Appendix A

Personal Lines Insurance Information Handouts

The following pages contain information that may be reproduced and provided to the community resources for reference in answering insurance related questions. They may also be reproduced and made available directly to consumers. You are free to reproduce and distribute this information as necessary to meet the local communication needs.

Immediate Funds Available
Important Points

· Funds are available to pay for the extra costs of a hotel room and meals if you have been displaced from your home by an event that is covered by your Homeowners policy, such as a tornado, a hurricane, or a fire.

· Immediately contact your agent or insurer to report your claim and secure an advance Additional Living Expense payment.

· Keep accurate and complete records of your additional living expenses, so you can document them as part of your insurance claim.

· Additional Living Expense reimburses you for costs above and beyond your normal daily expenses.

· Remember, this is an advanced payment of your overall claim. It will be accounted-for by the adjuster.

Steps to Take Immediately After the Disaster

Important Points

· Preserve the damaged property for examination by the insurance adjuster.

· Protect the damaged property from further damage.

· Report the loss to your insurance agent or insurance company immediately.

Suggestions on How to Manage Your Insurance Claim

Important Points

· Carefully read the policy to review the coverages you purchased.

· Keep an accurate and complete record of your additional expenses since the disaster.

· Prepare an inventory of the personal property that has been damaged.

· Document the damage with photographs or videos.

· Keep copies of all documents related to the insurance claim for future reference.

Cleaning up the Mess and Rebuilding

Important Points

· Meet with your adjuster and make sure everything necessary has been seen and that it’s okay to begin removing the damaged and destroyed property as part of the clean up.

· Contact a reputable contractor who possesses the licenses that may be necessary to do construction work in your community.

· Get detailed estimates from a contractor, or competing construction firms, on repairing the damaged structure or rebuilding the destroyed structure, as it stood before the disaster. The estimate should be detailed so that you and the adjuster know exactly what the contractor intends to do and the cost for each item.

· Present the inventory and construction estimates to the adjuster as soon as possible.

· Arrange a meeting between the contractor and your adjuster to review the estimates and arrive at an agreement.

· Proceed with the project, monitoring construction progress as you would if the bills were being paid by you, instead of your insurance company.

Disagreements – How they are Resolved

Important Points

If you disagree with your insurance adjuster about the claim, there are several options available for you to pursue:

· Contact the adjuster to review the dispute and seek a solution.

· Contact the adjuster’s supervisor to review the dispute and seek a solution.

· Contact your agent to review the dispute and ask for assistance in resolving it.

· Contact the state insurance commissioner’s office to review the dispute and seek assistance in resolving it.

· Consider using the provision of your policy that gives you the right to appraisal of the dispute.

· Consider using arbitration services available in many states to resolve disputes.

· Contact legal counsel for assistance.

Which Insurance Policy Pays for Damages to Your Vehicle?

Important Points

· If the vehicle is unlicensed and is used only around your property, damage will typically come from your Homeowners policy. However, you may have additional specialized policies that provide expanded coverages for vehicles such as all terrain vehicles, boats, and snowmobiles.

· If the vehicle is licensed for use on public roads, the damage will typically come from your automobile insurance policy’s optional comprehensive section.

Questions and Answers

The following pages contain questions often asked by people about their personal lines insurance policies following a disaster. These pages have been specially prepared for reference and use by some of the non-insurance people you may identify as commuity leaders who might possibly be in a position to provide accurate insurance information. However, the use of these Q and A sheets is limited only by your imagination.

The subjects are divided into free-standing sections to allow you to select those subjects on which you may wish to focus, depending on the type of disaster. The topics are identical to the preceding personal lines handout pages.

· Your Insurance Claim – Understanding insurance terminology, some of your coverage, and what your adjuster will do

· Cleaning Up the Mess and Rebuilding

· Disagreements – How They’re Resolved

· Which Insurance Policy Pays for Damages to Your Vehicle?

Questions Often Asked by Policyholders and Answers from Insurance Experts

Your Insurance Claim

Understanding insurance terminology, some of your coverage, and what your adjuster will do

The following questions are frequently asked by homeowners following a catastrophe. Flooding is often part of the cause of damage to a house during a natural disaster. Because the Homeowners Insurance policy provides no coverage for flood damage, the homeowner must have purchased a separate National Flood Insurance Policy. There are important coverage differences between these two policies. The answers to many of the following questions reflect the policy conditions of both the typical Homeowners Insurance Policy and the National Flood Insurance Policy.

Q: What is Actual Cash Value (ACV), as it relates to Homeowners insurance?

A: The ACV of the house is the real value of the structure. The value of the land is not included. It is determined by subtracting depreciation, caused by age and use, from the replacement cost of the building.

Q: What is replacement cost, as it relates to my Homeowners insurance?

A: The House: Replacement cost insurance covers the actual replacement of the building, or the damage portions of the building, to its pre-loss condition following an insured loss. There is usually a limit as to how much the insurance policy will pay, however. That limit is determined by the policyholder at the time the insurance policy is purchased. Many insurers offer “replacement cost” coverage for those structures that qualify by meeting stringent underwriting requirements. This type of coverage requires the policyholder to buy enough insurance to cover at least 80% of the replacement value of the house. The damage to the structure will be covered up to the policy limits. The value of the land is not included.

The Personal Property: Replacement cost insurance covers the actual replacement of the insured residence’s contents. There is usually a limit as to how much the insurance policy will pay. It is usually a percentage of the of the insured value of the house. You will be required to verify replacement of the damaged or destroyed items. If you choose not to replace an item, the insurance policy will compensate you for the actual cash value, as explained above.

Q: What is Guaranteed Replacement Coverage, as it relates to Homeowners insurance?

A: The House: This policy will pay the cost to replace the house as it stood before the loss, even if the policy limits were not adequate. If rebuilding costs increase following the loss, this type of policy will cover the bill. This type of insurance typically requires the policyholder to purchase enough insurance to cover 100% of the replacement value of the house. The value of the land is not included.

Q: How do I determine the actual cash value (ACV) of my personal property?

A: First you should determine the replacement cost of the personal property damage at current prices. Then estimate the life expectancy of the item. Remember that things depreciate at different rates. The ACV is determined when depreciation is applied to the replacement cost using the following formula:

Replacement cost (-) Depreciation (=) ACV

Constructing an inventory will help reduce the time needed by your adjuster to settle the claim. An inventory sheet with the following four columns could be used to record the information:

1. Item description;

2. Replacement cost;

3. Date purchased; and

4. Remaining value.

You will fill out the first three columns and the fourth could be agreed upon by you and your adjuster. Your agent may be able to provide you with a booklet or a Website link to assist you with the process.

Q: How do I determine the actual cast value (ACV) of my structure?

A: Typically the ACV is considered the cost to replace the structure as it was at the time of the loss, less physical depreciation. Land values are not included, on the insured building on the land.

There are contractor, engineering, and architectural firms available to appraise your structure. They may also be able to give you an estimate of the cost per square foot to build a house in your area. This will help you calculate the replacement cost. Deduct physical depreciation from the estimated replacement cost to determine the ACV of your house. Remember that insured to the value of the building is the responsibility of the policyholder in most states. The primary responsibility of the agent and the company is limited to explaining fully the significance of how the building amount relates to the insurance to value principle and the replacement cost. However, some states have a Valued Policy law. In those states the policyholder can be paid the face amount of the policy if the building is destroyed in a specified manner, such as by fire or wind. Ask your insurance agent, adjuster, or insurance company to explain these principles to you.

Q: Why is my claim check for actual cash value (ACV) when I have purchased replacement cost coverage?

A: Your insurance policy probably contains conditions regarding the replacement of your house and your personal property. In most instances, you will not be paid the full replacement amount until the house is rebuilt or the personal property replaced. First you are paid the ACV of the structure and your personal property. When it is actually replaced as required in your policy, then your insurer will pay you the balance.

Q: Now that I am forced from my home, what emergency expenses are covered?

A: The Homeowners policy provides for the payment of Additional Living Expense (ALE) if the insured residence has been made unlivable because of damage from a covered peril as described in the policy. ALE will cover the increases in living expenses you must pay because of the covered loss until your house has been repaired or restored to a condition in which it can be occupied. Most policies will pay ALE up to a stated amount. The Homeowners policy will also reimburse you for any reasonable and necessary expense you had to pay for temporary repairs that protected your property from further damage following a loss.

Q: How is the value of my property determined?

A: The value sought is the structure’s replacement value, or what it will cost to rebuild as it stood at the time of the loss. The adjuster will inspect the property to gather important information needed in reaching a value. Facts the adjuster will take into consideration include the square footage of the house, the quality of the materials used in its construction, and the house’s special features, such as a fireplace. You can help the adjuster’s research if you can provide pre-loss photographs of the property and its construction.

Q: How long before my adjuster will get here?

A: You must report the claim immediately to the agent of the company. Adjusters will typically give the highest priority to the most serious claims. Under most circumstances an adjuster will contact you within 48 hours. Following an enormous disaster, affecting thousands of buildings, the adjuster may take longer to reach you. Be sure to let the agent, company, or adjuster know how to reach you if you have been forced from your house or are gone during the business day.

Q: When will my claim check arrive?

A: In some cases, when there is serious damage, you may receive an advance payment. Otherwise the speed with which the claims is paid will depend on the complexity of the claim, how quickly information is provided to the adjuster, and the overall claim activity generated by the disaster. When the adjustment process has finished most companies attempt to issue a claim check within seven to ten days.

Q: Do separate deductibles apply to my house and my contents?

A: Under your Homeowners policy one deductible will typically apply.

Q: Must I list all my personal property that was destroyed?

A: Yes. The Homeowners policy provisions require that you present an inventory of all items with their replacement cost. At some point you me be asked to sign a sworn Proof of Loss form verifying the items and costs.

Q: Out pet died in the storm. Is this covered?

A: No. There is a specific exclusion in the Homeowners policy. However there are special mortality insurance policies which may be purchased for animals such a livestock, horses, show dogs, and so on.

Q: Do I need a lawyer to provide legal advice?

A: It is up to you to determine if you wish to be represented by an attorney for a property claim. If a question arises about your legal liability to another party for damages, the Homeowners insurance policy may provide an attorney for you.

Q: My personal property is temporarily stored in my neighbor’s garage. Am I covered?

A: Under your Homeowners policy, the personal property is typically covered up to the full limit for personal property coverages, usually about 50% of the amount of insurance covering the house. This amount may vary from insurance

Q: I lost electrical power during the disaster, my freezer and refrigerator are off and the food is spoiled. Is the damage covered?

A: It depends on which Homeowners insurance policy you purchased. Some policies will pay for the loss you suffered when the food spoiled and others provide no coverage for such damage. Your agent or adjuster can tell you if your policy covers this type of damage.

Q: Will my insurance policy pay to rent an electrical generator, so I can get electrical power in my home?

A: No.

Q: Our appliances were damaged by the surges of electricity through the utility’s wires during the disaster. Is the damage covered?

A: No.

Questions often asked by policyholders and answers from insurance experts

Cleaning Up the Mess and Rebuilding

Q: My house has to meet new code requirements when it is rebuilt. Is that covered?

A:. Typically a Homeowners insurance policy will cover the cost to rebuild the house as it was prior to being damaged. Modern materials and construction techniques are often employed in the rebuilding process. But specific building code requirements, which have been adopted since your house was built, are typically not covered under the standard Homeowners policy, unless it has been endorsed for Ordinance or Law coverage.

Q: Does the house have to be rebuilt exactly the same as the old one?

A. No. Your new house may look different than the destroyed structure, as long as the total amount doesn’t exceed the cost of reproducing the building as it stood before the loss. If you wish to upgrade the structure, which people often do when rebuilding a destroyed home, you will have to pay the additional cost yourself. Contractors will often include upgraded features at a minimal cost because of the project’s scale.

Q: How do I locate a reputable contractor?

A: Begin by seeking a recommendation from someone whose judgment you trust. Often a friend, neighbor, or relative can refer you to a good contractor. Another source of information is the local office of the National Home Builders Association or the National Home Remodelers Association. The local building official’s office may be able to provide you with a listing of licenses contracting firms that may legally work in your community. Your insurance adjuster may also be able to recommend some qualified contractors that can assist with your rebuilding.

Q: I have debris to be removed from my property. Is that covered?

A: Debris removal from the insured property is covered, if the debris was generated by a covered cause.

Q: Debris from my neighbor’s house blew into my yard. Is that covered?

A. Debris is often all mixed up following a catastrophe and it’s impossible to tell which debris is insured by what company. What usually happens is that debris removal from your property is covered by your Homeowners insurance policy, no matter where the debris originated.

Q. The wind blew trees down on my house and onto my yard. Is that covered?

A. It depends on your policy. Some Homeowners insurance policies will pay up to a specified amount for removal of the tree from your insured structures, such as a house, detached garage, a fence, or an in-ground swimming pool. Removal of trees from the yard is not normally covered by Homeowners insurance. Check with your adjuster or insurance agent to determine your coverage. Often the community’s public works department will haul the trees away if the property owners can get them to the curb or roadway for pickup by heavy equipment.

Q: Will my Homeowners insurance pay for damage caused by a flood?

A. The Homeowners insurance policy covers water damage caused by such things as broken pipes or rain pouring through windows broken out by high winds. It does not cover damages caused by flooding such as ground water runoff, overflowing lakes and streams, and so on. Coverage for flooding is available, but you must purchase a policy from the National Flood Insurance Program (NFIP), which is separate from your Homeowners insurance policy.

Q: Flooding caused my sewers to back up. Is that covered?

A: Sometimes. Some policies will cover sewer backup, but most Homeowners policies do not provide this coverage. Read your policy, check with your agent or your adjuster to determine if you have this coverage.

Disagreements – How They’re Resolved

Q. What happens if my adjuster and I cannot agree on the amount of damage? What alternatives are available?

A. Insurance claims adjusters are highly trained professionals. They aim to satisfy the consumer, but occasionally disagreements arise. Work with your claims adjuster to resolve a dispute resulting from a claim. Determine exactly how the adjuster has computed the damages and subsequent claims payment. Then, if you still disagree, call your insurance agent who can help you investigate the problem and possibly help negotiate a more satisfactory offer. Read the terms, conditions, and loss adjustment procedures of your Homeowners insurance policy. The terms of your policy will spell out whether the settlement is to be based on a replacement cost, actual cash value, or stated value basis. Following are brief descriptions of cash settlement options:

Replacement Cost – pays the amount needed to repair or replace the damaged or destroyed property with new goods and materials of similar or like quality at current prices.

Actual Cash Value (ACV) – is an amount equivalent to the repair or replacement cost of damaged or destroyed property at the time of the loss, minus depreciation.

Stated Value – The policyholder and the insurance company agree before a loss on the value of the property. The insurer will pay the claim for damages based upon this agreement.

The appraisal clause of your Homeowners insurance policy is designed to help resolve conflicts that may occur during the settlement process. You must formally request the use of the appraisal clause. You will pick a representative to gather facts and present your case, the insurance company representative will present its case. These two people will choose an independent third party to serve as an umpire.

Q: What happens if it costs more to fix the house than the adjuster has agreed to pay?

A: Unfortunately, Homeowners insurance will not always pay the full cost to replace or repair the damaged property. Your Homeowners insurance is subject to a deductible, which is the amount you agree to pay before the insurance pays. The type of insurance you purchase will also affect the settlement your company will pay to repair or replace damaged property. If your home is insured for replacement value, the full cost of repairs will be the basis for the claims settlement. If your home is insured for actual cash value (ACV), the cost of the damaged property minus depreciation for wear and tear will be the basis for the claims settlement. Your Homeowners insurance policy also has a requirement that you maintain enough insurance to cover the value of your house in order to be eligible for loss settlement on a replacement cost basis. This is known as insurance to value. Typically, insurance companies require that you insure your property for at least 80% of its total value. Other policies may require 100% of value be maintained in coverage. If your Homeowners insurance policy does not meet this requirement, you may collect the greater of Actual Cash Value or a portion of replacement cost, based upon the insurance to value requirement.

Q: What happens if the contractor finds some hidden damage that needs repair after I have agreed on the damage with my adjuster?

A: Every insurance agreement is based on good faith. If you have come to an agreement as to the amount of damage, but later discover additional damages, you should immediately stop all repair work and call the adjuster. Another visit will be scheduled by the adjuster to inspect the newly discovered damages and a new agreement will be determined.

Q: My agent didn’t notify me that my coverage had expired. What should I do?

A. It is highly unlikely that your agent or your insurance company would not contact you in the event that your policy was to expire. In some states, there are laws or regulations that determine exactly how the agent and company must notify customers when insurance policies are cancelled or expire. However, if you believe your policy expired without your knowledge, contact your agent and insurance company immediately to resolve this problem.

Q: I let my policy expire. What can I do to reinstate my coverage for this claim?

A. Your insurance company is not obligated to reinstate coverage if you allowed your policy to expire.

Which Insurance Policy Pays for Damages to Your Vehicle?

Q: My neighbor’s roof blew onto my car. Does my car insurance cover that?

A: Maybe. If you purchased the additional comprehensive coverage with your Personal Auto Policy, the loss would be covered.

Q: My car was destroyed while at the repair garage. Whose insurance pays, theirs or mine?

A. You have two options. You may wish to involve your own insurance carrier or you may wish to put in a claim under the garage owner’s policy. Your Personal Auto Policy’s comprehensive and collision coverages provide protection against loss caused by physical damage. It is typically subject to a deductible. The garage owner’s policy may, perhaps, provide coverage, depending on the coverages purchased by the business. However, if the garage owner is not legally liable for the damage to your car, you may be unable to collect damages. It would be a good idea to report the claim to your personal auto insurance carrier immediately, noting you are reporting it for record purposes only. This gives them the opportunity to check your car if they wish. It also prevents the possibility of them denying your claim because of late reporting. Also, should you be dissatisfied with the garage owner’s response to your claim, you can call on your own insurer for assistance.

Q: The title for my car is missing or destroyed. What can I do to prove it’s my vehicle?

A: Generally, you can go the state’s Division of Motor Vehicles with the Vehicle Identification Number (VIN), which is listed on your Personal Auto Policy, a bill of sale, or an earlier registration form. They can issue a duplicate title if you show proper identification. Contact your state’s Division of Motor Vehicles to determine the proper procedure.