2006 Disaster Assistance to Consumers
Frequently Asked Questions
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Auto FAQs | Mobilowner/Mobile Home FAQs | Homeowner FAQs | National Flood Insurance Program (NFIP) FAQs
(August 2006)
Q. My car was flooded. How do you determine if your car should be totaled?
A. Whether your car will be totaled is determined on a case-by-case basis like any other loss. Normally, when the cost of repair plus the salvage value equals or exceeds the actual cash value of the vehicle prior to the loss, it will be considered a total. A primary factor is the amount of water in your car. Generally, if water covered your dashboard or electrical components, the car will be totaled.
Q. My car was totaled due to flood damage and I have full coverage on it. The company is going to pay the Blue Book value but I still owe substantially more than that. Doesn´t the company have to pay what I owe on the auto?
A. No. The company is only obligated to pay the current market value of your vehicle. You can request that the adjuster explain to you how the value was derived to ensure that all of the vehicle´s equipment, features, upgrades and recent work was considered in determining the value. To cover the difference between the market value of your vehicle and what you actually owe, you would need an endorsement or separate policy, to provide Guaranteed Auto Protection (GAP) coverage.
Q. What will happen to the vehicle´s title if my car is totaled?
A. If you own the vehicle outright, you will have to sign the title over to the insurance company. In exchange, they will give you a check for the market value of the vehicle. If you still owe on a car loan, the insurance company will coordinate with you and your lender to have the title signed over to them. In most cases, the insurance company will establish contact with the lender and be advised of the amount owed on the loan. If the insurance company has determined that the market value of the vehicle is $10,000 and the amount owed the lender is $8,000, the insurance company will issue a check for $8,000 to the lender to release the lien on the car. The insurance company will then issue a $2,000 check to you to obtain your signature on the title.
Q. The insurance company requested that I tow my flooded vehicle to a specific location for inspection. Am I responsible for the towing charges?
A. No. The insurance company should pay the towing expense by reimbursing you or paying the tow truck operator once the vehicle is delivered at the inspection site. You should not be responsible for the expense since you are assisting the insurance company in a prompt inspection of your vehicle, as well as protecting it from further damage.
Q. The insurance company agreed to repair my vehicle. Can the company require the use of used parts?
A. In some cases, used parts and after market parts may be permissible, depending on the age, condition, and mileage of the particular vehicle. Most Texas personal automobile policies require the insurance company to pay the lesser of the following: actual cash value of the property; the amount to repair or replace the property with other of like, kind, and quality; or the amount stated in the declarations page of the policy.
Q. Since my car was flooded, I had to rent a vehicle. Does my auto policy cover the cost of renting a car?
A. Your policy will provide coverage for renting another vehicle only if you have an endorsement on your policy for Rental Reimbursement Coverage. Under this coverage, the insurance company will pay up to the limit shown on the endorsement for the reasonable amount of time it takes to repair or replace your vehicle.
Q. Is my vehicle covered for flood damage?
A. Only if you carry Other than Collision coverage, also called Comprehensive, coverage on your policy. This information can be found on your policy´s declarations page. If you do not have a copy of your policy, you may wish to check with your agent or company.
Q. What if I do not agree with the settlement offered by the insurance company, particularly the market value amount for my totaled vehicle?
A. Ask the adjuster to explain how the settlement amount was derived. If you still disagree, the Personal Auto Policy allows you to demand an appraisal of the loss. There is a specific provision in the policy for appraisal which lists the responsibility of both parties.
Q. My car was washed away in the flood. How do I find out where it is now?
A. Contact the Unclaimed Autos department of the area police department. Also, your vehicle may have been towed to a storage facility without your consent. If the vehicle was towed without your consent, and the storage facility wants to charge you a fee, you might contact the Texas Department of Transportation at 1-800-285-6997 (general information line).
Q. I´ve received a check from the insurance company, but am not satisfied with the amount. I plan to file a complaint to request additional funds be paid. Should I cash the check? If I cash the check, does it mean that I accept their decision and amount of payment?
A. Be careful about endorsing a check before discussing your concerns with the company. Call the adjuster or company first before cashing the check. Some companies have a release from further liability disclaimer printed on the back of the check.
Q. How does replacement cost coverage work?
A. Replacement cost coverage replaces or repairs your damaged property with new material and/or items of like kind and quality.
Q. Is replacement cost coverage available on all policy types?
A. Replacement cost coverage is not available under a typical auto policy. Some insurers provide new car replacement for a limited number of years if the auto is insured when new. You should check with your agent or company to see if they offer replacement cost coverage on all policy types.
Q. If an insured vehicle is financed, how are claim checks issued? If issued to both insured and lien holder, how does insured collect?
A. The loss payee endorsement requires the insurer to pay to the insured and the loss payee as their interest may appear. The insured and the loss payee may both be named on the check. The insured and the loss payee will agree on the release of funds.
Q. What is the insured´s recourse if the check made payable jointly to the lien holder and insured is sent directly to the lien holder and cashed without the insured´s knowledge or endorsement on the check?
A. That is a legal question that TDI cannot answer. However, your first step would be to contact the insurer and your lien holder. You can also contact the Texas Department of Banking at 1-877-276-5554 or visit their web site at www.banking.state.tx.us.
Q. What determines if a flooded vehicle should be totaled?
A. It is determined the same as any other loss. Normally, when the cost of repair plus the salvage value equals or exceeds the actual cash value of the vehicle prior to the loss, it will be considered a total loss.
Q. Does the insured have to agree to have their vehicle totaled if they will be "upside down" on their loan?
A. The policy contract states how the loss will be paid and it is the insurance company that decides whether or not to total a car. If the cost to repair exceeds the actual cash value, the company will pay the actual cash value of the vehicle. The insured and the insurance company may negotiate the settlement in which the insured may retain the salvaged vehicle; however the insured would be responsible for the cost of repairs at that point. Insurance coverage for the difference between the actual cash value of a vehicle and the outstanding loan amount can be covered by a GAP (Guaranteed Auto Protection) endorsement or a separate GAP policy.
Q. Describe how the title on an insured vehicle is processed if the vehicle is determined to be a total loss from flood damage or from collision damage.
A. For information about how titles are processed, please contact the Texas Department of Transportation at 512-465-7611.
Q. Are there different types of policies that provide coverage for mobile homes?
A. Yes, mobile homes may be written on a various types of policies, including a homeowners policy. The majority of mobile homes are currently written on a mobilowners policy. You should check with your agent or company to see what type of policy you have.
Q. Wind caused my tree to fall on my mobile home and damaged my roof. Does my mobilowners policy cover the damages to my home and would the company pay to remove the tree from my property?
A. If your policy provides coverage for windstorm it will pay for the damage to your roof. The tree itself will not be covered. Most mobilowners policies provide a limited amount of debris removal coverage. Some companies may provide an option to increase coverage. You should contact your agent or company regarding debris removal coverage.
Q. Does my mobilowners policy provide Additional Living Expense?
A. Most mobilowners policies provide some additional living expense reimbursement in the event the mobile home is damaged or destroyed from a peril or perils insured against by the policy and the mobile home is thereby rendered uninhabitable. Some companies may provide an option to increase this coverage. It is important that you contact your agent and/or company regarding your additional living expense coverage.
Q. My mobile home was flooded. Will my mobilowners policy pay for my damage?
A. Some mobilowners policies do provide coverage resulting from a flood. Other mobile home policies exclude flood coverage. It is important to check your policy and/or contact your agent regarding flood coverage for your mobile home.
Q. Can I make repairs to my property immediately?
A. Generally, you should make temporary repairs if necessary to protect your property from further damage. Do NOT make permanent repairs until an adjuster has inspected the damage. Your policy covers the cost of necessary temporary repairs, so save your receipts for materials and labor. You may wish to take pictures of the damage before making temporary repairs.
Q. What do I do if my home is uninhabitable?
A. If you can´t remain in your home because of loss from "a covered peril," your homeowners or renters policy will pay for staying in a hotel, motel or other temporary shelter. If the damage does force you to move, be sure to tell your insurer where you are and how to reach you by phone. Also, leave a note at your damaged residence telling the insurance adjuster how to find you.
Q. My home was not flooded by rising water; however, the sewer line backed up and caused damage in my home. Is this covered under my homeowners policy?
A. It depends on your policy. Some policies exclude water or sewage from outside the residence premises plumbing system that enters through sewers or drains. Contact your insurance company or agent regarding coverage.
Q. My house was flooded and I placed my furniture and household items in the front yard to dry out, but they were stolen. Will my homeowners policy cover this loss?
A. It depends on your policy. Even though there is an exclusion for flood losses, many policies contain an exception to that exclusion such as "We do cover an ensuing loss by theft or attempted theft or any act of stealing." Contact your insurance company or agent regarding coverage.
Q. My policy states that if a claim results from a weather-related catastrophe or a major natural disaster, each claim-handling deadline... is extended for an additional 15 days." Does this mean that I have coverage under my policy for damage caused by the flood?
A. This language does not alter or amend what is covered by the policy. It merely extends the time requirements of the Texas Insurance Code.
Q. Under a homeowners policy, who determines the cause of damage and who pays for an expert if one is needed?
A. The insurance company usually determines the cause of damage as its adjusters investigate and evaluate the loss. If an expert is required to determine the cause of the loss, the cost is usually borne by the insurance company, but in some cases may be paid by the insured.
Q. My house got water in it from the flood. I had damage to the roof and the roof is sagging and rain water came in through the roof. I don´t have flood insurance, but I do have homeowner´s insurance. What, if anything, may be covered under my homeowner´s policy?
A. If a covered peril such as wind or lightning caused damage to the roof and created an opening, then water damage to your home and personal property resulting from rain water coming through that opening may be covered under the standard homeowners policy.
Q. I´ve received a check from the insurance company, but am not satisfied with the amount. I plan to file a complaint to request additional funds be paid. Should I cash the check? If I cash the check, does it mean that I accept their decision and amount of payment?
A. Be careful about endorsing a check before discussing it with the company. Call the adjuster or company first before cashing the check. Some companies have a release from further liability disclaimer printed on the back of the check. The check may be a partial payment to initiate repairs. Additional funds may be released when you submit proof that repairs have been completed.
Q. How does replacement cost coverage work on policy types such as flood, homeowners, dwelling, and mobile home?
A. Replacement value is not available on the mobile owners policy; however, an agreed value is available. Replacement cost coverage replaces/repairs your damaged dwelling or personal property with new material and/or items of like kind and quality. In most cases, you should only be responsible for paying the deductible. Some homeowners and dwelling policies automatically include replacement cost coverage for the dwelling; others may be endorsed for an additional premium; and some may only provide actual cash value. You should check with your agent or company to see if they offer replacement cost coverage on all policy types.
Q. I´ve received a check from my company for damages to my home. It is going to cost more to repair than the amount received. Did they pay me enough for damages?
A. If you have replacement cost coverage, you should only be responsible for paying your deductible in most cases. If you believe your company is not offering an amount sufficient to repair/replace your damaged property, minus your deductible, you may want to request appraisal in accordance with the provisions in the policy. Have your company explain the basis for its payment and clarify if additional funds are forthcoming.
Q. What´s the difference between the different types of homeowner policies? How does a dwelling policy differ from a homeowners policy?
A. Homeowners policies may either provide "all risk" or "named peril" coverage. All risk is used to describe policies that typically cover all perils unless specifically excluded in the policy. Named peril means the damage must be caused by a peril that is specifically named or listed in the policy. The homeowners policy provides coverage for the dwelling, personal property, and personal liability. A dwelling policy provides coverage for the dwelling and/or personal property.
Q. Do checks from insurance companies have to be endorsed by both the insured and the mortgage company? Does the same procedure apply to mobile homes?
A. Insurance claims payments for damage to property that is security for a loan must be made payable to the policyholder and the mortgage company, so they would require endorsements from both parties.
Q. What recourse does the insured have if the check was issued directly to the mortgage company? How long can a mortgage company hold money before releasing any to the insured? Can the mortgage company disperse the money in small increments? Can they withhold disbursements?
A. Your insurance company cannot make a check for a claim payable only to the mortgage company. If they do, you should refuse to accept it and demand the check be re-issued to you and your mortgage company.
The Texas Insurance Code provides that the mortgage company must, within 10 days after they receive the insurance proceeds, tell you what their requirements are in order to have the funds released. Once you have provided sufficient evidence to show that you have met those requirements, the mortgage company has 10 days to release the funds.
Q. Are plumbing problems/backed up toilets covered by any types of insurance, even after a flood?
A. Some homeowners policies provide coverage for accidental discharge, leakage or overflow from within a plumbing system and if rising flood waters cause toilets to overflow, the loss may be covered. Contact your insurance company or agent regarding coverage.
Q: There is a power outage in my area and we have no utilities in our home. Will my policy pay for a hotel until power is restored?
A. Probably not. The policy will normally only provide loss of use coverage if your home is damaged by a peril covered in your policy and, as a result of the covered damage the residence premises is untenantable or unfit to live in. You must check the specific language in your insurance policy.
Q. What is the difference between a flood insurance policy issued by the NFIP and a policy issued by an insurance company? Does one provide better coverage than the other?
A. Flood insurance is provided by the federal government through the NFIP. The policies that are sold by insurance companies are NFIP policies sold through the Write Your Own (WYO) program. This is done to make it easier to purchase flood policies through local insurance agents. Even though the policies are purchased through the insurance companies, they are NFIP policies. Claims are handled by NFIP adjusters and by insurance company adjusters that are certified by the NFIP to handle flood claims. Questions and complaints can be referred to the NFIP at 1-888-225-5356.
Q. I bought my house several years ago and last year my mortgage was bought by another mortgage company. My original company provided flood insurance, but now I find that the new mortgage company did not provide it. What can I do?
A. Mortgage companies are required by statute to ensure that a property in a flood zone has flood insurance. A mortgage company must provide notice to the borrower of the requirement of flood insurance. If the borrower fails to purchase flood insurance, then a mortgage company may purchase flood insurance for the property. For information regarding the statute, contact the Federal Emergency Management Association (FEMA) representative at a Disaster Recovery Center (DRC) or the NFIP. Remember that it is important as a homeowner to ensure that all necessary insurance coverage is in place.
- If you have a concern about a private mortgage lender, you should contact the Federal Trade Commission (FTC) at 214-767-5501 or 5503. You may also reach the FTC at www.ftc.gov.
- If the lender is a state-chartered savings and loan, or bank, contact the Texas Savings and Loan Department at 512-475-1350.
- If the lender is a Federal Chartered Lender, contact the Office of Thrift Supervision at 972-281-2000.
- In some instances, the U.S. Department of Housing and Urban Development (HUD) can help. Call HUD at 1-800-669-9773.
Q. Wind caused my tree to fall on my house, which caused damage to my roof. Does my homeowners policy cover the damage to my house and pay for the removal of the tree from my property?
A. If your policy provides coverage for wind, the roof damage caused by the tree is covered. Homeowners policies will not pay for the tree itself; however, most policies pay to remove a tree if a covered peril caused it to fall on and damage covered property. Some policies limit the coverage for removal to $500 per tree and $1,000 per loss. Contact your insurance company or agent regarding coverage.
Q. My neighbor´s tree fell down on my house and damaged my roof. Will my neighbor´s homeowners policy pay for the damage to my home and remove the tree?
A. Probably not. Your neighbor is not legally liable for an act of nature. However, if the tree was dead, your neighbor may be responsible for the damage to your home. If your neighbor´s policy does not pay for your damage, you can make a claim under your policy if the peril that caused the tree to fall is a covered peril in your policy. You should contact your agent and/or company regarding the damage.
Q. Some trees blew down in my yard during a storm. Will my homeowners insurance policy pay for the loss to and removal of the trees?
A. No. Wind is not a covered peril for trees, shrubs, plants and lawns. Removal of the trees is not covered either since they did not fall on or damage covered property.
Q. A windstorm blew my fence down. Will my homeowners insurance cover loss of my fence?
A. If your policy provides coverage for wind, you may have coverage for the fence. Coverage for fences is usually limited to actual cash value which is the replacement cost for the damaged property less depreciation. Some policies do not provide any coverage for fences damaged by wind. You should check your policy and/or contact your agent regarding coverage.
Q. Who should I contact if I have damage to my home as a result of a windstorm and my windstorm insurance is provided through the Texas Windstorm Insurance Association (TWIA)?
A. For questions on policy coverage or filing a claim on your TWIA policy, please contact your insurance agent or contact the TWIA at 1-800-788-8247 or via their website at www.twia.org.
For questions regarding inspections of your property for certification to the Windstorm Building Code, please contact the Texas Department of Insurance Windstorm Inspection unit at 1-800-248-6032 or refer to the website at www.tdi.state.tx.us and click on More Windstorm Info.
Q. During the storm, a tree fell on the roof of my home which allowed rain to enter from the opening made by the tree. I now see mold growing - do I have coverage?
A. Most homeowners policies will provide coverage for the property damaged by rain that entered through an opening caused as a direct result of wind. Generally, mold is excluded in the homeowners policy; however, some policies will cover an ensuing mold loss caused by or resulting from covered water damage. Coverage for ensuing mold loss would include the reasonable and necessary costs to repair or replace your damaged property. Most policies do not include any additional cost for remediation or testing of ensuing mold unless your policy includes mold remediation coverage.
Q. During the storm, my home was flooded. Does my homeowners policy cover mold damage from the flood water?
A. Typically, homeowners policies do not cover damage caused by or resulting from flood, surface water, waves, tidal water or tidal waves, overflow or streams or other bodies of water or spray from any of these whether or not driven by wind. If there is no flood coverage provided in the homeowners policy, any ensuing mold loss resulting from flood would not be covered under the policy.
Q. Do I have to hire a public insurance adjuster to file and help in the settlement of my auto or homeowner's insurance claim?
A. No. Hiring a public insurance adjuster to assist you in filing a property insurance claim is optional. Public insurance adjusters charge fees to help negotiate claim settlements with insurance companies. Be aware that the public insurance adjuster fee is normally a percentage of the claim settlement and therefore is paid out of settlement monies received from an insurer.
Q. Are there any limitations on the compensation of a public insurance adjuster?
A. Yes, the following limitations apply:
- If a claim is settled within 72 hours of the date the loss is reported to the insurance company, the public insurance adjuster is entitled only to reasonable compensation for time and expenses.
- The public insurance adjuster's fee may not exceed 10 percent of a claim settlement and must be disclosed in the public insurance adjuster written contract.
Q. Is a public insurance adjuster permitted to be involved in the repair of damaged property for which the public adjuster negotiated settlement?
A. No. The public insurance adjuster may not participate, either directly or indirectly, in the reconstruction or repair of damaged property that is the subject of a claim adjusted by the public insurance adjuster.
Q. Are public insurance adjusters required to be licensed by the Texas Department of Insurance?
A. Yes, a person may not act as a public insurance adjuster in this state or hold himself or herself out to be a public insurance adjuster in this state, unless the person holds a license or certificate issued by the commissioner. You may verify the license status of a public insurance adjuster at http://www.texasonline.state.tx.us/NASApp/tdi/TdiARManager.
Q. The food in my refrigerator spoiled because of loss of power in my area. Will my homeowners policy pay for the loss?
A. Most homeowners policies will provide up to $500.00 for spoilage of refrigerated or frozen food caused by an off premises power failure, if the power failure is a direct result from peril covered in your policy. If the power failure is a result of physical damage to the dwelling or any equipment contained in the dwelling and is caused by a peril covered in your policy coverage is not limited to $500.00. Other policies may not provide the $500.00 for a loss resulting from a power failure off premises unless added by an endorsement.
Q. If I evacuate due to a storm, and my personal property is damaged or stolen while in another location, will my personal property be covered by my auto or homeowners policy?
A. Homeowners policies provide coverage for personal property while away from the insured location or premises. Most policies limit the amount of this coverage to either 10% or 20% of the total amount of coverage for personal property. Some policies limit theft coverage for personal property while away from the residence premises at any other residence owned by, rented or occupied by an insured, unless the insured is temporarily living there. Generally, a personal automobile policy will not cover personal property.
Q. How can I obtain insurance coverage to protect my home and contents from damage caused by flooding?
A. The National Flood Insurance Program (NFIP) makes flood insurance available to people who live in communities that participate in the National Flood Insurance Program. Contact your agent or the NFIP at 1-888-225-5356 to purchase a NFIP policy. The home need not be near a body of water or in a floodplain to qualify.
Q. Is flood insurance expensive?
A. The average flood insurance policy costs $300 a year for $100,000 of coverage. People in low risk areas can purchase flood insurance for just over $100 a year.
Q. Why would I buy flood insurance if my property is in a low or moderate risk area?
A. Twenty to twenty-five percent of all flood insurance claims come from low to moderate risk areas.
Q. Can I buy flood insurance if I rent?
A. You can buy up to $100,000 of flood insurance for your contents.
Q. How much flood insurance can I buy?
A. You can buy up to $250,000 for the dwelling and $100,000 for your contents.
Q. Does the policy provide any coverage for additional living expense?
A. No, the NFIP policy does not provide coverage for additional living expense.
Q. How is damaged residential property valued after a loss under an NFIP policy?
A. If the property is insured to at least 80 percent of its value and is your principle residence, the dwelling will be valued at replacement cost if the dwelling is replaced. If the dwelling is rebuilt at a new location, the replacement cost won't exceed what it would have cost to replace at the former location.
Contents, appliances, carpets and carpet pads and outdoor property are valued at actual cash value. Actual cash value is the cost to repair with new material of like kind and quality less depreciation.
Q. Is there coverage for the cost of debris removal? What about loss avoidance measures?
A. The cost of removing debris on your property, and the cost of removing debris of your property that is on someone else's property is covered, but it's subject to the limit of the policy. You will be compensated at the Federal minimum wage if you perform the work yourself. Loss avoidance is limited to $1,000 for the cost of sandbags, temporary levees, pumps and plastic sheeting and lumber, including the value of your work. An additional $1,000 is available for the cost of moving insured property to protect it from flood. These benefits do not increase the limit of insurance.
Q. If my automobile was parked on my property and damaged by flood, does the flood policy cover the damage?
A. No, automobiles are not covered property under the NFIP policy. If you have comprehensive or full coverage under your auto policy, flood should be covered by that policy. If you have liability only, there is no coverage for the auto.
Q. Does flood insurance cover damage to built-in appliances?
A. Check to see what flood insurance coverage you have. Then, call the NFIP at 1-888-225-5356 to determine what would be covered in a flood insurance policy. Generally, flood policies provide coverage for the structure and personal property. Built-in appliances may fall under either category.
Q. What coverage is available for commercial buildings?
A. Up to $500,000 is available for non-residential buildings, and an additional $500,000 for contents of non-residential buildings. Buildings and contents are valued at actual cash value.
Q. When does coverage become effective under an NFIP policy?
A. There is a 30-day waiting period before coverage goes into effect after an NFIP policy is purchased. However, there is an exception to the 30-day waiting period when a new policy is initially purchased in connection with a loan. In that case, the policy becomes effective at the time of the loan closing.
Q. What if my dwelling or commercial building is valued over the maximum limits available?
A. The insurance company that insures your commercial building for fire might add excess flood coverage. That coverage usually has the NFIP maximum limits as a deductible. Availability might depend on the Flood Zone of each location. There may be insurers that will write excess policies for dwellings over the $250,000 maximum limits. You should contact your agent to learn more about available coverage.
Q. Where can I get more information about flood insurance?
A. Check out www.floodsmart.gov and www.disasterinformation.org/disaster2/facts/flood_insurance/.
For more information contact: ConsumerProtection@tdi.state.tx.us
Texas Department of Insurance
