Storm Leaves Many Facing Tricky Insurance Process
Friday, November 2, 2012
Mario Veas spent Monday night hunkered down with his family. But he has been running ever since.
Veas runs a tree service in Willow Grove, Pa. He says his phone has been ringing nonstop because people want trees felled by the storm chopped up and cleared.
"Everybody [is] calling and they want [the job] to be done this morning," Veas says.
Earlier this week, Veas was clearing an enormous tree branch from Preethy Edamala's patio in nearby Elkins Park.
"It pretty much just landed on our roof and tipped over," Edamala says. "It came down about three hours after our power went out."
The roof held, and the day after the storm, her husband, Charles, was taking pictures and trying to get through to his insurance company.
"They've been backed up; the insurance people have been backed up," he says. "I was on hold for about an hour and a half and couldn't get through to anyone."
As the price tag for Sandy continues to climb -- some are estimating the total cost of the superstorm could run as high as $50 billion -- homeowners and business owners in the Northeast are not just dealing with the damage from the storm; they're also dealing with insurance companies.
So far the Edamalas are doing everything right, according to Jeanne Salvatore at the Insurance Information Institute.
"If anybody does have damage, what they should do right now is get in touch with their insurance company and start taking steps to substantiate that loss," Salvatore says.
But filing a claim might be the easy part. Actually getting paid could prove to be more difficult.
Robert Hunter tracks the insurance industry for the Consumer Federation of America. In recent years, he says, many insurance companies have added so-called hurricane deductibles to their homeowners policies, based on the home's value.
"If you have a $400,000 insured house your deductible, if it's 5 percent, would be $20,000," Hunter says.
But these higher deductibles apply only in hurricanes.
In the past two days the governors of New York, New Jersey, Pennsylvania and Connecticut have all said hurricane deductibles shouldn't apply in this case because Sandy wasn't officially a hurricane when it came ashore, but Hunter expects this issue will end up in court.
And for homes and businesses damaged by flooding, it doesn't matter whether Sandy was a hurricane or not.
"Since Sandy was a big, big flood event, you need to have purchased flood insurance," Salvatore says.
She says conventional homeowners policies don't cover floods. Banks are supposed to require homeowners to buy federally backed flood insurance if they live in flood-prone areas, but Hunter says that doesn't always happen.
"So a lot of people who are supposed to have it don't," he says.
Only about 20 percent of Americans actually have flood coverage. And if you don't have it and your home is flooded, you're out of luck.
"The second problem, which is more serious, is that a lot of companies have added into the policy something called the anti-concurrent causation clause," Hunter says.
How's that for a bit of insurance jargon?
The basic idea, Hunter says, is that if you have two events happen at the same time, one that is covered and the other that is not covered by the policy, the insurance company doesn't have to pay for either. So if your house has damage from wind, which is covered by your policy, and it also has damage from a flood, which is not covered, the insurance company doesn't have to pay for either the wind or flood damage.
After previous disasters, the anti-concurrent causation clause was challenged in the courts. But Hunter says there are no nationally binding precedents about whether clauses like this are valid.
Hunter says for some in Sandy's path, it may take some time before they find out whether they are covered by their insurance or not.
Copyright 2012 National Public Radio. To see more, visit www.npr.org.
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