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Hurricane insurance
5 Tips: What you need to know about insurance after a disaster.
August 30, 2005: 3:03 PM EDT
By Gerri Willis, CNN/Money contributing columnist
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CNN's Gerri Willis gives five tips on how to handle insurance claims after Katrina. (August 30)
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NEW YORK (CNN/Money) - As Hurricane Katrina continues on its destructive path through Louisiana, residents there are bracing for catastrophe.

This category four storm is one of the most powerful storms to hit the central Gulf Coast in decades. New Orleans Mayor Ray Nagin ordered a mandatory evacuation of the city yesterday. And it's likely that when these residents return to the places they call home, they may find complete devastation.

In today's five tips, we're going to tell you what you need to know about your insurance if your home as been damaged or destroyed in the hurricane.

1. Contact your insurer, stat.

Call your insurance company as soon as possible and let the company know about the severity of the damage.

Jeanne Salvatore of the Insurance Information Institute says that insurance cases are prioritized. If your home has severe damage, you will get more attention than a home that has minor repair problems.

Make sure you give the insurance company all of your contact information. Make it as easy as possible for the company to contact you.

Another reason to act pronto: Some insurers place a time limit on filing claims. For example, in New York you have two years to file a claim. The amount of time it takes for the claims process varies widely, depending on the amount of damage and the size of the storm, according to Salvatore. It could happen immediately or take up to 6 months if it's a complicated claim.

William Bailey, the executive director of the Hurricane Insurance Center, says that in Florida the average claim process is usually completed within 90 days.

If you can't stay in your house and you have to set up camp for a while at a motel or you need to bunk with some friends, you have the right to some cash. Insurance companies will reimburse you for additional cost of living expenses. This reimbursement will even cover restaurant meals within reason.

Salvatore says that if you spend money as if it were your own, then you should be fine. In certain circumstances, insurance companies distribute cash or ATM cards to policyholders in an emergency.

2. Document, document, document.

It's up to you to substantiate your loss. Think about photographing the damage. Make an inventory of damaged items, and don't forget that your car is also covered under comprehensive insurance. Keep any records and lists of people you speak to.

The better organized you are, the fewer problems you'll have. If you don't remember the value of some items, you can call your credit card company and ask them to send you a list of your purchases.

It's also a good idea to take advantage of the Insurance Institute's home inventory software. This is a free program that lets you scan receipts, take pictures and take inventory of what you have in the house. If you have the luxury of time, this is a great way to be prepared for catastrophes. For more information, go to their Web site at www.iii.org.

3. Live with it...for now.

Make only temporary repairs before the insurance adjustor has a chance to come in and access the damage. Of course you should not compromise your safety. But if you have a leaky roof, just put some pots and pans around instead of having the damage fixed by a professional.

This is a good way to make sure that you are reimbursed for any repair. If you are currently underinsured or you have a sizable unreinbursed property loss estimate, you may be able to deduct this from your taxes.

First, subtract any insurance you anticipate receiving. Then subtract $100. The loss must be further reduced by 10 percent of your adjusted gross income, according to Tom Ochsenschlager of the American Institute of Certified Public Accountants. The balance remaining is what you can deduct from your taxes.

If you think you might qualify for this deduction, collect your receipts, insurance statements, and other documentation and present it to your tax preparer to see if you qualify, says Salvatore.

Those who prepare their own taxes, should review the "Nonbusiness Casualty and Theft Losses" on the IRS Web site and contact their state income tax bureau to learn more about both the federal and state guidelines for this deduction.

4. Watch out for scammers.

If your home was destroyed by a hurricane, wildfire or other disaster, be cautious. There are dishonest service providers that prey on disaster victims.

Don't be rushed into signing a contract with any roofing or building company. Instead, collect business cards and get written estimates for the proposed job. Beware of building contractors that encourage you to spend a lot of money on temporary repairs.

Investigate the track record of any roofer, builder or contractor that you consider hiring. Look for professionals and get references. You can also call the Better Business Bureau for help. Never give anyone a deposit until you have done your homework.

5. Protest your settlement.

If you're not happy with how the claim is settled, go back to the agent, and document your side to the head of the claims department. If you're still not satisfied, you can file a complaint with your state insurance department and of course, you can always hire an attorney.

There's also the option of using your own adjustor. A public insurance adjuster assesses the damage to your home and can organize your claim. A public adjustor then works with your insurance company to maximize the return on your policy. You typically pay them a percentage of your claim. Because public insurance adjusters are regulated by the states, fees will vary.

For more information on public insurance adjusters, go to the National Association of Public Insurance Adjusters Web site at www.napia.com or call (703) 433-9217. It's a good idea to call your state government's insurance commission for a background check on any public adjuster you're considering.


Gerri Willis is a personal finance editor for CNN Business News and the host for Open House. E-mail comments to 5tips@cnn.com.  Top of page


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