As homeowners assess the damage from Hurricane Sandy, many will be facing the process of filing insurance claims as they try to recoup from the historic storm.

Navigating the claims process — understanding what a policy covers and how much of a cash payout should be expected — can be overwhelming, especially after experiencing a natural disaster. One option is to hire a public insurance adjuster (PIA), a licensed middleman who works on your behalf to help determine what you’re owed and who works with your insurer to make sure you get it. (See: "The $5,000 gap in your hurricane coverage.")

"Generally speaking, it’s a good idea to use a public insurance adjuster, especially if the claim may be $10,000 or more," says David Barrack, the executive director for the National Association of Public Insurance Adjusters (NAPIA). "It’s really a judgment call for the policyholder, but we do try to help them get everything that’s due."

That second opinion comes with a fee

Barrack explains that public insurance adjusters generally charge about 10% of the final settlement, so you’d pay about $2,000 if your claim settlement is $20,000. If they’re able to recoup more than you would by filing a claim by yourself, a public insurance adjuster’s service pays for itself.

Lynne McChristian, a spokesperson for the Florida office of the Insurance Information Institute (III), says PIAs may be a good option, but only if you’re not satisfied with the settlement offered through your insurer’s adjuster. She points out that you’re already charged for the insurer’s claim adjustment through your premium.

"Give your insurance company the chance to show you how much they are going to give you, especially since you’ve already shouldered the cost," McChristian says. "If there are concerns with the amount, or other issues, then think about going to a PIA."

However, many public insurance adjusters recommend that you bring them in at the beginning of a large claim, rather than in the middle. That way they can help streamline your claim and paperwork from the start, rather than sorting out problems weeks or months later.

Public insurance adjusters may reduce the stress that comes from filing

Despite the extra cost, a public insurance adjuster may bring peace of mind during times of duress. McChristian, Barrack and Pete Moraga, a spokesperson for the Insurance Information Network of California, agree that a public insurance adjuster could also be useful if the policyholder wants to avoid the stress of making a large or complicated claim alone. (See: "Hurricanes and insurance: 5 must-know facts.")

"Some people may be overwhelmed by the long and arduous task of paperwork, correspondence and phone calls that the process entails, and may want someone else to handle the job," says Moraga.

However, Moraga and the NAPIA are quick to caution people to look for licensed and qualified public insurance adjusters, especially following catastrophes like Hurricane Sandy.

"After major disasters, unlicensed public adjusters and unlicensed contractors descend on the disaster scene to try to rip homeowners off," Moraga says. "This is a very vulnerable time for these homeowners as they are still in shock after losing their home." (See: "5 signs fraudsters have targeted you after a natural disaster.")

Jeanne Salvatore, spokesperson for the III, says homeowners can check with their state department of insurance to determine if a public adjuster is legitimate. The NAPIA can also help you find one, through the public adjuster search feature at its website.

The NAPIA offers a few tips for anyone considering hiring a public insurance adjuster:

• Before you sign anything, ask if the adjuster is licensed, for documentation of his or her experience, for a list of references and if he or she has a website or local office. Check with your state’s insurance department to see if he or she has been cited by regulators for poor or unethical performance.
• Be aware that insurers cannot prohibit a home or property owner from using a public insurance adjuster during the claim process.
• Keep in mind that independent adjusters hired by insurers and their own adjusters "represent the interests of the insurance company and do not necessarily represent the interests of the claimant," according to the NAPIA.
• Be aware that some contractors and roofers may say they’re licensed public adjusters when they aren’t. Again, ask for references and check for the proper credentials.

The III website offers these tips for how to prepare for a claims adjuster visit:

• Prepare an inventory of damaged or destroyed items and give a copy to the adjuster. Don’t throw out damaged items until the adjuster has visited. Consider photographing or videotaping the damage.
• If you need to make temporary repairs, keep receipts and give these to the adjuster. Do not make permanent repairs until an adjuster has visited the property.
• Make a list of everything you want to show the adjuster — for example, cracks in the walls and missing roof tiles. You should also get the electrical system checked. Most insurance companies pay for these inspections, according to the III.
• Get written bids from licensed contractors. The bids should include details of the materials to be used and prices on a line-by-line basis.
• Keep copies of the lists and other documents you submit to your insurance company. Also keep copies of whatever paperwork your insurance company gives you and record the names and phone numbers of everyone to whom you speak.

Source: http://www.foxbusiness.com/personal-finance/2012/10/31/after-hurricane-sandy-public-insurance-adjusters-can-streamline-big-claims/

Hurricane Sandy appears to have easily caused twice or even three times the losses of last year’s Hurricane Irene, but final totals will be hard to come by for some time because of the scale of the disaster, catastrophe forecasting companies said on Tuesday.

One of the biggest questions now is who will pay for the extensive damage to municipal infrastructure — subway tunnels, train tracks, electrical transformers, coastal boardwalks and piers — that Sandy left behind along the East Coast.

The short answer, experts say, is that there may be some insurance in place for certain losses, but beyond that taxpayers could well end up on the hook for most of it.

AIR Worldwide, one of the three primary firms used by the insurance industry to calculate disaster exposures, indicated that Sandy is likely to have caused insured losses of anywhere from $7 billion to $15 billion. That figure excludes residential flood losses as well as subway and tunnel flooding.

Its assessment follows that of peer Eqecat, which said late Monday that Sandy was apt to cause anywhere from $5 billion to $10 billion in insured losses and from $10 billion to $20 billion in economic losses.

If AIR is correct, Sandy would rank as the third-worst hurricane in history, based on inflation-adjusted losses, according to the Insurance Information Institute.

A clearer picture should emerge in the days ahead as insurers get their catastrophe teams into the most affected areas and begin making assessments. Allstate said it had more than 1,100 claims staff ready to go once the storm has passed.

Eqecat and its peers are likely to refine their estimates as well. RMS, the other large disaster modeler, said Sandy should outdo the roughly $4.5 billion in insured losses Irene caused after hitting the northeast in August 2011, though it has not assigned a precise figure as yet.

"Sandy event is much more severe … and has impacted NYC to a much worse degree than Irene," RMS said in a storm report early Tuesday.

State Farm, the largest home and auto insurer in the United States, said late Tuesday it has already received more than 6,000 homeowners’ insurance claims and nearly 900 auto insurance claims for Sandy.

By comparison, in the 24 hours after Hurricane Isaac hit Louisiana in August, the company reported just 1,100 claims from that storm.

WHO PAYS?

For homeowners who suffered damage in the storm, on the surface the claims process might seem straightforward. Wind damage goes to their homeowners’ insurer. Flood damage goes to the U.S. Federal Emergency Management Agency’s National Flood Insurance Program.

Lawyers say it’s not that simple. Particularly in cases where a house is partly or entirely destroyed, it can be difficult to tell what happened, and more importantly in what sequence. Litigation on those issues after Hurricane Katrina took years.

"I think people will be challenged to come up with how the events unfolded and what percentage of loss was from one versus the other," said Mike Nelson, chairman of the insurance-focused law firm of Nelson Levine de Luca & Hamilton.

In one extreme case Nelson handled, where a house was totally obliterated, lawyers were reduced to arguing that flood waters were responsible because there was flood debris on top of a tree that was taller than the house had been.

Such disputes pale next to the problem of insuring the enormous New York City infrastructure.

Consolidated Edison said Tuesday its 337,000 Manhattan and Brooklyn customers without power could be in the dark for four days, an eternity by the city’s standards. Subway service is likely to be out until the weekend, the city said.

In Con Ed’s case, the utility carries insurance policies that may cover it for the inevitable lawsuits over business interruption, structural damage from exploding transformers, and similar blackout-related losses.

In the case of an institution like the MTA or the Port Authority, there is insurance in place, but it is unclear how far it will actually go.

The MTA maintains a so-called captive insurer, or insurance company that it set up itself for its own needs, called First Mutual Transportation Assurance Co.

A 2010 examination of First Mutual conducted by New York regulators indicated that it had about $1 billion in reinsurance lined up for property claims. But once that money runs out, someone else has to step in.

"It’s the same basic principles of insurance that would apply. For something like the MTA that has its captive … at some point in time that’s exhausted and something stands behind it or it’s insolvent," said Dan Gerber, co-chairman of the global insurance group at the law firm Goldberg Segalla.

An MTA spokeswoman acknowledged on Tuesday that the authority is self-insured for its losses but declined to comment on how much of its losses insurance might pick up.

Regardless of what the costs are to the MTA, Con Ed, or other authorities, there is a general consensus that the claims will not have a severe impact on the insurance industry.

Most financial analysts expect that an insured loss of even $10 billion would have little effect on insurers and reinsurers, aside from a probable hit to fourth-quarter earnings.

Reporting by Ben Berkowitz; editing by Andrew Hay and Prudence Crowther

Source:  http://www.reuters.com/article/2012/10/30/us-storm-sandy-insurance-idUSBRE89T0WT20121030

The federal government’s flood insurance program may not have access to enough funds to cover anticipated claims from Hurricane Sandy victims, a top official at the Federal Emergency Management Agency said on Thursday.

Edward Connor, FEMA’s deputy associate administrator for federal insurance, told an insurance advisory panel on Thursday that his agency is projecting a flurry of flood-related claims in the neighborhood of $6 billion to $12 billion.

That is well above FEMA’s current borrowing power, he said, which is maxed out at $2.9 billion. To extend it would require authorization from Congress, something Connor said he expects the Homeland Security Department will request soon.

Source: http://news.yahoo.com/hurricane-sandy-claims-may-exceed-insurance-program-funds-200945560.html

Just days after Hurricane Sandy pummelled the east coast of the United States, and made her historic turn inward towards the New Jersey coast, insurance estimates began rolling in, and the news wasn’t good. The storm, which affected a broad area, particularly devastated the states of New Jersey, Pennsylvania, and New York. Many in the tri-state area and beyond suffered severe or moderate property damage, flooding, power outages and more. Now that the clean-up for Hurricane Sandy has begun, insurance companies are attempting to gauge just how expensive this catastrophic storm really was and what the real cost of this natural disaster looks like. Here is a look at preliminary figures from the damage Hurricane Sandy caused and an in-depth look at just how much money the superstorm is costing insurance companies as a result.

Total Estimated Cost of Damage is Staggering

The total estimated cost of damage wreaked by Hurricane Sandy is nothing short of staggering. An article released by the Associated Press on Nov. 2, 2012, estimates the total damage caused by Hurricane Sandy to be up to $50 billion. (The total was projected by Eqecat, a catastrophic risk management consulting firm, which indicated that the damage caused by the storm was between $30-$50 billion.) The damage is comprised of property damage, loss of business, an increase in living expenses and more.

Cost to Insurance Companies Projected to Be Much Less

Another finding in Eqecat’s report is that although the total amount of damage is estimated at $50 billion, the costs that insurance companies will incur from Hurricane Sandy are considerably less. The report indicated that insurance companies can expect to pay between $10-$20 billion. The low end of this figure, while significantly reduced from that of the total damage incurred, is still a hefty price tag to pay. Hurricane Sandy is already more expensive than many severe hurricanes from the past, including 2008’s Hurricane Ike, 2004’s Hurricane Ivan and even the much overhyped Hurricane Irene from 2011.

Why the Lower Price Tag for Insurance Companies?

There are plenty of reasons why the insurance companies got a lower price tag. For one, many homeowners’ insurance policies have tricks and do not cover the cost incurred from flooding. In order for flood claims to be paid, a consumer must have already purchased a flood policy prior to the arrival of Hurricane Sandy. In addition, the damage estimates include costs that are not covered by insurance policies such as loss of wages, power outages and increased costs of living expenses.

High Short-Term Costs, Low Long-Term Effect

While the staggering cost of Hurricane Sandy is still being calculated, insurance companies and risk management firms are trying to pinpoint whether the damage done is short-term or if it has the potential to cripple the economy and insurance industry on a long term or permanent level. According to an article released by the Huffington Post on Oct. 31, 2012, the rebuilding will start and continue at a feverish pace, and the economy will not be impacted over a long period of time. Meanwhile, an article released by SeekingAlpha.com projects that the insurance industry will take a hit, but quickly recover once the cleanup has been completed.

The Bottom Line

Hurricane Sandy ravaged the east coast and left New Jersey coastal towns, New York City and plenty of other locations with billions of dollars worth of damages. With cases of flooding, structural damage, power outages and more, the clean-up process for Sandy is certain to be long and expensive. Only time will tell if the numbers projected by Eqecat are correct, and as more reports of damage come through, it certainly seems as though the catastrophic risk management firm has done its homework. Let Sandy serve as a great reminder of how families should take appropriate measures for protecting their assets and finances from natural disasters.

Source: http://finance.yahoo.com/news/much-hurricane-sandy-cost-insurance-231523049.html