After the storm: What to know about flood claims

When the remnants of Tropical Storm Barry stalled over central Texas in early July, the region was subjected to flood levels it hadn’t experienced in nearly 40 years. More rain fell in a few hours than typically falls in several months, triggering a storm surge on the Guadalupe River more than 20 feet high. Early reports estimate more than 38,000 homes experienced property damage due to the flooding.

Because extreme flooding is rare in the area, few homeowners carry flood insurance policies. Some reports have estimated that only 7 percent of the area is covered for flood damage, but even those with coverage may face challenges when filing claims, especially considering how rare such claims are for residents.

The following are some key issues families should be aware of as they navigate the claims process and seek an insurance settlement for flood damage.

Third-party documentation is essential for maximizing settlements

Documentation establishing the value of lost possessions and the cost of repair or replacement is a critical part of the claims process. Appraisals or contracts that detail the work done during renovations set the baseline value of the home before damage occurs. Estimates on the costs of repairs, including clean-up work, document what it will take to restore the property to its pre-flood condition.

Receipts and warranty information prove the value of personal items lost to flood damage. In lieu of such documents, photographs of personal items can help to establish value by showing the brand, model and condition.

Third-party documentation gives homeowners objective evidence to support their claims. Relying solely on personal testimony typically won’t result in a maximum settlement.

Insurance companies are responsible for an ‘adequate investigation’

Once a policyholder starts the claims process, insurance companies conduct an investigation to determine the extent of the damage. Their findings determine the settlement amount they provide.

Although policyholders play a role in establishing the settlement amount, such as by providing documentation on the value of items lost, the bulk of the investigative work should be done by the insurance company. Policyholders should be wary of processes that aim to shift the burden onto them.

For example, insurance adjusters working for insurance companies may explain that they are issuing a payment of a certain amount and provide instructions to “submit a supplement” if homeowners find they need more money. While homeowners may view this practice as a means of speeding up the settlement, it actually removes the burden of determining the total amount from the insurance company.

Most policies will require the insurance company or its insurance adjusters to do an “adequate investigation” designed to provide the policyholder with a fair settlement. Passing this responsibility to the homeowner can result in a cumbersome claims process that exhausts the policyholder and leads to a lower settlement payment.

Public adjusters can help with delays, underpayments and the denial of valid claims

Natural disasters such as the flood that ravaged Texas can leave homeowners displaced, disoriented and depressed, which can make it extremely challenging to engage in the claims process. Public adjusters can provide assistance to those homeowners, stepping in to help assess the damage, gather documentation and see the claim through to completion.

Unlike insurance adjusters who work for insurance companies or independent adjusters who are hired by insurance companies when they are short-staffed, public adjusters work as advocates for policyholders. They address delays in the process, underpayments and situations in which valid claims have been denied.

Natural disasters often trigger a high volume of insurance claims, which can make the claims process more challenging and complex. By providing as much documentation as possible, demanding a thorough investigation from their insurance company and consulting with public adjusters when necessary, policyholders can increase their chances of receiving a fair settlement.

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Theodore “Ted” Patestos is co-founder and CEO of Tiger Adjusters. Contact him at [email protected].