(Note: This Guest Blog is by Deborah Trotter, an attorney with Merlin Law Group in the Gulfport, Mississippi office).
The spring storms and tornadoes that ripped through Mississippi, Alabama and Louisiana recently could be a preview of a devastating hurricane season. Policyholders should take the opportunity now to review their policy coverage.
One of the many things we learned from Hurricane Katrina, is that people often do not know the various insurance benefits available to them under their homeowners and/or business policies. And sadly, many insurance company adjusters do not feel obligated to inform policyholders of all of the policy benefits available to them.
On the Central Gulf Coast we know all too well that after a catastrophic event, it is deeply comforting and reassuring to have the support of our family, friends, neighbors and extended neighbors. In addition to knowing that the replacement or repair of our homes and personal or business property will be taken care of, we should also be able to rely on our wise decisions to cover those additional and necessary expenses for the time period it takes to put our lives back together without the need to stretch our budgets and burden our families, friends and communities.
Some of the most overlooked and underused benefits are Additional Living Expense Coverage, Loss of Rents Coverage, Business Expense Coverage and Business Interruption Coverage. Though these coverages are often reimbursed after the actual costs have been incurred, many insurance carriers will make partial payments to policyholders to assist them on their way to recovery.
The only way to know if you have these coverages is to review the policy. We strongly encourage all of those affected by these recent storms to thoroughly review their complete insurance policy, including riders and endorsements. If you no longer have, or never had a policy, seek one from your insurer immediately.
A typical benefit under the Coverage for Additional Living Expense is coverage for rental or temporary housing when a covered event renders the covered primary home uninhabitable. Other additional expenses can also be covered, such as the additional expense in travel to and from work due to the new living location.
Often owners of residential rental property will have coverage under their rental dwelling policy that covers loss of rents when the covered property is made uninhabitable by a covered event, as a renter has no obligation to continue to make rental payments due to force majeure. A lease or a rental agreement will be helpful in documenting the amounts to be paid under this provision.
A benefit of Business Expense Coverage under a commercial policy may allow a covered business to take the necessary steps to continue the business at another location during the period of restoration to the covered property. This coverage is much like the Additional Living Expense Coverage in that it is intended to offset the “extra expense” associated with returning to the normal operation of the business.
Another valuable coverage to businesses is the Business Interruption Coverage, a.k.a, Time Element Coverage. This coverage often helps prevent a business affected by a covered event from going out of business or into bankruptcy by its receiving the benefit of lost income payments for the period of restoration or replacement of the damaged property.
Though many of these coverages are limited to a 12 month or 24 month period, unless there is an endorsement for an extension, these coverages should be explored and understood at the outset of any insurance claim. Policyholders should read their policies carefully to determine which coverages are available to them and to determine the duties and obligations of policyholders in order for them to make a proper claim for those coverages. Policyholders should also have their insurance carrier verify and commit to coverage early to ensure prompt reimbursement.
At this year’s annual Windstorm Conference held in Orlando, FL [link], there were many vendors in attendance that offer insurance policy related services. Temporary housing services can prove to be very beneficial to policyholders who have been displaced when their home is rendered uninhabitable by a covered event.
While visiting with some of the temporary housing vendors at the Windstorm Conference, we discussed the dilemma for many policyholders with regard to obtaining the temporary housing benefit under their Additional Living Expense Coverage. In the aftermath of a catastrophic event most policyholders are thrown in to a time of uncertainty and do not have the savings or resources immediately available to them to secure temporary housing.
The temporary housing services work directly with the insurance company. The hotel or rental bills are paid by the insurer on behalf of the policyholders directly to the temporary housing service. Informing policyholders that this kind of service can be available could lead to the benefit of temporary housing for policyholders at the time most critical in the recovery—the initial, emergency stages.
Insurance policies can be very difficult to understand. Policyholders should consider making an extra copy of their policy so that they can mark the areas that need further clarification. Policyholders should then consider discussing the meaning of these provisions with a claim representative as soon as possible. If policyholders are not fully satisfied with the answer(s) given, they should consider asking to speak to a Claims Manager or asking to be referred to someone who can assist them. If policyholders are still dissatisfied, have been wrongly denied, or have been told there is limited or no coverage due to exclusionary language, policyholders should consider seeking legal counsel to protect their interests.
Our hearts and prayers go out for all of those affected by these tragic storms and tornadoes and we send our wishes for a speedy recovery.
Best to All,