Tornadoes and severe storms sweep across the nation every year. Mother Nature can’t be stopped, but there are steps that real estate investors can, and in some cases must, take so that insurance coverage is not voided after a loss occurs. Real estate investors should heed the following tips to prevent bad from turning into worse.
What Immediate Steps Should be Taken After a Storm?
First, real estate investors need to know that,as an insured, they have a contractual duty to prevent further damage when a loss occurs at their property. Investors should check the section of their policy labeled “Duties in the Event of a Loss” for specific responsibilities. The items contained in that section are very sensible and reasonable, so they shouldn’t find any surprising requirements or be asked to do anything that any prudent person wouldn’t do in the event of a loss.
Some examples might include securing the property from unlawful entry after high winds and flying debris damage doors and windows, or putting a tarp on a roof that has been compromised by tree damage.
In any type of loss, property owners will usually be required to:
- Contact their insurance provider in a timely manner to advise them of the loss.
- Contact the authorities when appropriate.
- If a crime has been committed, file a police report.
- In the event of a fire, file a fire report.
- Take photos or videos of the damage, or both.
- Make any necessary temporary repairs to prevent further damage to the property.
- Set aside any damaged materials for the adjuster to examine.
- Save all receipts from any temporary repairs made.
- Get an estimate from a reliable contractor. (Obtaining several is advisable.)
Proactive Steps Real Estate Investors Should Take to Avoid Additional Loss at a Property
When it comes to the aftermath of storms, there are usually two main types of damage:
1. Damage to the property itself, such as broken windows, lifted or missing shingles or holes in the roof
or 2. Water … and lots of it. Quickly secure the property by using tarps or plywood to cover any areas where additional rain could enter the structure. This will help prevent further water damage and discourage thieves looking for easy access points to the property.
Any water damage can cause mold to grow rapidly, so property owners should act immediately to get wet items dried out.
Bring in fans, put furniture on blocks and remove area rugs from the floor. Tenants should be advised to clean clothing, linens, and other washable items that have been soaked as soon as possible. Take care around electrical appliances if the carpet or flooring is wet as these can cause shock hazards. If the water damage is the result of a flood, beware of dislodged materials from the investor’s property, such as nails. Lastly, rats, snakes, and other “creepy crawlies” may attempt to seek shelter in properties after a flood, so beware!
Be Aware of Scammers Wanting to Take Advantage
Unfortunately, there are unscrupulous people out there looking to take advantage of those who have just suffered a loss, especially after natural disasters. Real estate investors may not be able to avoid a storm, but can potentially avoid becoming a victim in the aftermath by simply being on their guard.
The Oklahoma Insurance Department recommends the following when hiring service providers after a disaster:
- Always be present when someone inspects a property. Companies may try to take advantage of investors and their insurance company by causing additional damage to increase the repair cost.
- Never pay a repair bill in full until the work is completed according to your contract with the provider.
- Anyone who offers to get more money for an insurance claim warrants additional caution.
- Always hire an established, licensed and fully insured company. Check the references they give.
- Reputable contractors should be able to provide their certificate of liability insurance. If they have employees, they should also carry worker’s comp coverage.
- To help ensure coverage is in force while the contractor is working, investors can ask to be added as an additional insured on their policy. If the policy lapses or cancels, they should be notified. In most cases, there is no fee to get added to the policy.
- Written estimates should include a detailed breakdown of the type and quantity of materials as well as hours of labor needed to complete the job.
- Please note: A property owner’s signature is NOT required to receive an estimate. Some scammers may use this tactic to trap clients into signing a contract.
- A formal repair contract should include approximate start and completion dates, as well as payment procedures. It also should guarantee that the contractor will secure any necessary permits.
- Fully read any warranty and be aware of any conditions that would void it.
- A bid that is substantially lower than other bids for the same scope of work is usually missing something significant. Review all bids carefully to ensure there aren’t items missing or unnecessary items added to the scope of work.
- High-pressure tactics can be a red flag. Don’t let the heightened stress following a loss cause you to rush the process of hiring a quality service provider.
Boarding a Property
When a storm compromises entry points like windows and doors, properly boarding up a property can help deter thieves and vandals. Find reliable board-up tips from the United States Fire Administration here: U.S.F.A. Board-Up Procedures.
Mold can set in very quickly when a property has sustained even small amounts of water damage. The EPA has a whole guide covering the causes of mold, cleanup guidelines and mold prevention and control tips.