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Insurers Working with FEMA Officials to Adjust Flood Claims

INSURANCE INFORMATION INSTITUTE
Contact: Press Offices
New York: 212-346-5500; media@iii.org
Washington, D.C.: 202-833-1580

NEW YORK, September 24, 2008 - Thousands of insurance adjusters are processing claims in areas accessible to them in Texas, Louisiana and other states affected by Hurricane Ike. There are also adjusters gathered at staging areas prepared to move into the most seriously damaged communities as soon as civil authorities allow. Insurers are working closely with Federal Emergency Management Agency (FEMA) officials to help adjust flood claims as well, according to the Insurance Information Institute (I.I.I.).

Hurricane Ike struck the Galveston area on September 13 and was the fifth-and third major-hurricane of the 2008 Atlantic hurricane season. It resulted in insured losses estimated at $9.8 billion, according to an analysis of catastrophe modeler estimates by the I.I.I. If these estimates hold, Ike could become the fourth most expensive hurricane in U.S. history. Hurricane Gustav, which struck Louisiana just two weeks earlier, caused $1.8 billion in insured losses in that state, arising from 245,000 claims, according to ISO's Property Claims Service.

While final figures are not yet available, Hurricane Ike produced several hundred thousand claims. Company claims handlers have been on call around the clock since the Category 2 storm roared ashore; many were deployed to the disaster zone even before the storm reached the Texas coast. Companies have provided policyholders with multiple reporting channels for filing claims, including toll-free numbers, regular phone numbers and Web-based filing. Companies are using television, radio and newspaper advertising to reach displaced policyholders to get the claims filing information out to as many policyholders as possible.

"Insurers have deployed mobile catastrophe response vehicles, enabling staff to set up shop as close to the affected areas as possible to meet with policyholders, verify their policies, determine their needs and issue checks," said Dr. Robert Hartwig, president of the I.I.I. "These catastrophe response vehicles are equipped with sophisticated computers and have satellite communications uplinks to relay claims information gathered by the adjusters in the field to headquarter systems without waiting for regular telephone service to be restored. The units have generators which allow the vehicles to operate in areas without electricity," he added.

Standard homeowners, renters and business property insurance policies will cover wind damage from Hurricane Ike. Home and renters policies also include coverage for additional living expenses (ALE). This pays the additional costs of temporarily living away from a home if it is uninhabitable due to an insured disaster. ALE covers hotel bills, restaurant meals and other living expenses incurred while a home is being rebuilt. Many people living in Texas coastal counties will have their wind damage paid through their policy with the .

A hurricane deductible was applied to wind damage from Hurricane Ike in coastal areas. Depending on the policy, hurricane deductibles usually vary between 1 and 15 percent. They are calculated as a percentage of the dollar amount of coverage on the dwelling. The trigger for hurricane deductibles, or the point at which they apply, varies by company. In some policies, there may be a dollar deductible for wind which is higher than for other perils listed in the policy.

The most significant flood damage from Ike occurred as the result of the storm surge from the hurricane. Flood damage typically is excluded under standard homeowners, renters and business insurance policies. Flood coverage, however, has been available since 1968 in the form of a separate policy from the federal government's (NFIP), and from a few private insurers. Texas had the second-highest number of NFIP polices in effect in the U.S. as of June 30, 2008 (662,606). Florida was the only state with more NFIP policyholders. More details on national flood insurance facts and figures, as well as Texas-specific data, can be found in this report.

Storm surge is generally defined as the rise of water beyond what would be expected by its normal movement due to tides. The NFIP routinely pays storm surge related claims. Virtually every federal and state court that has examined the issue of storm surge in recent years has ruled that losses incurred by storm surge are flood-related and are excluded from coverage under the standard homeowners policy.

Those with flood insurance through the NFIP are advised to contact ÌìÃÀ´«Ã½ agent or company representative who sold them the policy in order to file a claim

The I.I.I. offers the following suggestions to policyholders whose properties were damaged by the storm.

• Be prepared to give your agent or insurance representative a description of the damage. Your agent will report the loss to your insurance company or to a qualified adjuster who will contact you as soon as possible to inspect the damage. If you had to evacuate, make sure to give your agent a telephone number where you can be reached.
• Take photos of the damaged areas. These will help you with the claims process and will assist the adjuster in the investigation.
• Prepare a detailed inventory of all damaged or destroyed personal property. Be sure to make two copies: one for yourself and one for the adjuster. Your list should be as complete as possible, including a description of the items, dates of purchase or approximate age, cost at time of purchase and estimated replacement cost. If you do not already have an inventory prepared, free downloadable home inventory software is available from the I.I.I. at to help you with this task.
• Collect canceled checks, invoices, receipts or other papers that will assist the adjuster in obtaining the value of the damaged or destroyed property.
• Make whatever temporary repairs you can. Cover broken windows, damaged roofs and walls to prevent further destruction. Save receipts for supplies and materials you purchase. Your insurance company will reimburse you for reasonable expenses in making temporary repairs.
• Secure a detailed estimate for permanent repairs to your home from a reliable contractor and give it to the adjuster. The estimate should contain the proposed repairs, repair costs and replacement prices.

Serious losses will be given priority. Losses will be adjusted and claims paid as quickly as possible but hardship cases are usually handled first. If your home or business has been destroyed or seriously damaged, your agent will do everything possible to assure you are given priority.

The I.I.I. has produced a point of use video podcast on how to file a claim. It can be downloaded to a computer or a personal digital device so that you can play the information as you go through the claims process. The podcast can be accessed at: Six Steps to Follow When Filing a Claim. It is also available on iTunes in the podcast section by searching for "Insurance Information Institute".

For a related video, go to Filing a Claim.

For more information on claims filing, go to:
Settling Insurance Claims after a Disaster
How do I file a homeowners claim?
How do I file a business insurance claim?

The I.I.I. is a nonprofit, communications organization supported by ÌìÃÀ´«Ã½ industry.