Legal Insights for Natural Disasters: Navigating Insurance Challenges

It seems like every year, major natural disasters hit the United States, causing devastation and an influx of insurance claims. Florida and the East Coast get hit with storm and hurricane damage. California and the West also confront wildfires and earthquakes. Other areas of the country are prone to flood damage, tornadoes, and wind damage. Understanding insurance coverage tips can help in case the next natural disaster hits near home.

The details in your home insurance policy is something you should nail down before disaster strikes, not after the damage is done.

Homeowners insurance policy laws and exclusions can vary greatly by state. Contact a local insurance coverage lawyer to make sure your home insurance covers the next natural disaster.

Disaster Preparedness in the New Reality of Extreme Weather Events

From tornadoes and windstorms to wildfires and volcanic eruptions, scientists agree that the frequency and severity of natural disasters are increasing due to climate change, and won’t stop anytime soon. They can also happen anywhere, even if you think you live in a “safe” part of the country.

“There were people in the interior of Vermont who never dreamed that they would face exposure from a hurricane,” recalls Robert J. Gilbert, an attorney with Latham & Watkins in Boston. “Suddenly, the creeks overflowed and turned into rivers. The rivers turned into lakes, roads and bridges were washed out, homes were swept away, and the state was paralyzed for months because it was essentially impossible to go east to west. If it can happen in Vermont,” Gilbert says of Hurricane Irene in 2011, “It can happen anywhere.”

Still, many Americans prefer not to think about the possibility of natural catastrophes, much less how much property insurance they would need to rebuild, replace, or repair. “The events seem more remote in our minds,” says Joshua Mallin, an attorney with Weg & Myers in Rye Brook, New York. “That’s why we tend not to get that insurance or push that off to another day.”

Preparing for Natural Disasters Before They Happen: Insurance Shopping

If you’re reviewing your current renters or homeowners’ insurance policy or doing a risk assessment, consider more than just how much you’ll shell out for the annual premium and your standard deductible.

Hugo Alvarez of Cole, Scott & Kissane in Miami advises clients that construction costs in the state of Florida may have risen since they bought their homes. “If you took your policy out 10 years ago and you’re still in the same home, the replacement cost was much lower than it’s going to be today. You need to think about, ‘How much is it truly going to cost me should my home be blown away by a hurricane now?'”

Regularly review your policy to make sure your homeowners’ insurance covers any unexpected risks. State insurance laws may change your insurance deductible or the types of damage covered.

You’ll pay extra for an all-risk policy, but it’s worth it, Gilbert says. All-risk coverage isn’t limited to specified perils such as lightning and fire. And be sure to opt for full replacement, which will pay for you to rebuild your dwelling based on current values, he adds. If your home is insured for $400,000 and it’s actually worth $800,000, you may also get hit with a coinsurance penalty for not buying enough coverage. “It’s a trap for the unwary.”

Special Types of Insurance Coverage for Natural Disasters

Mortgage lenders are increasingly likely to require certain types of coverage, depending on where you live.

Flood insurance, for example, is recommended throughout Florida, where hurricanes have strengthened in recent years. “If you’re in certain floodplain areas, you’ll be required to get insurance. No bank will lend to you if you don’t have flood insurance,” says Mike Ricketts, an insurance attorney with Gordon Thomas Honeywell in Seattle.

“Look at your deductible,” suggests Donna Stockham of the Stockham Law Group in Tampa. Make sure it’s not too high to be useful. “A lot of folks are pretty much self-insured because they can replace their whole roof without reaching their deductible. That can be devastating.”

Don’t Rely on FEMA To Bail You Out if You’re Underinsured

Subsidized coverage is also available through the Federal Emergency Management Agency (FEMA) National Flood Insurance Program (NFIP). You can supplement this coverage through private insurance riders or endorsements.

One thing property owners should not do, Stockham says, is expect FEMA to bail them out after storm damage if they’re underinsured. “They may come in and help the community [with clean up and disaster assistance]. But they’re not going to come in and rebuild your house just because you don’t have a separate flood insurance policy,” she says.

Know the Fine Print of Your Insurance Contract

Insurance policies are not easy to interpret, but it’s important to read the fine print, says Jordan Dollar, an attorney with Dollar, Burns, Becker & Hershewe in Kansas City.

In some cases, the first page stated the company would provide coverage for certain disasters. However, that wording was overridden by an endorsement 20 pages later. “You might as well take a Sharpie to that first page,” Dollar says. “But it was still in there. It’s really confusing, even to lawyers sometimes, as to how to read these policies comprehensively and in a way that makes sense.”

Stephen Marino, managing partner at Ver Ploeg & Marino in Miami, Orlando, and Philadelphia, began litigating insurance cases after Hurricane Andrew in 1992 and often represents builders and developers in construction defect cases. “I always tell people to buy a little more insurance than you think you need because the worst-case scenario is you bet against yourself and lose.”

“Unfortunately, all typical insurance policies include provisions and/or exclusions that limit coverage to some extent,” adds Keith Givens, an insurance coverage attorney at Mansell & Engel in Oklahoma City.

“Our role is evaluating whether benefits have been denied in accordance with such provisions/exclusions, or contrary to the terms of the potential client’s policy. If benefits were wrongfully denied, or someone’s claim was handled in violation of Oklahoma’s duty of good faith and fair dealing, we can seek appropriate relief and damages through litigation.”

Documenting Your Personal Property and Losses

It’s essential to document in detail your personal property and belongings, both before and after a natural disaster.

Save Evidence of Your Personal Property Before Natural Disaster Strikes

Once you’ve gotten the right coverage, walk through every room of your house and photograph your belongings, down to the floor coverings and appliances. Store those images in the cloud and ask for a certified copy of your insurance policy.

“Oftentimes, the insurance company will have online portals to access coverage information,” says Susan Minamizono, a Denver attorney at Levin Sitcoff who has been counseling victims of the Marshall Fire that killed two and destroyed more than 6,000 acres over New Year’s in 2022. “All you really see are the bullet points, so it’s important to see the actual entire policy.”

Gilbert knows firsthand the importance of saving documents, photos, and videos off-site. His own house burned down 22 years ago. “There are some things that I had done in advance that were really helpful, including keeping a copy of my insurance policy at my office, so I was able to go and immediately get it. I did not do a good job of documenting all of our property.”

Document Property Damage and Losses After a Natural Disaster

It’s equally important to document your losses following a natural disaster. As long as it’s safe, take photos and video of the damage. Create a spreadsheet and start documenting your personal losses. Stay organized and keep receipts for anything you have to replace.

“The biggest issue we see is proving what they had,” says Jenneane L. Jansen, an insurance attorney with Jansen & Palmer in Minneapolis. “One of the things I say is, ‘Grab a video camera, a phone or whatever, and walk around your house or apartment. Videotape closets, your furniture, and everything you can to show what you had.’ When we see really big disasters — tornadoes or a big fire — it’s tough to prove everything you had. It flummoxes insureds and it’s exhausting, so a camera can really help.”

“I’m talking everything from your kitchen pots and pans to your clothes to the lamp on the nightstand by your bed,” says Dollar. “All of that might be covered under your policy.” If your house was completely destroyed, get a copy of the building plans from prior owners or the building inspector’s office.

Stockham had clients with wind damage from a hurricane who didn’t realize how extensive the problem was until it was too late to file a claim. “They look at it and think they just need to replace a few roof tiles, and it would fall under the deductible,” she says. “Then it starts raining, and they realize, ‘Wow, the roof is in bad shape!’ My advice is always to get a professional out to look at your house.”

Navigating the Insurance Claims Process Following a Natural Disaster

If a natural disaster has damaged or destroyed your home, you should notify your insurer right away. Notification is important, even if you’re not ready to file a detailed claim. This generates a claim number and starts the process. The same goes for reporting the situation to FEMA.

“Especially if there is a natural disaster that’s affecting so many people, you’re going to end up in a queue,” says Minamizono. “Being prompt about that is of foremost importance.”

Even worse, a staggering number of people are left uninsured and undercompensated afterward. “After catastrophes, you see these things crop up,” says Ricardo Echeverria, an insurance litigator with Shernoff Bidart Echeverria in Claremont, California. “I tell everyone to take a close look at your policy… Just like you go to the doctor for a checkup, you should also go to your insurance agent and check on your coverage. Just don’t accept the line, ‘With the extension, your number should be appropriate.’ I’ve seen too many people be underinsured. It happens all the time.”

Your homeowner’s premium will usually increase following a catastrophe, adds Gilbert. However, if the hike is exorbitant, it may be time to decide whether to stay with your current provider or shop around.

Most people, attorneys agree, don’t need legal representation just to purchase or review an insurance policy. But if you own a business or high-end property, or if you’ve had prior bad experiences with insurance claims, you might want to hire an insurance lawyer before you’re in crisis mode.

Strategically Communicating with Insurance Agents About Your Claim

Don’t say too much when the insurance representative contacts you. You don’t have to accept the first reimbursement offer. Gilbert suggests requesting a visit from an adjuster and explaining that you’re still assessing the damage.

Keep a written log of the calls, and refrain from sharing too much online. “A lot of times, you’ve talked about how quickly the floodwaters were rising and maybe engaged in a little bit of hyperbole,” Gilbert says. “The insurance company will get all of that. They’ll use everything they can against you. The less you talk about it on social media or emails, the better off you’ll be.”

When To Get a Lawyer Involved in Insurance Claim Negotiations

And don’t panic if your claim is lowballed. “Once there is a clear dispute, you’ll need to get a lawyer to get the full dollar for it,” says Robert D. Green, an insurance attorney with Green Kline Wood & Jones in Houston. Attorneys know the deadlines, how to draft the documents, and navigate the courts. They can also put up the money that is often necessary to defend your stance if the insurance company denies your claim.

“We have to hire engineers to come in and say, ‘No, this was caused by this or that’ and contractors to say what it will cost to fix a building. Very few can afford that, but lawyers take a lot of risks and incur a lot of expenses. And if we don’t recover, then they don’t owe us anything.”

“Because we’ve been around the block, we know some of the arguments that are available to consumers that may expand coverage or provide coverage where coverage wasn’t provided beforehand,” Dollar says. “We know how to call them out.”

Be Aware of Insurance Filing Timeframes and Deadlines

“If you have a flood claim, you have to get on the phone with a lawyer very quickly,” Alvarez says. “Certain notices have to be filed within certain timelines, or those claims are forever barred.” For example, some insurance companies require claims within 30 days and may penalize policyholders for waiting too long.

“Sometimes people are trying to be too smart for their own good, not notifying their insurance company because they don’t want their premiums to go up,” says Mallin. Despite the trauma and confusion that come with a natural disaster, “It’s going to be hard to justify that you couldn’t notify your carrier within the first 30 days.”

States also generally have statutes of limitations on insurance claims. This limits how long you have to file a claim.

Jansen gives an example from Minnesota. “Another tricky part is the two-year limitation period in the law for fire policies in Minnesota. It’s conceivable that a carrier could write a shorter limitations period for types of loss other than fire. Regardless, the deadlines are very important, so I always say to clients, ‘Shoot me a copy of your full policy.'”

Keep in Mind How Long It Takes To Finalize a Claim

In addition to the deadlines for initiating a claim, keep in mind that a claim can take several months, or even years, to finalize. Because of the sheer volume of claims after a widespread disaster, your insurance carrier will probably subcontract with adjusters from other states to handle the overload.

“Take a deep breath,” Marino says. “I’ve seen families survive terrible catastrophes and come together as a family. But I’ve also seen families just completely ripped asunder by living in terrible conditions post-hurricane and not getting any satisfaction. There’s a certain amount of patience that you need to just endure the process.”

For damage to your small business, you might want to apply for a Small Business Administration (SBA) property recovery loan. FEMA may provide disaster relief assistance if your home was uninsured or underinsured. And if you don’t have insurance, contact an attorney.

“You may have a claim against somebody who didn’t have a building up to code,” Dollar says. “It may be worth investigating because it may allow you to get the medical care and treatment that is necessary.”

What To Do About Insurance Claim Denials Following a Natural Disaster

Carriers can come up with many reasons for denying claims or not paying enough after a natural disaster. They claim the policy doesn’t cover it, the damage isn’t that bad, or the damage already existed due to wear and tear.

If the insurance company denies your claim, that’s the time to reach out to an attorney. “Although some people reach out from the get-go,” says Green. If people have had insurance disputes previously and expect another to crop up, they sometimes call up an attorney just to get in line.

“The insureds are human beings whose lives have been turned upside-down, and the stress of it can be immeasurable,” says Stockham. “These are people’s lives and homes we’re dealing with. They don’t have the money to fix everything, which is why they bought insurance, and it all takes a toll.”

Beware of Scammers Following a Natural Disaster

Most people who show up after a natural disaster wanting to help have good intentions, says Marino. But beware of scammers who urge you to sign a contract for repairs, turn over your insurance claim to them, or assign them a portion of your payment.

Exercise caution with unsolicited calls or emails from people asking for personal information. Get references and check out online reviews for anyone who appears out of nowhere.

“Disasters bring out the best in people but also the worst in people,” Gilbert says. “There are folks who make a living preying on victims of fires, floods, and so forth. Be aware that if something sounds too good to be true, it probably is.”

Find an Experienced Attorney

Many insurance law attorneys charge based on a contingency fee basis, meaning they receive a fraction of what they recover for you. For help navigating the insurance claim process after a natural disaster, talk to an insurance coverage attorney.