Insurance Overview: Understanding Your Policy
New Orleans best insurance claim dispute attorneys know that insurance policies can be divided first between residential and commercial/business policies. This insurance overview applies to both, with additional business considerations addressed separately below.
Insurance policies are contracts between you and your insurer. By entering into these contracts, you agree to pay premiums and take specific steps in the event of a loss, while your insurer agrees to fairly determine the cause and value of your loss and pay you accordingly. Any failure by either party to do what is required under the agreement would be a breach of contract.
Residential Policies: What Do You Have?
Residential policies are usually referred to as “homeowners” policies. If you live in a high-risk coastal area, you may have two or even three distinct residential policies:
- Homeowners Policy: Covers typical risks such as fire but usually excludes coverage for hurricane losses.
- Windstorm Policy: Covers risks associated with the winds accompanying hurricanes but excludes flood damages (typically defined to include storm surge associated with a hurricane).
- Flood Policy: Covers risks associated with flooding. All primary flood policies define this to include “overflow of tidal waters” (storm surge).
Wind vs. Flood: The Legal Distinction Wind coverage is written by private insurers, and disputes concerning those policies are governed by state law. Primary flood coverage is handled by those same insurers, but the policies are federal; disputes are governed by federal law because the National Flood Insurance Program (NFIP) is administered by FEMA. However, if you have excess flood coverage (above the federal $250,000 limit), disputes arising under those coverages typically are governed by state law.
It is extremely important to obtain copies of your policies and highlight the definition of flood that is excluded under your homeowners or windstorm policy. While insurers take great care to exclude damage caused by rising waters, some definitions are broader than others and might provide coverage for surge-related losses.
How to Read a Residential Insurance Policy
o read your policy intelligently, you must understand its structure. Most policies include the following sections:
- The Declarations Page (“Decs Page”) This serves as the table of contents for your policy. It outlines your policy limits for each coverage, such as:
- Physical Structure: The actual building that is your home.
- Contents Coverage: Pays for personal items.
- Other Structures: Applies to sheds, pool houses, or fences.
- Loss of Use/ALE: Additional Living Expenses covers lost rent or hotel costs while displaced.
The Decs page also identifies every “form” that makes up your policy (e.g., HO-334-9). You should check that you have every form listed on this page to ensure you have the full policy.
2. Definitions. Insurers use specific, technical definitions for policy terms, often appearing in bold or italic script. For example, your entitlement to benefits could vary greatly depending on whether “flood” is defined as “rising and falling of waters in rivers” or “any rising water from any source.”
3. Coverage Sections & Insuring Agreement. These sections describe exactly what perils are covered. For example, “Coverage A” usually refers to your dwelling structure. The language here is often written broadly before being limited by the exclusions that follow.
4. Exclusions. This section takes away specific coverages granted in the insuring agreement. This is where you will find language eliminating coverage for flood, power failure, ordinance or law, and similar events.
5. Conditions. This sets forth routine claim handling, such as how to file a claim, your responsibility to minimize damage, and how the insurer adjusts the loss.
Business Coverages
Commercial policies are similar to residential ones but frequently include additional business-specific coverages, which can be complex and subject to “sublimits.” Common examples include:
- Business Interruption: Covers lost income for a specified period due to a covered loss.
- Accounts Receivable: Covers losses due to an inability to collect on accounts because of a covered loss.
- Civil Authority Coverage: Compensates for losses due to forced evacuations or declarations by civil authorities.
- Contingent Business Income: Covers loss of income due to damages suffered by others (e.g., a supplier’s inability to ship goods).
- Extra Expense Coverage: Covers operating expenses incurred to stay open, such as temporarily relocating.
- Utility Services: Protects against business loss due to local utility failure.
Making a Claim: Document, Document, Document!
The single most important thing you can do after a loss is to document your damages and your communications with your insurer.
- Report the Claim: Contact your agent or use the insurer’s 1-800 number immediately.
- Track Communications: Keep a log of every contact, including the date, name of the representative, and the substance of the conversation regarding coverage or cause of loss.
- Photograph the Damage: Take photos and videos to help the adjuster perform their investigation.
- Inventory Content: Create a list of damaged personal property, including purchase dates and replacement costs.
- Make Temporary Repairs: Cover broken windows or roofs to prevent further damage, and keep receipts for materials; insurers generally repay these reasonable expenses.
If you have any questions regarding your insurance claim, contact the Berniard Law Firm.
State Insurance Resources
- Louisiana Dep’t of Insurance: 800-259-5300 | ldi.la.gov
- Mississippi Dep’t of Insurance: 800-562-2957 | mid.ms.gov
- Alabama Dep’t of Insurance: 800-433-3966 | aldoi.gov
- National Flood Insurance Program (NFIP): 800-427-4661