The record rains of Hurricane Irene and the remnants of the tropical storm that followed a week later left tens of thousands with water in their basements (including yours truly).  Others like those living along the Delaware River in Yardley and Morrisville, PA or those living along major streams like the Neshaminy in Langhorne experienced far more devastating damage from the flood waters.  Unfortunately, many homeowners with standard insurance policies will not be covered for these losses.  Flood insurance is typically provided through a separate policy under Federal Emergency Management Association (FEMA) guidelines and is only available to persons living in designated flood areas.  Even a wet basement will not be covered unless the homeowner purchased a separate rider for overflow of sumps.

If you did have the foresight to purchase the insurance, then your insurance company owes you a duty of good faith to settle your claim quickly and fairly.  Covered costs should include steps taken to mitigate or prevent further loss, for example, hiring a remediation company to remove soaked wallboard and carpets before mold forms.  Hopefully, you photographed the water damage before, during and after any remediation and kept receipts for all expenses incurred.  Your insurance company may ask for proof of the damage and receipts to substantiate your claim.

If the insurance company fails to respond, repeatedly asks for resubmissions or otherwise causes unreasonable delay, or denies all or part of a claim without a reasonable basis, the insurance company may be liable to the homeowner for “bad faith.”  “Bad faith” is defined as the unreasonable refusal to pay the proceeds of an insurance policy.  Damages for “bad faith” may include the policy proceeds denied, additional damages caused by failure to pay the proceeds (for example, money spent on lodging where the homeowner could not complete repairs and live in the home), attorney fees, and even punitive damages in egregious cases. 

If your insurance company is holding out on your claim, attorney review of your insurance policy and the insurer’s conduct will educate you on the merits of your claim and a letter from the attorney may very well expedite resolution.  DO NOT simply settle for the insurance company’s first offer (unless, of course, it is for the policy limits).  I guarantee you they will not willingly offer you full compensation for your damages on the first request.

Of course, the best way to be prepared for a natural disaster is to know what your policy provides before the disaster occurs.  Consult your agent and increase your coverage if necessary.  Being informed of what is and is not covered, and how to present and prove your claim to the insurance company, will save you time and money once the waters recede.