your consent, and the storage facility wants to charge you a fee, you might contact the Texas Department of Motor Vehicles (TxDMV) at 888-368-4689 (general information line).
Q. 152 I’ve received a check from the insurance company, but am not satisfied with the amount. I plan to file a complaint to request additional funds be paid. Should I cash the check? If I cash the check, does it mean that I accept their decision and amount of payment?
- Be careful about endorsing a check before discussing your concerns with the company. Call the adjuster or company first before cashing the check.In addition, read both sides of the check carefully, as well as any accompanying documents. Some companies have a release from further liability disclaimer printed on the back of the check. Be sure to review any document before signing it – including a check.
Q. 152 How does replacement cost coverage work?
- Replacement cost coverage replaces or repairs your damaged property with new material and/or items of like kind and quality.
Q. 153 Is replacement cost coverage available on all policy types?
- Replacement cost coverage is not available under a typical auto policy. Some insurers provide new car replacement for a limited number of years if the auto is insured when new. You should check with your agent or company to see if they offer replacement cost coverage on all policy types.
Q. 154 If an insured vehicle is financed, how are claim checks issued? If issued to both the insured and lien holder, how does the insured collect?
- The lien holder endorsement requires the insurer to pay to the insured and the lien holder as their interest may appear. The insured and the lien holder may both be named on the check. In most cases, insurance claim payments for damage to property that is security for a loan will be made payable to you and the lien holder, and the checks would require endorsements from both parties. The insured and the lien holder will agree on the release of funds.