The III’s publication,
"Settling Insurance Claims after a Disaster," is also well worth
reading. The publication, which can be found at III’s Web site,
describes what you will—or would—need to know and do, including:
Filing a claim.
Contact your insurance agent or company to report your damages. Confirm
that your policy’s terms cover it so that you can file a claim, your
claim exceeds your deductible, you need estimates for repairs, and so on.
Get ready for adjuster.
Fill out a form that you will receive with descriptions of damaged and
destroyed items, dates of purchase, original costs, and replacement costs.
When the company sends out an adjuster to assess the damage, be prepared
to show him/her all the structural damage in and around the house and to
give him/her the description of damages—keeping a copy for yourself—and
copies of detailed estimates for repairs from contractors whom you are
considering. Also be prepared to show the adjuster damaged items and give
him/her sales slips, invoices, or cancelled checks, which you have kept
since their purchases, as well as receipts for any necessary temporary
repairs, for which you will be reimbursed.
How much you may get.
The amount of money you may get from your insurance company depends
primarily on the type of policy that you have.
If your home is so damaged
that it cannot be repaired, a typical replacement cost policy will
pay to replace it within specified limits; an inflation-guard
clause will help you to keep up with increases in building costs.
Under an extended
replacement cost policy, a company will pay 20 percent or more above
the specified limits to give you protection against very large cost
increases. A guaranteed replacement cost policy pays whatever it
costs to rebuild your home—but not to improve on it.
Temporary quarters.
If you and your family have to live elsewhere until your home is repaired
or replaced, your company probably will pay for your loss of use:
reasonable additional living expenses—such as rent, eating out, utility
installation costs, added transportation costs—which may be 20 percent
or more of the insurance on your house. (Be sure to keep records of your
expenses.)
Water damage.
Homeowners’ policies don’t cover flood damage but do cover other kinds
of water damage, such as rain coming through a hole made in the roof
during a hurricane. If you have a flood policy and can substantiate flood
damage, you need to get actual repair costs for payment.
Trees and shrubbery.
Companies typically pay for removing trees that fell on your house but not
for those that fell on your lawn or for replacing damaged trees and
shrubbery.
Getting the money.
You usually get two insurance checks when both house and contents are
damaged. If you have a mortgage, the check for home repairs will be made
out to both you and the lending institution. The lender is likely to put
the money into an escrow account, pay for the work as it is completed, and
inspect it before making the final payment.
If your property was destroyed or damaged
due to an "unusual" event such as a hurricane, you may be
entitled to an income tax deduction. Read IRS Publication 547,
"Casualties, Disasters, and Thefts," on the IRS Web site, www.irs.gov.
October 2005— This column is
produced by the Financial Planning Association, the membership
organization for the financial planning community, and is provided by
McGuire & Co., LLC, a local member of the FPA.
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