Homeowners, insurers often evaluate damage differently

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It looks simple enough.

A homeowner visits an insurance agent or an insurance company's Web site to obtain an insurance policy on the dwelling. The agent or company provides information about what the policy does and does not cover, what the policy limits are based on the home, its contents, liability limits and other factors. The homeowner is quoted an annual premium and, if all goes well, the policy is signed and goes into force.

Fast forward a few years. One day a washing machine pipe snaps and water goes everywhere. The adjuster visits the home, the problem is fixed, and the insurer pays the claim. All is well.

A few more years pass, and then it happens. A tornado blasts through the homeowner's neighborhood and the home suffers serious damage. This time the homeowner is one of 50 whose homes suffered varying amounts of damage from the twister.

Now it takes the adjuster two days to get into the damaged neighborhood and the homeowner meets the insurer's representative with half the roof ripped off, a wall is partially down from the side of the house and several windows are blown out, with rooms soaked by the rain and damaged by debris blown in by the twister.

The homeowner and the insurer are putting their relationship to a much more complex test than when the washing machine pipe ruptured. All is not well. The homeowner realizes the property has been damaged by a major tornado. The insurer's representative sees that there is serious damage, but the homeowner sees something else.

The home is ruined and can't be fixed back like it was before the storm. That's likely a reasonable perception of the homeowner while looking at the battered home and property. The adjuster may see significant damage, but not enough to raze the home and rebuild. The insurer and the insured are now on opposite sides of the situation and its resolution.

This brief example has been played out across the South, the Midwest and the Northeast in the last few weeks as an unprecedented number of tornadoes caused damage in the billions of dollars.

Let's take a step back and look at what the insurer and the insured agreed to when they decided to become "risk partners." The insurer assumes the risk of providing financial protection for the property and its contents as defined in the policy. The insured agrees to accept the protection provided by the policy's terms. This is, after all, a legal contract between the company and the homeowner.

The essence of the policy provides that the homeowner will be indemnified, or returned to the pre-disaster state of the property.

What sometimes happens is that the homeowner does not have the experience of the insurer as to what damage can properly be repaired versus what damage requires the demolition of the home and its rebuilding. As with anything, emotions can impair our judgment.

Insurers and remodelers understand what it takes to restore a property to its original condition versus tearing it down and starting over. Structural engineers are schooled in knowing how to differentiate serious damage from damage that is beyond repair.

I've seen many damaged and destroyed homes, but like most of us, I'm not qualified to say which is which in order to return a property to its original condition. Sometimes, homeowners have difficulty understanding the science of rebuilding.

The immediate haze of a disaster's destruction can create the emotional perception that once a property is damaged it cannot be repaired.

The term rebuild has at least two outcomes. To rebuild a destroyed home is literally to clear the property and start over. To rebuild a damaged home that structural engineers determine is repairable means to literally fix what's broken and rebuild the damaged portion of the structure into the undamaged portion.

Working with one's insurer is, by policy agreement, a partnership where the two work together to restore the dwelling to its original state in one manner or another.

DAVID COLMANS IS THE EXECUTIVE DIRECTOR OF THE GEORGIA INSURANCE INFORMATION SERVICE. CONTACT HIM AT (770) 565-3806 OR DCOLMANS@GIIS.ORG.


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