My House Flooded in Harvey. What should I do?
Thousands of people have been displaced by the flooding associated with Hurricane Harvey – several of my friends and loved ones were rescued by boat or helicopter as their houses flooded. Tens of thousands of houses have been destroyed by the epic floods and people are wondering what to do and where to turn. This issue is personal to us – we are Houstonians – and we want to help. In conjunction with some of the best insurance coverage lawyers in the State, we will break down who is covered and who isn’t and what to do in each case.
Am I covered?
Recent statistics show that only 2 out of every 10 Houstonians have flood insurance. That means that 8 out of ten do not. Typical homeowner’s policies exclude flooding from coverage – and having reviewed several policies in the past couple of days, I can tell you there are few if any, loopholes in the typical homeowner’s policy for flooding. There are some potential claims I have identified with my experts that I will explain in our post “What if I don’t have flood insurance?”
All flood insurance is backed by the U.S. Government (FEMA), although it is sold through the same agents that sold you your homeowner’s policy. If you live in the 100-yr floodplain or “Special Flood Hazard Area” and you financed your home, you were likely required to have flood insurance. That is especially true if you have a federally-backed mortgage, like through FHA or VA. If you have flood insurance, please come back for our posts tomorrow that will focus on the folks that have flood insurance.
Regardless of whether you have flood insurance, do not have it, or don’t know, you should make a claim with your insurance company.
What if I am not covered by flood insurance?
More homes flood annually in Harris County than are destroyed by fire, according to the Harris County Flood Control District. And while almost every homeowner’s policy covers loss due to fire, the standard homeowner’s policy excludes flood damage from coverage. That means that between 80% and 90% of the victims of the Hurricane Harvey flooding do not have insurance coverage for their losses. With the average home value in Houston at nearly $200,000, not including lost contents, the cost to Houstonians of the loss due to flooding will easily run into the billions of dollars. Without help from somewhere, our citizens will have to pay for these costs out of their own pocket.
But the fact that your homeowner’s policy does not cover floods does not mean there are no other ways to recoup your losses without depleting your savings or bankrupting your family. First, do not assume that you are not covered – make a claim with your insurance company as soon as possible. And do it in writing if possible and save a copy of the correspondence. There is a lot of information, and misinformation, circulating about when to make your claim given the new insurance law that goes into effect on Friday. We have a post devoted to House Bill 1774 to explain what changes occur on Friday, September 1, 2017.
If you think not covered, again, make a claim anyway. If you truly are not covered by flood insurance, there are still ways you can get help finding temporary housing, repairing your house, replacing your contents, and recouping your other losses. First, there is help through FEMA. Here is a step-by-step list is taken from people and clients that have gone through this process recently:
You also may have other claims that need to be evaluated by a lawyer down the road, but FEMA and the SBA are the most reliable and quickest resources available to those that have no flood insurance – one of my friends, whose house is underwater, already got his first check from FEMA to help with living arrangements – four days after applying!
Is My Agent Liable for Failing to Offer me Flood Insurance?
Many Houstonians, faced with the catastrophic loss of their home and possessions in the floods caused by Hurricane Harvey, are wondering why they do not have insurance coverage for floods. Considering that more homes flood annually in Harris County than are destroyed by fire (according to the Harris County Flood Control District), it is legitimate to question whether your insurance agent owed you any duties with regard to flood insurance. Since flood insurance would have cost you about $10/month if you were outside the 100-year floodplain, it seems like a no-brainer that your agent suggests, or at least offer, the coverage. And that is especially true now that the average Houstonian is faced with hundreds of thousands of dollars in flood loss.
Because insurance companies have a strong lobby in our legislature, the law favors insurers over consumers. And recent changes to the law, going into effect September 1 (Friday), make the law even more favorable to insurance companies. But that does not mean that a good attorney cannot find a way to help consumers. And the best way to do that, in our opinion, is through the agents that should have offered you coverage. Those agents are employees of the insurance company in many cases and the insurance company can be held liable for their mistakes.
The law as it currently stands places very few duties on the insurance agent. “In Texas, an insurance agent owes the following common law duties to a client when procuring insurance: 1) to use reasonable diligence in attempting to place the requested insurance, and 2) to inform the client promptly if unable to do so.” Critchfield v. Smith, 151 S.W.3d 225, 240 (Tex. App. – Tyler, 2004). “No legal duty exists on the part of an insurance agent to extend the insurance protection of his customer merely because the agent has knowledge of the need for additional insurance of that customer, especially in the absence of evidence of prior dealings where the agent customarily has taken care of his customer’s needs without consulting him.” Id.
That seems to foreclose suits against insurance agents that failed to offer flood insurance, despite the obvious need to Houstonians. But we believe there are still viable claims to be made that could make the homeowner whole after a flood loss.
First, if your agent has a history of choosing your coverage and placing it without consulting you, you may have a reasonable expectation that he or she would secure flood coverage. If that is the case, you may be entitled to compensation for your loss.
There is a second way that Houstonians may recover their losses. It is possible that your agent created a warranty or misrepresented what coverage you had through his or her affirmative statements. You may have a claim if your insurance agent made any of the following representations and you relied on that advice:
• you don’t need flood insurance
• you have all the insurance you need in this policy
• this policy will protect you from any foreseeable loss
• you cannot get/do not need flood insurance because you are not in the floodplain
• you are covered in case of any natural disaster
• you have flood coverage (but don’t)
False statements of material fact, like those above, constitute violations of the deceptive insurance act and/or the deceptive trade practices act. And, if you do not have insurance to cover your loss because your agent said you did not need it, we may be able to recover for your losses. This is a fact intensive inquiry and not everyone will have a misrepresentation claim. Remember, the agent has no duty to offer you flood insurance, even if he or she thinks you need it. But they cannot say things that are untrue that you rely on, either. If you think your insurance agent misrepresented your need for flood insurance or the coverage afforded by the policy he or she purchased for you, you should contact a lawyer.