Texas’ winter storm fiasco shows why some homeowners should rethink their own coverage

Photo (c) Dimitri Otis - Getty Images

If all else fails, bringing up ‘bad faith’ can get an insurance adjuster's attention

The winter storm that recently shook Texas may be an aberration for the Lone Star State's typically mild winter, but it put both homeowners and insurers in a tough spot when it came to resolving the damage. The Insurance Council of Texas said it anticipated that hundreds of thousands of claims for water damage, leaking roofs, fallen trees, and auto accidents would be filed, and that one single week was the costliest in the state's history.

But a more profound pain may be waiting for Texans seeking insurance relief for their damaged homes and property: will I be protected?

Spring promises more bad weather and potential problems for homeowners

What happened in Texas can happen anywhere. In fact, Mother Nature has already started her move from winter to spring, and with that comes flooding and tornado season. Tornado activity is forecast to be slightly above normal this year, with the number of tornadoes expected to hit somewhere between 1,350 to 1,500, according to AccuWeather meteorologists. The mid- to lower-Mississippi Valley and the mid-Atlantic regions will have the highest risk for severe weather this spring, and activity can last well into June across the Plains.

A study from last year found that 14 million homes in the U.S. have a higher chance of being affected by flooding than they might think. That could result in millions of dollars in damages if they’re not covered.

When it comes specifically to floods, ConsumerAffairs has prepared a guide on flood insurance with added tips, expert opinions, and brand comparisons. You can find that guide here.

Getting ahead of the problems

ConsumerAffairs reached out to insurance law expert John Kelly of the Kelly Law Team to determine what consumers should look for in getting coverage for potential flood or wind damage. Here's what we found:

What should someone look for regarding the language of a homeowner's insurance policy? "The language of your homeowner's policy is important, especially when you need it the most when disaster strikes. In the wake of the historical power outages in Texas, homeowners need to understand how to protect themselves," Kelly told ConsumerAffairs.

"If you look closely at the insurance industry, you know that insurance companies like to mitigate their own risk of costly payouts during disasters. Homeowners can take some simple steps to ensure they have the best chance of getting coverage in the future if disaster strikes again."

What should be at the top of every homeowner's checklist? Kelly told ConsumerAffairs that the first step is to make sure you are covered. "You may be surprised to hear that there are countless claims denied because the insurance policy has lapsed due to lack of payment or failure to renew. Many people who have set up autopay options forget to update the insurance company when they get new credit cards or change banks. This can result in unexpected policy terminations and therefore a denial of coverage."

Is there specific documentation a homeowner should have? After making sure you’re covered, Kelly says to request a copy of your homeowners' policy from your insurance company -- and be prepared because it could be dozens of pages long. 

"You should read it carefully and be sure to understand it to the best of your ability. There may be exclusions in your policy that may restrict the types of damage you thought would be covered. For instance, many policies exclude flood damage unless you specifically elect to include the additional coverage under the policy," Kelly said.

How do homeowners know if they are covered for all the various weather scenarios? "If you are uncertain, call your insurance company, and talk about some scenarios that you expect to be covered. For instance, tell them that you want your insurance to include any damage from power outages, including water and fire damage," Kelly said. 

"Ask them to refer you to any exclusions in the policy that may apply. Watch out for 'Force Majeure'* clauses that may give an insurance company a reason to deny coverage during unexpected circumstances.  (*"Force Majeure" clauses are provisions that are common to contracts. In essence, they free both parties from any obligation if an extraordinary or unpredictable event -- like a tornado -- prevents either party from fulfilling their obligation.)

What does a homeowner do if their coverage is denied? If that happens, Kelly says to consult with a local attorney who focuses on "insurance bad faith claims." "They may be able to direct you to a winning argument, but they may also have other resources for recovery such as Federal funding through FEMA," Kelly said.

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