Tuesday, November 18, 2008
Lessons learned from home repairs
As regular readers will know, I've been engaged in extensive home repairs after a small house fire in August, followed by further damage caused by Hurricane Gustav in early September. It's been a long, exhausting process, but it's finally complete. The place looks great in its new coat of paint, with new carpet, window blinds and ceiling tiles to brighten things up.
I've learned a number of lessons about the aftermath of this sort of damage, and I thought you might like to hear about them. If (God forbid) you should end up with a similar problem, knowing about these things beforehand should make repairs and recovery a whole lot simpler.
It's really important to understand what your policy covers, and what it doesn't: also, any deductible amounts for particular sorts of disaster. As I mentioned in an earlier post, many insurance companies in hurricane-prone areas modified their policies in recent years, slapping a very large deductible (known as an 'excess' to readers in English-heritage countries) on storm damage before they'll pay out. I got caught by this to a certain extent, as my insurers (Lousiana Farm Bureau, or LFB) had done the same: but their deductible was still reasonably low. Other companies have imposed a much more severe deductible. One nearby family suffered roof damage during Hurricane Gustav, only to find out that their deductible for hurricane damage was now $8,000! That was more than the cost of replacing the shingles on their entire roof. They had to eat the storm damage costs themselves. Needless to say, they're not happy.
It's also important to check the reputation of your insurance company when it comes to assessing damage and paying claims. LFB have been outstanding in this regard, and I'm very happy with their service. Not only did their assessor approve every quote I obtained for repairs, but he also authorized a second, supplementary claim for several thousand dollars when certain repairs proved to be more expensive than originally estimated. Of course, I helped him by staying on top of the contractors at every step (see Section 2 below). Since I made the assessor's job easier, I think he went out of his way to do the same for me. I appreciate that.
However, other insurance companies have developed reputations (particularly since Hurricanes Gustav and Ike went through) of being slow to get assessors on site; slow to approve claims; quibbling about the amount of claims, often authorizing payments considerably less than the damages incurred; and being slow to pay out, even after authorizing a claim. Among some home-owners in my area, mentioning the words 'State' and 'Farm' in the same breath will produce a barrage of invective better suited to a particularly foul-mouthed dockhand! There are other companies with equally poor reputations.
It's worth checking on the experience of those living in your area, to see which insurance companies respond promptly, effectively and appropriately to damage claims. The Better Business Bureau, local Internet forums and chat sites, and readers' letters to newspapers are all useful sources of information. I'd choose your insurer only after checking those resources. If your present insurer proves to have a less-than-stellar reputation, it might be worth considering a change.
As I mentioned in an earlier post, there are lots of fly-by-night 'contractors' who appear after a disaster, offering repairs for what sounds like a great price. Unfortunately, most of them aren't licensed, bonded or insured, and many wouldn't know a hammer from a Hummer. A lot of them are also criminals, plain and simple, out to either extort money by threatening tactics, or actually breaking into homes and stealing what they can in the confusion following a disaster. I strongly recommend that you don't hire anyone who might fall into this category.
I was perhaps fortunate in that my house fire preceded Hurricane Gustav by a couple of weeks. I'd already lined up a contractor when Gustav arrived. In his immediate aftermath, you couldn't get a contractor for love or money! Fortunately, my contractor honored his prior commitment to me, and started work a couple of weeks after the storm (after asking me for a grace period to help home-owners who had holes in their roofs, or needed other emergency assistance, which I was happy to give him). However, in any widespread disaster, expect to have to do most urgent repairs yourself. That's just the way it is. Even today, three months after the hurricanes, it's still very hard to find a contractor in my area to do anything at short notice, and it'll probably stay that way well into the new year.
It also helps if you stay on top of everything, from quotation to completion. All the contractors involved in my repairs (five different companies, covering initial cleanup, general repairs, flooring, air-conditioning and plumbing) knew from the start that I'd be on site, supervising, inspecting and checking everything. Some of them weren't too happy about that: but, on the other hand, there were no problems whatsoever with work not being done to my satisfaction, or the wrong materials being used, or anything like that. It's worth being a pain in the posterior to your contractors (as politely as possible, of course). It keeps them honest.
If you have to be at work, and can't maintain that level of supervision, it might be worth asking a trusted friend to do it for you, or even hiring your own contractor to supervise the others. The latter option will cost more money, but I think your added peace of mind will be worth it. YMMV.
If you have a house fire, or serious storm damage, you can expect your life to be very disrupted for three to six months. If you have to move out while repairs are made, the hotel bills can mount up very fast indeed. I was spared that cost, because all our local hotels were full of hurricane evacuees who weren't going anywhere! Of course, that meant I had to live in my house, with all the disruption of repair work. That wasn't fun, and I don't recommend it: but I didn't have much choice. If I had to do it again, I think I'd consider renting a travel trailer, and park it outside my back door. If you can get one from FEMA on a temporary basis, that's also worthwhile: but that'll only apply in a disaster situation, and the supply may be limited.
This has been the biggest single problem for me. LFB's payout was sufficient to cover my repairs: but they wouldn't pay me directly. Because of their agreement with my bondholder, they issued the check, but I couldn't cash it. I had to sign it and send it to my bondholder. They released about a third of the funds to me, and held on to the rest. They won't release them until an inspector has certified that the repairs have been satisfactorily completed.
This has made it a nightmare to get everything done. The building contractor flatly refused to work unless he was paid weekly. I don't blame him, of course: he had staff to pay, materials to buy, and an unlimited demand for his services after Hurricane Gustav. However, I had to max out every credit line I have, and re-finance one major expense, in order to cope. If it hadn't been for the generous assistance of a few friends, who loaned me enough to make up the difference, my repairs would still be limping along. My bondholder informed me that they'd release the money in stages, if necessary, but only after completion of each stage - and the contractors concerned wouldn't do the work if they weren't guaranteed payment right away. They weren't prepared to wait for an inspector to approve their work. Guess where that left me?
This is made worse by the fact that any widespread disaster will overload the inspectors. I've been trying to get one to come to my home for almost a month, to certify that repairs are complete. After two broken appointments (without so much as a telephone call in explanation) I lost my temper, demanded to speak with a manager at my bondholder, and threatened all sorts of nasty things unless they did something about the problem. That produced results, and an inspector arrived yesterday. However, while waiting, I've been piling up interest charges on my credit lines, and those of my contractors who are still waiting for payment are getting rather rude. I don't blame them.
I've read a number of books and articles in which financial gurus tell you how to organize your life. Many of them suggest that you should have at least six months' expenditure in a savings account or other cash asset, to tide you over any emergency. After this experience, I'm now convinced that they're right - and I'll go further. I think it's worth trying to build up a one-year cash reserve. This may be very difficult for most of us (including me, at the moment), but it's a worthwhile objective. If disaster strikes, you'll be able to cope with it much more easily. Also, if you have to spend a lot on repairs in a hurry, it's great to have credit cards available, with a decent credit limit, that you're not using - or not very much, anyway. Because I try to pay off my credit card bills in full each month, I had access to their full credit line to pay for repairs. If I hadn't had that to fall back on, I'd have been stuck. Of course, I now have to use the insurance money to pay them off, plus the interest charges.
Finally, as Cheops' Law states, "Nothing is ever built on time or within budget": or, as the Fifth Corollary to Murphy's Law puts it, "Everything takes longer and costs more". This is particularly true of recovering from a disaster, and getting repairs done. Expect it, and you won't get too frustrated. If you're a person like me, who likes to work to timetables and organize everything . . . learn to chill out. You won't get anywhere chewing rocks in frustration because life isn't following your plan!
I hope these 'lessons learned' have been helpful. I hope I never again need to use the knowledge thus gained: but if I do, I'll be better prepared.