Insurance Lessons Can Be Expensive

Sep. 12--HARLINGEN -- Many homeowners whose properties were damaged during Hurricane Dolly learned some hard lessons about insurance coverage.

Eddie Bartnesky, a local independent insurance agent, said many people have only a basic homeowner's policy that may not cover damage that could occur only during a hurricane.

There is a difference between "Form A" homeowner's coverage and "Form B," he said.

Form A usually does not cover windstorm damage, such as shingles blowing off a roof, a fence blowing down or a tree limb falling on a house, he said.

Jill Stout, a business manager at the Valley Morning Star, said her home had a lot of water damage.

Stout said she heard conflicting stories from several people who represent her insurance company.

The insurance adjuster told her she should have had wind-driven rain coverage, Stout said.

Since the Rio Grande Valley hasn't had a direct hit from a hurricane in more than 40 years, many people felt comfortable with minimal coverage, Bartnesky said. They have never given much thought to their coverage, he said.

"Wind-driven rain" damage occurs when wind lifts shingles and rain goes down through the wooden decking into ceilings and walls, ruining insulation, drywall, carpeting and the contents of a house, such as furniture, he said.

Stout said the service she has received from her insurance company has not been impressive.

"It took the adjuster 22 days to come over," Stout said. "That's when I was informed I should have had wind-driven rain coverage." She said she wasn't told she should have that type of coverage when she renewed her policy last year.

Stout said water came through "weep holes" in a brick wall of her house and around window frames.

Her "sunken living room" had so much water from flooding, the regular adjuster said, "I can't touch that," Stout said.

She would need a special "flood adjuster" who was supposed to arrive in a few days, but she still hasn't heard from that person, Stout said Thursday.

"I've spent about $6,000 so far, fixing it myself," Stout said.

Bartnesky said some companies require a windstorm or wind-driven rain endorsement on a homeowners' policy.

That coverage would cost about $300 to $400 extra a year for an average $150,000 house, he said.

State Farm Agent Tito Resendez of Harlingen said his company includes wind-driven rain coverage and wind storm coverage in its homeowner's policy, but some others don't.

"We have a benefit-rich policy," he said. Many people make the mistake of thinking a cheap insurance policy will be adequate and then find out later they aren't covered for certain types of damage, he said.

Some companies' policies are "named risk" policies while others, like State Farm, are "all-risk" policies, Resendez said. "Named risk" policies require special endorsements for windstorm or wind-driven rain coverage, he said.

Flood insurance is a federal program sold through all insurance agents, both men said.

In Texas, windstorm coverage is an add-on, or endorsement, to a policy and is provided through the Texas Windstorm Insurance Assocation, Bartnesky said.

Some companies do not offer windstorm insurance in coastal counties, he said.

Both agents said that some policies cover the retail value of the house while others cover the replacement value.

Stout said her house's retail value is $126,000, but the replacement value is $230,000.

Resendez said the appraised value of the house, set by the local appraisal district, is also a factor.

Both Bartnesky and Resendez said homeowners should ask a lot of questions about the coverage they are buying and review it frequently.

Resendez said a state Web site, www.opic.state.tx.us, allows any homeowner to compare the coverage in their policy to what other companies offer.

"Cheap insurance does not mean good coverage," Resendez said.