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After The Storm, Part One

hurricane-damaged buildings in Everglades National Park
Damage to the Everglades National Park's Gulf Coast District from Hurricane Irma.
Photo courtesy the National Park Service's Eastern Incident Management Team (Eastern IMT).

As millions of Carolinians can attest, you get a sinking feeling when a catastrophic storm is bearing down on your home, and there is nothing you can do except hunker down or get out of the way.

I know this from recent personal experience, although my experience is nothing like the misery that so many have suffered from the brutal storms of the past two years. Don’t waste any pity on me. I offer my own story only to help others deal with some of the frustrations and red tape that will inevitably come after the storm has passed – and also to offer some suggestions for legislative changes that could make it easier for property owners to put things back in order after future storms.

I planned to post this column this week long before Hurricane Florence set its sights on the Southeast coastline. The timing is just a sad coincidence.

My wife and I own a vacation home near the beach in northeastern Florida. We suffered considerable damage when Hurricane Matthew passed just offshore in October 2016, and then even more damage when Irma raked her way up the state one year ago this week.

Most of Matthew’s destruction came from water. Once property owners were allowed to return to the evacuated shoreline, I discovered that the dunes that formerly stood between our home and the beach now were sitting, three feet high, in my driveway, complete with anxiously skittering crabs. About 18 inches of salt water had intruded in the garage, signaling a slow demise for our water heater. The outdoor heat pump and air conditioning compressors were ruined, and the deck needed shoring.

Regular homeowners insurance covered none of this carnage. Fortunately for us, the home’s living space was elevated above the garage and was untouched. We have federally sponsored flood insurance, but this only covers the building and contents – not the excavation of tons of sand, or the restoration of landscaping beneath. Our damages were in the tens of thousands of dollars. The flood insurance reimbursement for the air conditioning and water heater was $1,231 after deductibles.

Then came Irma, which passed west of our town – well inland from us – but which nevertheless produced about 12 hours of tropical-storm-force winds directly off the ocean. There was much less storm surge; when I returned to the house (exactly one year ago today), I found less than a foot of sand on the property. Still, it was enough to wreck all the newly restored landscaping. And Irma added to the mischief by peeling sections of siding off the house, and by blowing out a vent cover so rain could pour into the attic. I had an “uh-oh” moment when I spotted the missing vent cover from outside. Sure enough, I found that the rain had caused the ceiling to collapse in an upstairs bedroom, ruining the wood flooring below it as well.

Because the damage to the structure was caused by wind rather than flooding, my homeowners’ policy was applicable, and I was eventually paid – but it took 11 months, five field adjuster visits, two checks and one lawsuit before everything got settled. Despite the considerable aggravation, I am very fortunate. I could afford to hire contractors without waiting for the insurance company to pay my claim. This allowed me to get a head start in the race to secure scarce labor and materials. Aside from the one damaged bedroom upstairs, the home was perfectly habitable once my indomitable landscapers dug me out (again). It was not my full-time residence anyway. Most people are not nearly so lucky.

It turned out that extracting money from the insurance company was just the first challenge. Next I had to get the banks that hold a security interest in the property to let me cash the checks. I will write about the banks tomorrow. For now, with Florence threatening to cause devastation from the coastline to the Blue Ridge and maybe beyond, I want to offer a little advice to folks who will soon be dealing with many of the same issues I faced after Matthew and Irma.

Start by making sure you have a reliable mobile device with a good data plan. Ideally, you should be able to share your phone’s internet with another device, such as a laptop. Cell towers tend to perform pretty well during storms, and they come back online quickly after they are knocked out. Cable and other landline internet service can take much longer. The first thing I did last Sept. 13, once I got back to my property after Irma, was get onto my insurer’s website to file a claim. Using my laptop with my phone’s data service made this much easier.

Take pictures of everything, and save every receipt for money you spend as a result of the disaster. You can never have too much documentation.

Keep a record of every contact with the insurer and with every adjuster who visits your property. Many adjusters are freelancers. When a major disaster strikes, they will flood into an area from all over the country to meet the demand. Still, they can be overwhelmed. It took three weeks just for me to get the first adjuster to visit my property after Irma. Keep the adjusters’ names and phone numbers. They may become witnesses if you get into a fight with your insurer.

Contractors and cleanup specialists will also flood into an area following a disaster. Always deal with someone who is licensed and insured. When possible, use someone local – and ideally, someone you regularly work with or whose reliability can be attested to by someone you trust. Local contractors will naturally take care of their regular customers before serving foul-weather friends, who are apt to abandon them once things settle down.

Above all, don’t endorse or deposit an insurance settlement check labeled “full and final,” or with similar language, unless you are satisfied that the payment is, in fact, full compensation for the damages (less deductible) that should be covered under your policy.

It took 10 days for my insurance company to acknowledge receiving my claim after I reported the damage from Irma. Two more weeks passed before an adjuster could visit me, and another two weeks before she filed her report. Then things got weird.

Field adjusters send their notes to an “inside adjuster,” who adjudicates a claim. My inside adjuster called me on Oct. 21 to say she was processing the report. But the next day a different field adjuster called to schedule another visit to the property. The inside adjuster then said the first adjuster’s report was not in their computer, and that the first field rep no longer worked with that insurance carrier.

The damaged flooring upstairs posed a problem because it was made from a pecan wood product that is no longer manufactured. In mid-November the insurer sent another adjuster – the third field agent to handle this claim – to take a sample. In the meantime I replaced the flooring with a maple product of a similar grade. In the end, the company allowed about the same amount as I spent on the replacement, so that turned out not to be an issue.

The siding was a different story. The first two field adjusters, and my contractor, agreed that all siding on the north and south sides of the building needed replacement, because it was not possible to make spot repairs that would match the undamaged portions. They were not even able to identify the original product. But the insurance carrier balked and sent yet another field adjuster – that’s number four if you’re counting – to collect a sample. Later, the carrier would claim that a laboratory had identified the damaged siding, although they never backed that up with any sort of report. I was offered far less than the $20,000 or so it cost to replace the material on two sides of the house.

In late December, more than three months after the storm, the inside adjuster sent me her report. By my count, the covered damages should have been around $32,000, leaving me entitled to about $25,000 after the hurricane deductible. The company granted $11,600. A check arrived in January. It did not have any “full and final” language and the company was still willing to negotiate over the disputed items, so the money was available to me with the bank’s approval. (Tune in tomorrow.)

It soon became apparent that the carrier had no intention of paying for the appropriate siding replacement. Florida offers a mediation process, which insurers will push customers to use. But Florida also has a statute, F.S. 627.428, that makes insurers liable for legal costs when they improperly deny a valid claim. That makes hiring a lawyer a no-lose proposition if an insurer fails to hold up its end of the bargain.

I found a good insurance lawyer in Miami (John Lanpher III of the Morgan Law Group). I hired him in January and told him my goal was to take my problem and make it his. He agreed to this offer. John’s first step was to send still another adjuster (number five) to reinspect the home and identify a few other claimable items that I had overlooked. He then filed suit on my behalf against the carrier, knowing that he would end up negotiating a settlement with the carrier’s attorney.

That is exactly what happened. In April the insurer agreed to an additional $18,000 payment on top of the original $11,600. The lawyer’s fees were paid separately. Even so, we did not actually receive that money until August 13, exactly 11 months after I first filed my claim.

Tomorrow’s post will explain the four-month delay.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, The High Achiever’s Guide To Wealth. His contributions include Chapter 1, “Anyone Can Achieve Wealth,” and Chapter 19, “Assisting Aging Parents.” Larry was also among the authors of the firm’s previous book Looking Ahead: Life, Family, Wealth and Business After 55.

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