As the flood waters begin to gradually recede in Texas and Louisiana, residents are going home to assess the damage and see what remains after Hurricane Harvey swept through. Many will be unsure of where to start or how to manage the claims process.
Safety should be the first priority when returning to a home or business. Do not enter unstable buildings or structures that need to be cleared for re-entry by local authorities. Before entering the structure, walk around the exterior to make sure there are no major holes or other signs of collapse, loose pipes or downed wires that could pose a danger. Beware of broken windows and doors, since they may allow snakes, alligators and other wildlife to enter the premises.
If there are fuel oil or propane tanks, make sure to turn off the fuel valve on the tank. Natural gas should be turned off at the meter. Only enter buildings during the day, since there will be many hazards that may not be visible at night. Never use candles for temporary lighting because of the fire risks. Use a flashlight or battery-operated lantern.
“Turn off your main water valve, as well as the main electrical box,” cautions Don Carson, executive vice president and managing director for Burns & Wilcox, a large personal insurance wholesale broker and underwriting manager in North America. “It is also important to be cognizant of any safety issues that may cause further damage to the home or occupants.”
Do not enter any buildings with sagging ceilings, large cracks in the walls or floors, or areas where the walls are out of alignment, since the structure could be unstable. Pregnant women, young children, those with compromised immune systems or individuals with other health issues should avoid being in flooded structures. Mold can begin to form in 24-48 hours with enough moisture and humidity, and given the trillions of gallons of water involved with Hurricane Harvey, it won’t take long for interiors of structures to become compromised. Removing wet materials and allowing air to circulate in the structure will help to mitigate some of the growth.
Safety also applies to what is worn in the building. Heavy work or thick-soled rain boots provide greater protection against exposed nails, popped boards, mountains of debris and unexpected encounters with some wildlife. Heavy rubber or leather gloves, long pants and long-sleeved shirts will also provide protection against some of these dangers.
Capturing the damage
“Take as many pictures as you can,” adds Carson. “This will aid in the insurance claims process. Photographic evidence of all visible damage, the height of the flood waters and flood levels in and around your house, and damaged contents is extremely helpful.” Shooting video of the damage inside and out of the structure will also aid in capturing the extent of the damage.
After everything is photographed, damaged property should be separated from undamaged property in order to be reviewed by the carriers. Flood policies require that damaged property be organized and examined by the carrier, however homeowners policies only require that the damaged items be shown to the carrier.
Take a careful inventory of what was damaged. Insurers will ask for documentation, but will understand that much of the documentation may have been lost in the flooding. Proof of loss needs to be sent within 60 days after a loss, and must be signed and sworn to for claims filed under homeowners or flood policies. The Texas Department of Insurance (TDI) has already asked insurers to waive the time requirement, so homeowners should check the TDI website for updates.
Unplug any electric appliances like televisions, computers, stereos and microwaves, since there could be a power surge when the electricity comes back on, causing further damage. Some electronics can actually be cleaned and restored if they are not turned on, so unplugging them could reduce replacement costs as well.
Shawn Hagdorn helps to cover the roof of his father's home that was damaged in the wake of Hurricane Harvey, Monday, Aug. 28, 2017, in Rockport, Texas. (AP Photo/Eric Gay)
Damage from flooding is not covered under a traditional homeowners policy unless there is damage from wind, falling trees or other covered losses. Any flood damage would fall under a flood policy that was purchased separately from the homeowners policy.
Homeowners may not be aware that most policies have a section entitled “duties after a loss” that outlines insureds’ responsibilities. First, they should report the claim as soon as possible under the flood or homeowners policy by contacting their agent or the company that sold them the policy. Carriers are sending large numbers of adjusters to the area and even if owners don’t have a flood policy, they should still report the loss, since the actual cause of the damage will determine whether or not there is coverage.
Homeowners are also responsible for mitigating any additional damage to their property. If a tree fell on the roof, it should be removed and the roof tarped or repaired to prevent additional damage from rain and other elements. Broken windows should be repaired, replaced or boarded up for the same reason. Water should be removed from the floors and wet carpets should be taken from the building to reduce mold growth and enable them to dry more quickly. Any items moved outside to dry that are still salvageable should be put into a secure area to protect them from theft. Keep track of any expenses incurred to repair or replace property, since these will be submitted as part of the insurance claim.
Residents should also keep receipts for additional expenses such as hotel rooms, meals, replacement clothing, and the like. Although there is no reimbursement for additional living expenses under a flood policy, there may be under a homeowners policy if there is a covered loss.
Wet contents such as books, clothing, furniture and other items should be removed from drawers, cabinets and shelves and laid out to dry if possible, since some can be cleaned and restored. Open dresser and cabinet drawers to allow air to circulate inside and to keep the drawers from sticking together.
Hard surfaces can be rinsed with clear water and then cleaned with standard cleaning products and disinfectants. Many people mistakenly believe that everything should be cleaned with bleach, which is corrosive and can cause even more damage.
Some homeowners will hire restoration or other contractors to assist with the cleanup. Insurers may recommend companies, but the homeowner makes the final decision as to who is hired. Make sure to check references before hiring any contractors. For those homeowners attempting to handle their own cleanup or volunteering to help others, the Restoration Industry Association offers some guidelines.
Several hundred thousand vehicles were damaged by Hurricane Harvey. Flood-damaged cars will be a risk for mold, electrical issues and other problems. (Photo: Interstate Restoration)
Filing a claim
“Based on our initial observations, claims may fall under either named windstorm or flood coverages, or possibly both,” explained Gary Marchitello, head of property broking for Willis Towers Watson. “That determination, however will be based specifically on the facts related to each insured and the specific policy wording governing those facts.”
Property claims will not be the only types of claims that arise from Hurricane Harvey. Business interruption claims are also likely to be filed and could take some time to calculate. "After assessing the damage, one of the first things a business owner will want to do is to retrieve his or her business personal property list," says Stacy Mazur, CEO of Ft. Worth-based Interstate Restoration. "Hopefully that list is complete and up to date, along with photos of the property."
“Even if a specific property is not damaged, an insured’s property may face other obstacles to its operations. For example, it could be impaired by civil authority, or it may not have the means of ingress/egress due to nearby road closures,” added Marchitello.
Damaged autos will be covered under the owner’s auto policy, although residents should be cautious when purchasing a used vehicle because scammers may try to sell flood-damaged cars in the coming weeks and months.
The Texas Legislature enacted HB 1774 to reduce the number of frivalous lawsuits and to ensure that insurance companies were notified when policyholders were unhappy with how their claims were handled before a suit was filed. (Photo: Shutterstock)
Lawsuit reform efforts won’t affect claims
There has been a fair amount of discussion and misinformation on social media concerning a new law that takes effect in Texas on Sept. 1, 2017. The primary purpose of the new statute (HB 1774) is to require written notice of a dispute before a lawsuit is filed by a homeowner against an insurance company. According to a statement from the Texans for Lawsuit Reform (TLR), “The requirement for a written pre-lawsuit notice (not a pre-claim notice) to the insurance company ensures the company is aware of its policyholder’s complaint and has had an opportunity to adequately address that complaint before being sued.”
“Policyholders do not lose any protections with these changes that go into effect on September 1,” explained Joe Woods, vice president, state governmental relations for the Property Casualty Insurers Association of America (PCI) in a press release. “The new law does not bar access to the courts, nor does it prevent consumers from retaining legal counsel. Consumers still have all legal remedies available under the consumer protection laws in the event an insurer engages in bad faith conduct. The Texas Department of Insurance is available to handle any complaints about insurers. The new law does not take away any right to sue and does not diminish any cause of action that a person has against an insurance company.”
The process for filing a claim is exactly the same as it was before the statute was enacted. Many insurers are already in Texas and are prepared to bring in additional resources as needed to service their policyholders.
TLR President Dick Trabulsi said, “The Texans affected by this historic disaster deserve our full support as they begin to pick up the pieces.” He also warned homeowners to “beware of anyone – lawyer, adjuster, contractor or anyone else – claiming to help you get more money from your insurance company.”
The new law was designed to encourage out-of-state adjusters to come work in Texas following a major disaster like Harvey because the extent of the damage will require their assistance in order to evaluate and address all of the claims in a timely manner, explained Trabulsi. “It will also prevent unscrupulous individuals from taking advantage of thousands of hard-working Texans,” he added.