AG Coakley Offers Advice to Massachusetts Residents Regarding Home Improvement Contractors and Insurance in Aftermath of Hurricane Irene
Home Improvement Contractors:
Here are some tips that can help you select a contractor to conduct repairs on your home:
- Make sure that the person you are dealing with is a licensed contractor affiliated with a legitimate business. If you have access to a computer, you can verify a home improvement contractor's registration online on the Office of Consumer Affairs and Business Regulation's website.
- Ask for references-names of satisfied customers who can tell you about the business. If you can, ask a neighbor, friend or co-worker for the name of a business they have used. When choosing a contractor for insurance claims, it is a good idea to hire a contractor that has a successful track record in dealing with insurance companies. Contractors often play an important role in negotiating with your insurance company.
- Get estimates from more than one contractor and compare prices.
- Check for a history of complaints with the Attorney General's Office and the Better Business Bureau.
- Obtain a written contract or estimate describing the work to be done, the price and estimated date of completion.
- You should not pay more than one third the cost of the project at the inception of the contract, with another third due half way through the project and the balance paid when the work is completed to your satisfaction.
There are three types of insurance that can help in the event of a hurricane. Each type of insurance covers a different kind of loss. Be aware, however, that both homeowners insurance policies and flood insurance policies tend to be very limited in terms of what they cover.
- Homeowners Insurance- Homeowners insurance policies typically do not cover water damage that is caused by flooding, including water that seeps into a house through a basement or as a result of a sewer backup. However, homeowners insurance policies do cover damage caused by water that comes in "from above" like heavy rain.
- Flood Insurance- Some consumers who live in flood zones have separate federal flood insurance policies through the National Flood Insurance Program (NFIP). However, even this flood insurance is quite limited in what it covers. To read more about what is and what is not covered by NFIP flood insurance policies, click here.
- Auto Insurance- If you have comprehensive coverage on your vehicle, your vehicle is insured for most types of damage resulting from hurricanes.
UNDERSTANDING YOUR HOMEOWNERS INSURANCE POLICY
It is important to understand the limits, deductibles and exclusions that apply to your homeowners insurance policy.
- Limits- A limit is a cap on the amount of money an insurance company will pay to repair covered damage to your home. Typically, a homeowners insurance policy is made up of several types of coverages, and each coverage has its own limit. In addition, certain types of losses may be subject to separate limits. For example, some insurance policies limit the amount of money that they will pay to remove fallen trees from your premises to $500, regardless of the number of fallen trees.
- Deductibles- Nearly all homeowners insurance coverages are subject to deductibles. A deductible is the amount of covered expenses that must be paid out of pocket by the homeowner before the insurer will begin making payments. Deductibles range from very small amounts to tens of thousands of dollars. In coastal areas of the Commonwealth, insurance companies often require separate wind deductibles as part of a policy. These wind deductibles can be quite large.
- Exclusions- Many homeowners insurance policies do not cover certain types of damage, such as damage caused by flooding, earthquakes, mold, sump pump failures and pollution. While you can sometimes purchase endorsements from your insurance company to cover these otherwise excluded risks, these endorsements are not provided as part of the standard homeowners insurance policy.
To learn more about homeowners insurance, including what is and is not typically covered, read the Division of Insurance's Guide to Understanding the Homeowners Insurance Policy Covering Your Home.
TIPS FOR DEALING WITH YOUR HOMEOWNERS INSURANCE COMPANY
- Notify your insurance company right away- Contact your insurance company and/or its agent as soon as possible to notify them of the damage. Find out exactly what your insurance policy does and does not cover.
- Prevent further damage- Take whatever reasonable steps you can to prevent further damage (such as putting a tarp on a leaking roof or siphoning water out of your basement). If you fail to take reasonable steps to prevent further damage to your home, your insurance company might refuse to pay for that further damage.
- Document the damage- Take pictures or video and prepare a list of lost or damaged materials and items. Keep a copy for yourself.
- Don't discard damaged property- Do not throw away your damaged property without documenting the damage and ideally, allowing the insurance company to inspect the damage first.
- Save receipts- Save receipts for what you spend on clean up, repairs or substitute housing so that you can submit them to your insurance company.
- Hire a licensed contractor who has experience dealing with insurance claims- Try to hire a contractor who has a successful track record in dealing with insurance claims. Contractors often play an important role in negotiating with the insurance company.
- Keep notes- Keep written notes on your dealings with your insurance company and/or its agent concerning the claim.
- Ask about timing- Ask your insurance company whether there are any limits on how long you have to complete the repairs that the insurance company is paying for. See if you can get this information in writing.
- Don't succumb to pressure- Do not feel pressured to accept what an insurance company offers you if you feel it is not a fair settlement. Do not be afraid to take the time to understand the process, get help when needed and advocate for your interests.
- Don't sign documents unless you understand them- Be careful what you sign. Some consumers sign paperwork presented by clean-up companies in order to get clean-up work started, and realize later that their insurance company won't pay for that work. Also, be wary of prematurely signing any kind of release from your insurance company. Be aware that some insurance companies consider a "proof of loss" a release form.
- Be wary of public adjusters- You may be approached by a public adjuster who may offer to handle your insurance claim on your behalf. Public adjusters are supposed to act as your representative in dealing with an insurance company in exchange for a percentage (typically 10%) of your insurance settlement. There is no requirement that you hire a public adjuster to handle your claim. Public adjusters may require you to enter into a contract with them before assisting you with your claim. Please read this contract carefully before signing it. Before hiring a public adjuster, it is advisable to contact the Division of Insurance to see if complaints have been made against the public adjuster.
- Contact the Attorney General- If you have questions or feel that you have been mistreated by an insurance company, agent or public adjuster, call the Attorney General's Insurance & Financial Services Hotline at 1-888-830-6277. In addition to bringing cases against companies that engage in unfair or deceptive trade practices, the Attorney General's Office offers free and voluntary mediation services to consumers who are experiencing difficulties with insurance claims.
- Not all auto insurance policies will cover damage to your vehicle from a hurricane. Damage will only be covered if you have purchased comprehensive coverage for your vehicle. Comprehensive coverage pays for accidental damage to your car that is caused by anything other than a car accident. Damage caused by falling trees, debris and flooding is typically covered by comprehensive coverage.
- Glass damage is also covered under comprehensive insurance coverage. Some policies do not require a deductible for glass; however, others include a separate glass deductible.
- If you experience damage to your vehicle, report the loss to your insurance company or its agent as soon as possible.
Massachusetts residents in need of emergency assistance are urged to contact the Massachusetts Emergency Management Agency, at 508-820-2000, or 800-982-6846.
To check the history of a business or to file a complaint about a scam, the Attorney General's Office urges you to contact its consumer hotline at (617) 727-8400 or file a complaint online at www.mass.gov/ago/consumercomplaint .