Homeowners' insurance does not cover flood damage. Flood insurance is generally required to be separately purchased in areas that are designated as flood prone by the Federal Emergency Management Agency (FEMA) and participate in the National Flood Insurance Program (NFIP). Most flood policies are for building only and exclude contents. Unless it is a premium flood policy, most flood insurance policies do not cover basements. In my experience, filing a successful FEMA flood insurance claim requires understanding the rules, and doing diligence documentation of the flood loss.
Filing a flood loss claim over the phone
The declaration page of the flood insurance policy has the necessary information to file a flood loss claim with the insurance company, which notifies NFIP. Having the policy number on hand expedites the call. The phone call involves discussing the approximate date and nature of flood loss. After taking down contact information, the insurance company provides a claim number and contact information of the independent adjusting company. The insurance company advises that owners "exhibit all remains of the property, as required" to the adjuster, or at least take good photographs of the damage.
Providing evidence and documentation substantiating flood loss
Unless flooding is declared a Major Disaster by the federal government, as Hurricane Sandy and Irene were, insurances want to establish a "general flood". Owners are required to provide photos showing damaged structural elements like garage, garage door, door frames, electrical, heating, plumbing, entryway etc. It is also important to show if there are stairs leading to the property, as some policies cover only an elevated level. I believe a tape measure showing the water level in the interior can make for a great photograph. Photos that establish how deep the flood water is on the street, example a partially submerged car or a person walking in flood waters are particularly appreciated by adjusters.
Call from adjustment company
The next step is a call from an adjustment company. For localized floods, the appointment can be made within 72 hours, however, for a major disaster like Hurricane Sandy, appointments can take a couple of weeks. Reassignment of the adjustment company is possible, so it makes sense to follow up with insurance if they cancel the appointment. Inspections may be at short notice (less than 24 hours), including weekends, although most are made during the day time.
Scoping the loss
Adjusters note how high the water reached, and what damage, if any, occurred. In most cases, the water line is evident, unless damaged sheetrock has been removed. For areas with concrete, brick or cinderblock, it makes sense to leave the damage for the adjuster to note. An adjuster will usually not mind the home owner pointing out or explaining damage. He will often advise if he prefers printed photos or digital copies. For HOAs, adjusters also need a copy of the condo association bylaws, in addition to the flood and building insurance policies. Depending on the size of the property and extent of damage, a scoping by the adjuster could take 45 minutes to 2 hours.
Completing a Proof of loss Statement
The NFIP Handbook states a proof of loss must be submitted within 60 days. However, FEMA can waive this requirement if the adjustment companies are backed up, as with major disasters like Hurricane Sandy, Irene or Katrina. I used this opportunity to submit documentation of the cost of repairs, whether they are estimates or invoices. Since the adjuster is often out of state, providing multiple estimates can improve chances of getting the proper settlement amount.
The adjuster's estimated proof of loss statement details the estimated costs of repairing damages that were found during the inspection. These include cost of clean up, drying, and repairing. The estimated proof of loss provides a break out room by room. Most allowances are reasonable. However, if a carpeted stairway is submerged for the first two steps, the insurance will not reimburse the cost to replace the entire carpeting for the stairs.
Homeowners are required to sign, notarize and send back the estimated proof of loss to the adjuster if they agree. Email or fax is acceptable. If they do not, the FEMA handbook details the procedure of appealing this statement.
For local floods, insurance checks, less the deductible, can be in the mail within 4-8 weeks of filing a flood loss claim. For a major disaster, the entire process can take 4-5 months. For those strapped for cash to start the repairs, a Small Business Administration's disaster loan can be a viable solution.
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