Almost every adult in the Houston area owns a car. Now hundreds of thousands of vehicles have been ruined by the torrential rainfall. This, added to the loss of life and staggering property and commercial damage, has become the worse natural disaster in the history of the United States.
Insurance companies have received more than 100,000 Harvey-related auto insurance claims. That number is expected to reach 500,000.
As car owners begin to review their policies, some might get an unwelcome surprise. Policies that seemed just fine at the time they were signed might actually exclude the types of damages caused by Harvey.
Unfortunately many car owners figured flooding was highly unlikely and opted for lower premiums instead of comprehensive coverage.
The thing about insurance is you have to predict what you might need and decide whether paying higher premiums is worthwhile. You could potentially pay premiums for a lifetime and never file a claim. Or, as with Harvey, your insurance might be a financial lifesaver. In many ways, it’s a gamble. But usually choosing the better coverage pays off.
Those Texans who have the minimum required liability insurance are not covered for Harvey damage. Liability policies only cover damage to other people’s cars involved in a wreck with you.
However Texans who carry comprehensive coverage may have a valid claim. Comprehensive auto insurance pays repair costs or, if the vehicle is a total loss, replacement value minus depreciation.
When you renew or buy new auto insurance, take the time to consider your options. For just a few dollars more each week, you can receive comprehensive coverage, uninsured/ underinsured motorist insurance (UM/UIM) and personal injury protection (PIP), which can change the outcome of an accident or natural disaster.
Whereas policyholders hope they will never have to file a claim, so do the insurance companies. The fewer claims they pay, the more profits they make. Be aware that rate increases may occur in Texas in the aftermath of Harvey as the companies pay their expenses and rebuild their capital.
To add to the suffering, September 1st was the first day for a new law that limits the liability of insurance companies which underpay or deny certain property damage claims in Texas. As the executor director of Texas Watch, a consumer group in Austin observed, “we fear that this disaster is going to be compounded by the man-made disaster of dangerous laws that make it harder to fight insurance companies when they wrongfully deny, delay, or underpay valid claims.”
Many wonderful organizations and people are helping those affected by the storm and it’s heartwarming to see Texans pitch in to help.
My firm has donated to these charities: