Emergency Preparedness – Insurance

Welcome to our Emergency Preparedness Blog Series! We hope you are enjoying this series. We know that it isn’t necessarily our “day to day” life or what you may consider super interesting, and we hope you will still continue to read and learn! Make sure you take a look at our other posts – if you haven’t already!

All right….before you zone out, you have made it this far into a post called “Emergency Preparedness – Insurance” which means you know that you should want to learn this. Whether or not it truly interests you, this is a topic that anyone who owns a house or would like to own a house in the future should know about. Believe me…just writing this is like writing a college paper or something…UGH! However, I’m sure you are an adult or are planning on adulting at some point in your life and therefore…it will add value to your life. I will say that I am certainly NOT an expert on insurance (though I did a short stint as a Front Office Manager for an insurance agency) so take this information as perhaps a springboard to become more educated on your own specific situation. This will not be about what insurance you should get but rather a chronicle of our experience so you can learn from what we went through.

To have insurance or not….that is the question. You may be required to have insurance or particular coverage on your home if you have a mortgage or if you live in a certain area. We own our home (see here) and therefore got to decide what sort of coverage we have on our home. If you don’t have any coverage on your home and there is a disaster, you will be responsible for any and all repairs that will need to be done.

So you own a home. You decide to purchase insurance. You speak to an insurance agent about the coverage and the cost. You live in an area prone to hurricanes. You learn that windstorm coverage is an additional $5000 that you do not have. You get new windows and hurricane shutters. You pray that that will be enough to provide the protection from massive damage to your home. You opt out of windstorm coverage on your insurance policy. A Category 5 hurricane hits your island. Your home sustains some damage. You KNOW you will not be able to file a claim with your insurance for the damage because it was caused by a windstorm.

Yes…this was our situation.

I knew that we would not be able to submit a claim but as soon as I could get out of the house and had service to make a call, I called our insurance agent anyway. I confirmed with him that, should we file a claim, we would not be approved due to insufficient coverage. He said that was correct and offered that I could still file if I wanted to. I decided to skip that step and went to apply for Federal assistance.

After a disaster, the governor of your state/territory can declare a state of emergency thus opening up the ability for the Federal Government to offer aid to the area. This is what happened here. There were FEMA (Federal Emergency Management Agency) workers on our island very quickly setting up stations around the island to assist residents in getting assistance. There was a phone number and a website. That was kind of funny because they kept sharing this number and the website over the radio while the majority of us had no service or connectivity. I finally took a day and went to a local restaurant where I could use their WiFi and filled out the necessary forms to apply for assistance. On the forms it asks whether I have homeowner’s insurance. I consider myself honest and so I put that I do – there was not a place to indicate that I DO NOT have windstorm coverage and hoped that I would at some point be able to inform someone of that.

FEMA sent a representative to come and take a look at our house and the damage. The representative was very kind and took down a lot of information. I told him that I had put that I had insurance and that I didn’t have windstorm coverage and asked if that would be confirmed with my insurance company. He said that they would. He also encouraged me to apply for an SBA (Small Business Association) loan as an added measure for help. Then he said I should receive information about the status within the week and was on his merry way in his rented blue jeep.

I received an email notice of denial – the next day, due to having homeowner’s insurance…Seriously?!

Once I saw the email, I immediately called FEMA. They said that I could appeal the decision. I would need to get a denial for a claim from my insurance company. OH. MY. WORD. Could we all just work together!? SOOOOO off I went to the insurance agency to file a claim so I could be denied so I could appeal to FEMA to see if they would help us out with the repairs. (Can you hear the carousel music too?)

When I got to the insurance agency I spoke with someone who was not the agent I normally worked with. They told me that the agency was working on a letter of denial that they would be giving to clients in order to give to FEMA. I was apparently not alone. They said the letter should be ready within the week and they would give me a call (or a text since I still had no service at my home). I gave them 2 weeks before I went back in. They said they were still not done with the letter.

At that point I decided to email my agent and find out more information about this denial letter. He told me that I should only need my declarations page indicating that there was not windstorm coverage on my home. I called FEMA to confirm this. They said yes, that would be fine. Nevermind that I had just wasted 2 weeks already taking a turn on this merry-go-round….I digress. I uploaded my declarations page to the FEMA website and waited. I am still waiting. I have given up all hope of FEMA helping.

Since all the other options had been used up… – we figured we would follow the encouragement offered by the FEMA inspector to apply for an SBA loan. We learned that when a state of emergency is declared the SBA (Small Business Association) can offer low interest rate loans for individuals to help with repair and recovery. Some individuals are even awarded a grant depending on eligibility.

Off I went again to locate WiFi and complete the SBA loan application. After many back and forth calls between Stewart and an SBA representative, here is what we learned:

We were eligible for receiving a very low interest loan (1.75%) IF we were willing to hand over the deed to our home so they could place a lien on the home.

NO. THANK. YOU. We had worked too hard to secure this home and we were not going to put it in any sort of jeopardy for the sake of fixing a few things around the house. We politely declined the offer and asked that our application be withdrawn.

Have insurance on your home in case of emergency because it is the right thing (and most responsible thing) to do. Am I sad that we didn’t have windstorm coverage? Sure. Will I add it to our policy and pay the extra $5000? Probably not. Our home did not sustain extreme damage with this disaster. I am not willing to “gamble” with $5000 in the event that we may or may not sustain the kind of damage that would be accepted by an insurance company to process a claim. You may think we are crazy. Our plan is to put a little bit aside each paycheck for things like home repairs in the event of a disaster. That is what we can do….and that will have to be enough. I will continue to ask “What else is possible?” and see what else might show up for us.