Being properly informed and prepared, from the time you submit an application for property insurance until the worst happens, is usually the difference between having coverage denied, or undervalued, and arriving at a fair claim settlement. This subject could fill a book, but the following tips will better prepare you for the aftermath of storm damage.
The insurance application
Let’s begin with the application for insurance. Florida Law allows an insurance company to void coverage (meaning act as though the policy was never written) if the application the policyholder signs contains “material” misrepresentations or the concealment of “material” facts. The term “material” has a statutory definition.
Many insurance companies conduct their first detailed review of the application after a large claim has been submitted. They look for anything on the application that may be false, and then issue a letter voiding coverage, accompanied by a check for the total premiums paid on the policy. At that point, you need a lawyer to battle the company in court.
Before this happens, your first line of defense is to review the questions answered on the application and be certain those answers will pass the future scrutiny of insurance company investigators. Often, applicants rely upon the insurance agent to guide them through this process. Insurance agents are busy people, and they sometimes assume the answers to certain questions on your behalf and then ask you to sign the application. If they made the wrong assumption and you did not correct the mistake, you may find yourself without coverage at precisely the time you need it the most.
Some questions on the insurance application focus on your “protective safeguards.” Those include burglar and fire alarm systems and hurricane shutters. When you answer “yes” to the existence of these protective safeguards, the insurance company generally issues the policy with “Protective Safeguard Warranties.”
These endorsements to the policy void coverage if the protective safeguard was not in proper use at the time of a loss. That means you must set the alarm when you leave the premises and have your hurricane shutters installed when a “named storm” is heading your way. Florida Law expects policyholders to read their policies. So, take a peek at the endorsements to your policy (generally found near the end of the policy) and be sure you know what is expected of you.
How to prepare in advance of a claim
With today’s digital technology, everyone should tour the house or the commercial property and photograph or video all the personal property that is covered by your policy. We like video because it allows you to comment on the model, make and year you bought the TV, stereo or dining room set. Upload the photo or video file to the cloud. This assures preservation of the record. This record is vital when you are asked to prepare an inventory of all items damaged or destroyed at the time of a disaster. You’d be surprised how much more you remember when you have a visual record of your property, and that improves the settlement value of your insurance claim.
When you purchased the house or commercial property you probably paid for an appraisal. Most appraisals include a “Reconstruction Cost Estimate” to rebuild the structure. That estimate includes vital information like square footage, construction quality and “extras” that add value to the structure. Use the full reconstruction value when writing the dwelling or building limit on your initial policy application. Have your company include an “Inflation Guard” endorsement that increases the limit of insurance over time. In the event of a total destruction of the covered building, Florida Law generally requires the insurance company pay the limit shown on the policy declarations.
Of course, when a named storm is heading your way, install your shutters, drain some water out of the pool, turn-off the water main and turn the natural gas off before vacating.
When disaster strikes
If the worst happens, consider hiring a reputable public adjuster to help you value your claim and prepare the Proof of Loss. Do your homework on which adjusters are “reputable.” They generally charge a percentage of the claim settlement amount (don’t sign an Adjuster Agreement that asks for more than 10%). Good public adjusters generally earn enough additional settlement money to justify the expense.
Michael Sapourn spent 30 years in the insurance business including as an independent agent and a public adjuster and now litigates insurance claims as both a lawyer and an expert witness at The Law Offices of Michael Sapourn. His law practice specializes in representing policyholders when they feel their insurance company doesn’t play fair.
David Volk of Volk Law Offices, P.A. has been a commercial litigation lawyer for 32 years. At times, Michael and David jointly prosecute insurance claims cases.