The Morning After the Storm:
The day after a storm, you do not want to regret wishing you had read your homeowner’s insurance policy more closely but that is exactly what happens particularly if you have insured direct with an insurer rather than use a Broker. It is then you learn that even though you saved lots of money with such a cheap product, you do get what you pay for. With major Storms comes wind and water damage claims resulting in a huge number of claims being lodged all at the one time. All wanting to be dealt with and paid out straight away.
There are often questions and disputes about whether damage was caused by excessive rain, wind or flooding. Homeowners often find themselves being told that damage to their home is not covered because it was caused by flooding, which is not generally covered in homeowner’s policies. With many insurers, you need to specifically request the policy to be extended for flood insurance for that.
But here is the difficulty. After much pressure from the Federal Government, many insurers now automatically include Flood cover but they will cost this risk. In many instances, this pushes the cost of insurance much higher causing the Insured to seek out cheaper cover elsewhere.
With Direct Insurers, they will not advise you about how their policy compares to their competitors. To do so will mean they have to put this advice into a “statement of advice” (SOA). They are also meant to complete a “needs analysis” to justify their advice. Too much work that adds to too much costs. This will add to the price of cover. It is better to warn you that they will not give you any advice, that they will only give you the facts about their cover, it is up to you to ask the questions about the policy. They will certainly not tell you what is wrong with their product.
So if you are not getting any advice at the time of taking out the policy, what do you expect when you come to make a claim?
The storm damage claims are the less black and white areas of claims. Disputes often erupt about whether the water that caused the damage was the result of flooding or whether it was wind-driven, in which case the damage generally would be covered.
If you use an Insurance Broker, they negotiate this area for you and this is why so few claim disputes occur when you have a professional expert on your side making sure the insurers are playing fair.
It is natural for Insurance companies to seek to reduce claim payouts. The more they save, the more profitable and competitive they can be. You cannot assume they are willing to part with their money willingly or easily. They are accountable too.
This is another reason why using an Insurance Broker who acts for you is so important.