Hurricane Hermine Insurance Claims – Approach Your Storm Damage with Some Common Sense
by Charles R. Tutwiler on 9/9/2016
As the saying goes in the sports fishing world when the big one is hooked, “FISH ON!” After 10 years of no hurricane landfalls, Florida experienced first a tropical storm, which was later upgraded to Cat 1 Hurricane Hermine. I feel very bad for all the folks affected in this State from Hurricane Hermine. From the media reports, this storm caused misery to a lot of Floridians along the Gulf Coast from Sarasota, Tampa Bay, all the way up the west coast to the big bend area and westward to Tallahassee. Flooding was as bad or worse than the wind in many locations but in combination, they likely did a number on property owners. And if property damage wasn’t enough, the loss of power added misery to the mix.
So while the clean-up begins, it appears in some areas there is a feeding frenzy going on with the usual crowd of disaster mitigators, loss consultants and others that claim knowledge about making it all better in short order by just signing a piece of paper. In other words, there is a lot of “FISH ON” mentality out there following the passing of Hurricane Hermine. Don’t get me wrong, some of these folks are on the up and up. But like any big Cat (catastrophic) event, the bad ones often show up intermingled with the good guys. Based on field reports I am getting, the “FISH ON” mindset may have overtaken common sense that often is not too uncommon when home and business owners just want everything to be put back the way it was.
At this stage of the game, property owners need to stay focused. If you have insurance regardless if it is flood, wind, or both, remember you have a duty to mitigate your loss. In simple terms, this means you have a duty to preserve the property and prevent further damage to your property. But this process has a great deal of subjectivity associated with it. To put it another way, there will be second guessing by the folks with the money better known to many of us as big insurance.
So what to do? Remember the common sense idea of applying common sense to your factual surroundings. Certainly you would want to take care of any life, health or safety issues such as making sure the power is off in flooded areas (best leave this up to the professionals) before you go walking through wet or standing water. If confronted with trees or other objects hanging in a dangerous or precarious manner that may cause you, your family or co-workers bodily injury, think before you act! Think things through--can you reasonably do this without injuring yourself? Remember, most accidents and injuries happen at home. You may already have a really dangerous situation on your property that may compound the possibility of an accident.
But what about that mitigation issue when it comes to your insured property? Same thing applies with mitigation requirements. You simply need to use common sense. Listen closely to what people that are making the promises are saying. Does it make sense to plug in truckloads of dryers and dehumidifiers without understanding the scope and price of the work being done? Remember, a lot of folks may not have insurance coverage so this cost will be billed to you. Does it make sense to run up a big bill for dryers and blowers when wet and damaged drywall will likely have to be thrown out anyway?
Also, wet-building materials should be removed from inside the property. However, if insurance is in place, do not throw anything away. Wait until your insurance adjuster gives the OK. When you do dispose of property, set it outside before the looters or others come by to go through your stuff. Take photos, lots of photos and make sure they are preserved for future reference. If you do not have insurance, talk with a qualified financial professional. You may have a tax deduction for an uninsured casualty loss for property that was not covered by insurance. Please remember to document and confirm everything you are told or promised in writing. Emails are a great way to confirm what someone told you to do or not to do and to ask questions or for instructions on issues about your loss.
Now some mitigation/restoration companies who are either sent out by your insurance company or solicit you directly may ask you to sign an authorization form before commencing work. READ CAREFULY! There is some small print they may claim is standard procedure for losses like yours. If you see anything on the authorization form that says ASSIGNMENT OF BENFITS I would back off, in my opinion. Look for someone who can dry-out your home without having you assign all your policy benefits over to them. In other words NOW is the time to read a restoration company’s contract before you sign. If you do not understand the terms and conditions, seek professional help, either from a Public Adjuster or Attorney.
In addition; don’t be afraid to modify the contractor’s form with language such as: ANY WORK PERFORMED AND BILLED TO ME HAS TO BE APPROVED BY MY PROPERTY INSURANCE COMPANY. MY INSURANCE COMPANY HAS THE FINAL SAY ON SCOPE AND PRICING OF THIS CLEAN UP AND THE CONTRACTOR AGREES TO ADJUST ANY SCOPE OR PRICING DISPUTES WITH MY INSURANCE COMPANY. THE CONTRACTOR AGREES THAT OTHER THAN MY DEDUCTIBLE, ANY SUMS BILLED OR OWED BY ME TO THE CONTRACTOR ARE TO BE PAID TO THE CONTRACTOR BY MY INSURANCE COMPANY, PROVIDED THE WORK MEETS MY SATISFACTION AND IS APPROVED BY THE OFFICIAL BUILDING DEPARTMENT HAVING JURISDICTION OVER THIS MATTER. EVERY EFFORT MUST BE MADE BY THE CONTRACTOR TO MEET WITH ME, MY REPRESENTATIVES IF INVOLOVED AND MY INSURANCE COMPANY ADJUSTER TO FIRST AGREE ON THE SCOPE AND PRICE OF THE RESTORATION PROPOSED BY THE CONTRACTOR.
The above is just a suggestion of how you may want to protect yourself and you may want to have the contract reviewed by an attorney before signing.
As to the ASSIGNMENT OF BENEFITS issue, controversy surrounding this practice continues in Florida. The following is a little background that may help you understand the AOB problem. AOB means the contractor has the right to pursue a claim directly against your insurance company should their bill not be paid in full, regardless of its merits. As this term says, you have assigned ALL POLICY BENEFITS TO A CONTRACTOR! An AOB in Florida with licensed insurers gives your contractor (with your permission by signing their form) the right to argue, file suit and do any other thing detailed in your policy (not you) to collect their money regardless of your satisfaction about the work that was performed! Some property owners may say, “what’s wrong with that? I don’t care as long as I get my property fixed.” Please consider problems of workmanship. Will they do the job correctly and did the building officials issue a final permit to allow you to occupy your home? Since a lot of damage from this storm was from flood, how did the mitigation work turn out? You also need to make sure the property was actually dried out. How much structural material was removed to allow for a proper dry out? So pay attention to the details.
Do you have flood coverage? This is important since a lot of AOB contractors are banking on suing your insurance company if they do not get paid. If there is no flood coverage or even with flood coverage, the AOB contractors will get no relief from FEMA who runs the NFIP. So guess who they will be coming back to collect their money from?
And remember this storm caused a lot of flooding which is a peril not covered in a standard homeowner’s insurance policy or for that matter a commercial policy. If there is no insurance coverage for the flood peril, what happens to the AOB issue? To my knowledge an assignment of benefits is a moot point with the National Flood Insurance Program. Being a federal program, they will not honor an AOB contract provision. So if you or your contractors are banking on collecting from NFIP, be careful. Any shortfalls in payment from the NFIP or work preformed on uninsured items will likely result in a lien being filed on your property by the contractor if you get into a dispute on the scope or price of your loss.
After a widespread storm like Hurricane Hermine, the fact that this storm was a big flood event will only compound the problems property owners in Florida are going to face. On top of that, the media has released information about wastewater flooding that has occurred in a number of communities along the Gulf Coast. So with Hurricane Hermine we have a PARADE of TERRIBLES, with wind, water, flood and black water (sewer) exposure.
To deal with these perils it behooves property owners to keep their eye on the ball or in this case the money. High percentage hurricane deductibles are being applied and many folks may be surprised that despite their wind or hurricane coverage, they may be out of pocket for the mitigation and replacement costs due to lack of flood coverage or exclusions for water - sewer back-up.
Meanwhile, we are likely to hear that some restoration contractors are enjoying a FISH ON atmosphere, because with lien rights and in some cases an AOB provision, they are smelling the money. Let us know what you think?
As always, the professional public insurance adjusters at Tutwiler and Associates are here to help with any property insurance related questions you may have. Please call 800.321.4488 or contact a public adjuster to submit a question to one of our insurance claim experts.