University of Minnesota Extension
www.extension.umn.edu
612-624-1222
Menu Menu

Extension > Family > Disaster Recovery > Getting Help Today

Settling a Property Insurance Claim

 

Rosemary K. Heins, Extension Educator – Family Resource Management

Reviewed July 2013.

Property owners carry homeowner's insurance to protect themselves from loss when a disaster strikes. Once the claim is being processed, don't be in a hurry to settle your claim. Often, people are so anxious to have their home restored after a disaster, they sign off on a settlement before damages are fully discovered.

Do not settle your claim until:

  • Your property has been thoroughly inspected by an insurance adjustor and repair contractor.
  • Estimate for all damages have been prepared and you fully understand them. You, your insurance adjustor and contractor should agree on needed repairs and estimates.
  • Advance insurance payments have been calculated, deductibles have been applied and you know the total amount of your settlement.
  • You have identified damaged items you are keeping and agree with salvage deductions.
  • You have identified any items that won't be repaired, but for which you will be paid an "appearance loss." An example of this would be hail-damaged siding.
  • And, you and your contractor understand any time limits for repairs, as required by the insurance company. Extensions usually can be granted with advance notice.

One last item of advice, contact a reputable and well-established firm or individual to have your damage repaired. Sometimes undependable workers enter a damaged area, make cheap repairs and leave before the resident discovers the repair was inadequate. Get recommendations and written contracts' for the work.

Don't become a victim again.

Records for a Disaster Insurance Claim

 

Rosemary K. Heins, Extension Educator – Family Resource Management

Reviewed January 2013 by the author.

With the exception of flooding, most property losses due to a natural disaster are covered by homeowner's insurance. If you have property damage you need to contact your insurance agent to report the loss. The sooner you talk to an agent, the sooner your claim can be filed and an adjuster will look at your damage. Find out when the adjuster will visit.

Protect your property from further damage or theft. Patch roofs temporarily. Cover broken windows with boards or plastic and move household items out of the weather to a safe storage location. Take pictures of the damage beforehand if possible.

Accurate records will help you go through the recovery process. Include a list of all cleaning and repair bills, including materials, cost of rental equipment and depreciation of purchased equipment.

Maintain a list of all disaster-related living expenses, including motel and restaurant bills, home rental and car rental.

List all actual losses, including furniture, appliances, clothing, paintings, artifacts, food and equipment, regardless of your intent to replace the items. Try to document the value of each object lost. Written and videotaped household inventories, bills of sale, check and charge account records and insurance evaluations are good evidence. If you don't have these records, estimate the value and give purchase place and date of purchase.

Photograph damaged property. These pictures can also be used for tax deduction evidence.

Good records save a lot of headaches even when disaster doesn't strike you. But if it does, know what to do that will help you with the insurance claim process.

Income Tax Deductions for Property Loss

 

Rosemary K. Heins, Extension Educator – Family Resource Management

Reviewed January 2013 by the author.

Dealing with property loss after a disaster, like a flood or tornado, is a challenge. However, property losses from natural disaster are tax deductible. Such deductions, which are allowed for partial or total loss of personal or business property, could greatly reduce the amount of federal income taxes owed for the year the disaster occurred.

If you claim a theft or casualty loss resulting from a disaster you may be asked to show:

  • The kind of disaster and when it occurred;
  • The damage was direct result of the disaster;
  • That you were the owner of the property;
  • For business and rental property, your income tax basis in the property. In general, this is the original cost of the property plus the cost of any improvements before the loss, minus depreciation claimed for income tax purposes.
  • Fair market value before and after the disaster; and
  • Any insurance benefits or other compensation received including free repairs, restoration and clean-up from any disaster relief agencies.
  • Be sure to keep for documentation any before-and-after photographs, receipts from both cash and credit transactions, check and debit card statements, deeds, purchase contracts and professional statements. This is good supporting evidence for casualty claims.

For more details, contact your local tax preparation professional for advice. IRS offices and their website, www.irs.gov has more information on casualty losses, too.

Disaster Recovery

Getting Help Today

Have you and your family recently experienced a disaster? These resources are here to help.

AnswerLine — Answers basic household questions around disaster recovery like how to clean up mold and prepare food safely. Also gives referrals to University of Minnesota Extension Educators who can guide you through financial decisions related to disaster recovery. From Minnesota, call 1-800-854-1678 (hours: 9 a.m. – noon and 1 p.m. – 4 p.m., Monday through Friday) or send an email: answer@ia.state.edu.

Crisis Connection — Crisis counseling hotline for anyone calling from a Minnesota area code. Call 866-379-6363.

Farm Information Line — Answers general farm-related questions including what to do after a flood. From Minnesota area codes, call 1-800-232-9077 (hours: 8:30 a.m. – 1:30 p.m., Monday through Friday; voicemail available after hours) or email: fil@umn.edu.

Minnesota Farmer Assistance Network (MFAN) — Minnesota Department of Agriculture — Hotline staffed by veteran financial analysts who help producers facing crises. Includes referral services for lenders, farm business management instructors, and extension educators as well as legal advice and crisis counseling. Call 1-877-898-MFAN (6326) or email: mfan.mda@state.mn.us.

Financial Recovery From a Disaster: Where do I Start? (352 K PDF) — University of Minnesota Extension and Lutheran Social Service of Minnesota — Easy-to-use checklists for things to do before and after you return to your property.

Tax Deductions and Insurance Claims

Income Tax Deductions for Property Loss (audio; 1:56) — Deductions, which are allowed for partial or total loss of personal or business property, could greatly reduce the amount of federal income taxes owed for the year the disaster occurred.

Settling Property Insurance Claims (audio; 1:50) — Don't be in a hurry to settle your claim. Often, people are so anxious to have their home restored after a disaster, they sign off on a settlement before damages are fully discovered.

Records for a Disaster Insurance Claim (audio; 2:02) — Good records save a lot of headaches even when disaster doesn’t strike you. But if it does, know what to do that will help you with the insurance claim process. Transcript

Extreme Weather — How to manage in a drought, prepare for and recover from floods, and more.

  • © 2014 Regents of the University of Minnesota. All rights reserved.
  • The University of Minnesota is an equal opportunity educator and employer. Privacy