WASHINGTON — Storm-ravaged homeowners in the path of Hurricane Gustav will file an estimated 175,000 wind- and flood-damage claims with insurance payouts likely to top $5 billion, the Consumer Federation of America reported Wednesday.
Actual damages to covered property could range from $2 billion to $10 billion, according to industry estimates for the storm, which continues to dump rain and high winds across Oklahoma and parts of the Southeast.
The Consumer Federation of America is warning that because of increased deductibles and recent policy limitations on hurricane coverage, many homeowners will assume a greater share of the cleanup costs.
"Some have gone from a $200 deductible to 2 percent or even a 5 percent (deductible) on certain parts of the policy," Mississippi Insurance Commissioner Mike Chaney said.
Some homeowners won't realize their increased liability because the disclosures typically are buried in the fine print of their insurance policies, which often goes unread.
"Families will have to dig deeper into their pockets," said Robert Hunter, the director of insurance for the federation. "Because so many consumers experienced claims problems in the wake of Hurricane Katrina, we urge homeowners dealing with losses caused by Hurricane Gustav to be vigilant with their insurance companies to ensure that they receive a full and fair settlement."
On Wednesday, President Bush traveled to Baton Rouge, La. and saw firsthand the carnage left in Gustav's wake.
On his way from the airport to the emergency response center, Bush saw buildings with crumpled roofs, downed trees and power lines, and a nursery school with toppled playground equipment.
Gas stations and shops remained closed, and power was out in large swaths of the state capital. After describing the emergency response to the storm as "excellent," Bush met privately with emergency responders at the command center, which resembled a war room with giant TV screens and a maze of office cubicles, each representing a different city.
Aboard Air Force One, Dave Paulison, the Federal Emergency Management Agency administrator, urged Louisiana residents who'd evacuated to remain in their temporary housing until their parish executives say it's safe to move back. "Otherwise they're going to come back in and be a burden on the community, because there is no place to buy groceries or get fuel, or anything like that," Paulison said.
In the Gulf Coast area of Mississippi, which Katrina devastated, Insurance Commissioner Chaney said that he expected only about 1,200 damage claims. It's unclear, however, how many more will result throughout the state from inland flooding, mudslides and tornadoes. Mississippi issued 120 tornado warnings in a 24-hour period that ended at 4 p.m. Tuesday, Chaney said.
TIPS FOR HOMEOWNERS:
While Hurricane Gustav's tab probably will be just a portion of the $40 billion-plus damages that Hurricane Katrina caused, Robert Hunter, the director of insurance for the Consumer Federation of America, is warning homeowners to be prepared to spar with insurers when filing damage claims.
"Not all insurance companies handle claims badly, so go into the claim process with an open mind," he said. "Be vigilant, though, or you run the real risk of being shortchanged."
He urges homeowners to document all contacts with their insurance companies, including the dates, times and descriptions of the exchanges, including whether an adjuster is rude.
Inventory possessions and photograph rooms and items in your home to help develop a thorough list.
Get a repair estimate from a local contractor to guide discussions with claims adjusters, and keep receipts for emergency repairs and other costs incurred in obtaining temporary housing. Many policies reimburse for these costs.
Home policies typically don't cover floods, earthquakes and tree removal, unless a tree damages the home, according to the Consumer Federation of America. Some polices have provisions that exclude coverage for wind damage if it occurs during a flood. The federation advises homeowners to contact lawyers if insurers use such provisions to deny claims.
Homeowners who think that their insurance offers are too low or whose claims were denied should complain to higher-ups in the company. A policyholder with detailed records of the claims process is more likely to get a better offer, said Hunter, who's a former federal insurance administrator and Texas insurance commissioner. Ask the company to identify the exact policy language that your claim denial or disputed offer was based on.
If that fails, contact your state insurance department, which, at the very least, will seek a response to your complaint from your insurer. Some agencies will intervene on your behalf in obvious cases of mistreatment. If that fails, contact a lawyer who can help you get your claim covered and additional compensation if the insurance company is found to have acted in bad faith.
In some states, homeowners can request arbitration to settle coverage disputes. Policyholders should be advised, however, that when both sides present valid cases, arbitrators — based on Hunter's experience — tend to side with insurers. That's because they don't want to alienate the industry players that are likely to use their services more frequently, Hunter thinks.
Since the federal government underwrites flood insurance, policyholders with disputes about flood coverage should follow the same instructions when contacting the Federal Emergency Management Agency, which runs the federal flood-insurance program.
Officials at the federal flood program can be reached at 1-888-225-5356. Tips for handling flood claims are available online at http://www.fema.gov/business/nfip.
(Kevin G. Hall contributed to this story from Louisiana.)
McClatchy Newspapers 2008