Property insurance claims are expected to approach $20 billion after deadly winter storms devastated Texas and surrounding states last month. Damage from this type of event is typically covered in homeowners’ and commercial property insurance policies. However, look for insurance companies to search every nook and cranny to avoid financial responsibility and to press down the value of policyholders’ losses.
The storm’s impact
For more than a week, a series of winter storms and an arctic blast gripped large swaths of the country, causing dozens of deaths and crippling Texas’s power grid, leaving millions of Texans without power and water. Properties in Texas are not built for arctic temperatures, and pipes burst in homes and businesses across the state, creating significant water damage, while roofs collapsed under the weight of snow and ice. Property damage resulted in lost business income while causing many people to incur additional expenses, like hotel stays and replacement costs from food spoilage. Hundreds of thousands of property insurance claims are expected to be filed in the wake of the storm, mostly in Texas.
Insurance analysts expect the cost of the storm to rival that of Hurricane Harvey, whose $19 billion insurance tab made it the costliest storm in Texas history. While damage from Harvey was centered along the Gulf Coast, devastation from this event was more widespread. Disaster assistance from Federal Emergency Management Agency is available in 108 counties across the state. Insurers who cover properties in Texas are expected to suffer record catastrophe losses for the first quarter, which is usually a quiet time of year in the Lone Star State.
To limit their liability, insurance companies will be looking for loopholes to avoid covering some claims, while disputing the costs to repair or replace damaged structures or the value of damaged or destroyed personal property items in others. Insurance companies routinely rely on crafty policy language to deny or limit claims, and they stymie claims by requiring home and business owners to submit voluminous, unnecessary documentation to prove the ownership and value of their losses.
Depending on the terms of your homeowners’ policy, it may provide coverage for the replacement cost of the home’s physical structure or it may only reimburse for the “actual cash-value,” which takes depreciation into account. For instance, if you have an actual cash value policy and your roof is 10 years old, you will be reimbursed for what the roof was worth just before the storm, rather than what it will cost you to replace it. Standard homeowners’ policies typically provide replacement cost coverage for the physical structure and cover the insured’s personal items at actual cash value.
If you were affected by the disaster, carefully review your insurance documents to determine your rights and obligations under the policy. It is important that you comply with the policy’s notice requirements. Many policies have short deadlines following an event for providing notice and proof of loss. Keep track of and document your losses and any additional expenses that you incurred as a result of these losses. Take photos of damaged parts of your home and contents and save receipts from expenses. If the process seems too complex and overwhelming, consider hiring a public adjuster to assist you.
If you or your business suffered losses from this storm event and your insurance company is not keeping the promises it made to you, feel free to contact us to discuss it. Our mission is to make insurance companies keep the promises they made to you.
Evan S. Schwartz
Founder of Schwartz, Conroy & Hack