Each time a hurricane strikes, homeowners hear stories about those who did not purchase the proper insurance coverage. While most homeowners with mortgages must carry hazard insurance, some actually find that their insurance covers a lot less than was expected. Even homeowners who think they have purchased adequate hurricane coverage can be surprised as insurance companies have done quite a few things to limit liability and subsequent payouts.

As global weather events have seemingly become more severe and devastating, insurance companies have tightened the rules. They’ve surreptitiously raised rates, changed coverage definitions, raised deductibles and added hurricane exclusions, so reading the proverbial fine print has never been more important.

Flood Insurance

Consumers who live on coastlines are likely aware that floods are not necessarily covered by their homeowner’s insurance policy. While a failed sump pump due to a severe thunderstorm may be covered, flood waters from a hurricane like Sandy may not. Therefore, federal flood insurance is sometimes the only alternative.

Anti-concurrent Causation Causes

While it may seem that consumers need to call a lawyer to interpret clauses like these, the principle is simple. If a hurricane hits, and a home is damaged by flooding and wind, the insurance company can refuse to pay for anything. The insurer will claim that the damage is from multiple causes, and will use the anti-concurrent causation clause to justify their position.

Limits of Flood Insurance

Even with federal flood insurance, some things may not be covered. While furnace and utility box replacements are commonly covered, loss of precious valuables like books and CDs are probably not. Deductibles of $250 to $500 usually apply to food lost due to spoilage, so unless a freezer was full of steak or priceless mushrooms, the claim may not be worth filing.

Correct Claim Terminology

Consumers need to avoid characterizing any hurricane damage as flood related. It’s better to note that a broken living room window allowed rain water to puddle on the floor, than to claim that the living room is flooded.

Different Coverage

If a neighborhood needs to be evacuated, standard homeowner’s insurance will likely cover hotel or motel costs. If a home is flooded, however, even federal flood insurance will not cover hotel bills.

Hurricane Deductibles

Unlike garden variety severe thunderstorm damage deductibles, insurance companies have started to add a hurricane deductible of up to 15 percent of the value of the home. A homeowner with severe hurricane damage to a $300,000 home may face a huge deductible of $30,000 to $45,000.

As storms become more severe, insurance companies are sure to look for more ways to limit their collective liabilities and ultimately pay out fewer dollars in claims. A good attorney can help by closely examining a homeowner’s insurance policy before a disaster strikes. If necessary, this attorney can also be retained to help settle insurance claims equitably.

This post was authored with help from Hurricane Sandy Lawyers.

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