FEMA Policy On Insurance Deductibles
Release Date: October 3, 2004
Release Number: 1551-038
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ORLANDO, Fla. -- Hurricane victims with deductibles in their homeowner insurance policies may wonder if disaster assistance will pay for part or all of their deductible.
By law, the Federal Emergency Management Agency (FEMA) does not pay insurance deductibles. However, what FEMA pays for is often different from what insurance pays for. Because of that, victims are encouraged to register with FEMA and, later, report their insurance settlement. Some people will qualify for disaster aid despite having insurance and a deductible.
Below are three examples of how someone with insurance might still get disaster assistance.
Rent money—Suppose someone has to rent a place to live while unable to be in her home because of the hurricanes. Most homeowner’s policies will pay for that expense, under a clause called “additional living expenses” (ALE). However, some policies do not cover ALE. In that case, FEMA may give a grant to cover the rent.
Different coverage—Suppose the FEMA inspection of someone’s home estimates the cost of repairing the damage will be $5000. Then the insurance adjustor estimates that the damage covered by the homeowner policy will be only $3000. The insurance company subtracts the deductible from $3000 and pays the rest. As far as FEMA is concerned, the insurance coverage was $3000; FEMA will then pay $2000, the amount of the FEMA estimate not covered by insurance.
A circumstance like this is very unusual, because insurance companies usually cover more than what FEMA will pay for. FEMA grants are to make a home safe and livable, not restore property to its pre-disaster condition. Also, a FEMA grant for home repairs will never exceed $5,100 unless the home is totally destroyed.
All claims about insurance are subject to verification by the FEMA Inspector General’s office.
SBA loans—Suppose someone had $200,000 worth of damage, and their insurance only covered $150,000 of that amount. They could be eligible for a low-interest disaster loan from the Small Business Administration (SBA) to cover the difference of $50,000, with rates as low as 3.187 percent. Filling out and returning the SBA loan form might also make them eligible for some additional FEMA grants.
Because there are aid programs that can help hurricane victims who have insurance, disaster officials urge applicants to register with FEMA by calling 1-800-621-FEMA (3362), or TTY 1-800-462-7585. Call soon, because registrations are accepted for only 60 days after a disaster is declared. Later, when the insurance settlement comes through, mail or fax a copy of the settlement to FEMA at the location below, and include a copy of your case number.
FEMA
P.O. Box 10055
Hyattsville, MD 20782
FAX 1-800-827-8112
The State Emergency Response Team (SERT) is a collaboration of Florida’s state agencies led by the state coordinating officer. SERT’s mission is to ensure that Florida is prepared to respond to emergencies, recover from them, and mitigate their impact. Visit http://www.floridadisaster.org for the latest information on the hurricane relief efforts.
On March 1, 2003, FEMA became part of the U.S. Department of Homeland Security. FEMA's continuing mission within the new department is to lead the effort to prepare the nation for all hazards and effectively manage federal response and recovery efforts following any national incident. FEMA also initiates proactive mitigation activities, trains first responders, and manages the National Flood Insurance Program and the U.S. Fire Administration.
Last Modified: Wednesday, 06-Oct-2004 18:37:58