Homeowners & Renters

Awareness Notification to Homeowners Regarding Corrugated Stainless Steel Tubing (CSST)

 

The National Association of Insurance Commissioners (NAIC) is launching a campaign to bring awareness to homeowners the importance of proper bonding of yellow corrugated stainless steel tubing (CSST) due to potential damage risks associated with lightning. Please check out the following links for additional information regarding CSST:

Consumer Resources


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Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department.

Listed below are some common homeowners insurance definitions.

Actual Cash Value: Replacement cost less depreciation, considering the age and condition of your property.

Additional Living Expenses: Pays expenses over and above your normal living costs (motel rooms, restaurant meals, and laundry service) while your home is being repaired or rebuilt after damage from an insured loss.

Agent: A representative who sells insurance for one or more companies.

Application: A signed request for insurance, giving information about the prospective policyholder

Appraisal: An evaluation of your property.

Binder: A temporary or preliminary agreement, which provides coverage until a policy can be written or delivered.

Broker: A licensed person or organization you can pay to shop for insurance on your behalf.

Builders Risk: Coverage for a home under construction. Claim payments are based on the percentage completed at time of loss. This coverage must be changed to a homeowners policy upon completion of the building.

Cancellation: Termination of a policy before its normal expiration date.

Claim: Your request for the insurance company to pay you an amount under the terms of your policy.

Claims Adjuster: A person an insurance company hires to settle claims. The adjuster could either be a company employee or under contract with the company.

Coinsurance Clause: An agreement with the insurance company in which you agree to carry insurance on your property in an amount equal to a certain percentage of its actual cash value.

Covered Expenses: The losses or conditions the policy will pay for.

Deductible: The dollar amount you must pay out-of-pocket for each claim before the insurance company begins paying.

Depreciation: Decrease in home or property value due to age or wear and tear.

Earthquake Insurance: A type of catastrophic coverage available for an additional premium to repair or replace your property/personal belongings when damaged by an earthquake. Standard home insurance policies do not cover earthquake insurance.

Endorsement: Amendment to the policy used to add, change, or delete coverage. Also referred to as a "rider."

Exclusions: Specific situations or circumstances listed in your policy describing when benefits will not be paid. Typical homeowners insurance exclusions are earthquake, sewer backup/sump pump failure, ordinance or law, and intentional loss.

Floater: Additional coverage for personal property such as jewelry, artwork, or antiques not otherwise included in the homeowners policy, or included for a nominal coverage amount. The coverage "floats" or moves with the property. Also called "Scheduled Personal Property Endorsement."

Flood Insurance: A type of catastrophic coverage available for an additional premium to repair or replace your property/personal belongings when damaged by rising water. Standard home insurance policies do not cover flood insurance. If your property is located on a flood plain, your lender may require you to purchase flood insurance.

Full Replacement Policy: A homeowners policy that pays the full replacement cost (up to the policy maximum) to repair or restore damaged property.

Guaranteed Replacement Cost Coverage: Endorsement that lets you replace your home without subtracting for depreciation, even if it costs more than the policy limit. Most companies limit the guaranteed replacement cost to 125%.

HO Forms: Homeowners insurance polices are sometimes referred to by the kind of form used and the specific perils they cover. Examples are HO2, HO3, HO4, HO5, HO6, and HO8.

Home Inventory: A detailed list of personal possessions and any information (including pictures or videos) that could help identify lost or destroyed items.

Illinois FAIR (Fair Access to Insurance Requirements) Plan: A not-for-profit property insurance association that offers insurance to individuals who have been refused coverage by at least three insurance companies.

Illinois Insurance Guaranty Fund: A fund that pays an insurer's claims when the company is insolvent. All Illinois-licensed insurance companies belong to the Illinois Guaranty Fund.

Inflation Guard Endorsement: A special endorsement that increases the face amount of a homeowners policy on a regular basis to compensate for the increasing costs of home construction.

Inspection Report: A report filed by an individual employed by the insurance company or credit agency, giving general information on the physical condition of the property.

Insured: The policyholder or person(s) protected in case of a loss/claim.

Insurer: The insurance company.

Lapsed Policy: A policy that has terminated for non-payment of premiums.

Liability Coverage: Insurance protection that pays for claims or judgments brought against the insured.

Market Value: A real estate term for the current value of your home if you were to sell it. Market value includes the price of land, and is not generally used when settling insurance claims.

Mine Subsidence Insurance: Pays when an underground mine shifts, causing damage to your property. Insurance companies must offer mine subsidence insurance in counties where mines are under one percent or more of the land. Underground mines are common in central and southern Illinois, but other areas of the state may be affected as well. You must sign a rejection form to remove this coverage if you live in a county where mine subsidence insurance is required.

Non-Bound Application: There is no coverage involved and you pay no money. The insurance agent submits the application to the company to find out whether or not you will be accepted.

Non-renewal: A notice of the insurance company’s refusal to renew your policy prior to the end of the policy term.

Peril: Event causing damage to your property (for example: fire, tornado, theft, or vandalism).

Personal Property: Personal belongings such as furniture, appliances, clothes, jewelry, and bicycles.

Private Mortgage Insurance (PMI): Insurance that provides financial protection to your lender if you default on your mortgage payment. By purchasing PMI, a homebuyer may be able to obtain a mortgage with little or no down payment.

Policy: The contract form issued by the company to explain the coverage provided. It is a legal document.

Premium: The price charged for insurance.

Public Adjuster: A person you can hire to help settle a claim with an insurance company. A public adjuster may be hired to handle a complex or difficult loss negotiation. Generally, the public adjuster receives a percentage of the settlement reached. In Illinois, a public adjuster must be licensed with the Department of Insurance.

Real Property: Property considered to be immovable, such as land and things affixed to it.

Replacement Cost: A determination of the cost to replace contents, rebuild your home, or repair damages with materials of like kind and quality, without subtracting for depreciation.

Settlement: After negotiating, the amount you accept from the insurance company as full payment for your loss.

Sewer Back-up and Sump Pump Overflow Coverage: Coverage available for an additional premium to your homeowners insurance policy that pays for damage to your finished basement caused by water or waterborne material which backs up through a sewer, drain or overflow or is discharged from a sump pump overflow. Water seepage is not covered.

Title Insurance: Protection against any defect in the title to your property. Title insurance can be paid for by either the buyer or seller and is usually paid for when the home is purchased.

Umbrella Liability Insurance: A policy that "floats" above your other coverage. You must carry a certain amount of underlying liability coverage before you may buy an umbrella policy. This coverage kicks in if you are sued for an amount greater than the limits of your homeowners policy.

Watercraft Endorsement: Applies to small motorboats and sailboats and broadens your personal liability and medical payments coverage on them. If your watercraft exceeds a specified length, you will need a separate boat owners or yacht policy.

For More Information

Call our Consumer Assistance Hotline Toll Free at (866) 445-5364 or visit us on our website at http://insurance.illinois.gov

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Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department.

If your homeowner's insurance company terminates your policy without your permission, your company has certain duties and you have certain rights. A company may terminate a policy without your permission in three ways:

  1. rescission - when the company voids your policy back to the beginning. There is no coverage at all and the company will return the money you paid;
  2. cancellation - when the company terminates your policy before the expiration date;
  3. nonrenewal - when the company terminates your policy at the expiration date.

A company's duties and your rights differ depending on whether your policy is rescinded, canceled or nonrenewed. This fact sheet explains what happens when your policy is being canceled before its expiration date.

Reason for Cancellation

During the first 60 days of a new policy, your company may cancel for almost any reason. Illinois law allows companies 60 days to look at your risk and decide whether they want to issue you a policy.

If a check, credit card charge, or money order given for the initial premium payment is not processed due to insufficient funds, the new policy may be considered null and void and cancellation provisions will not apply. After your new policy has been in force more than 60 days, or if you have a renewal policy, your company may only cancel you for one of the following reasons:

  • if you fail to pay the premium by the due date;
  • if you obtained the policy through misrepresentation or fraud; or
  • if there is an increase in the risk originally accepted.

If the company cancels your policy because the property condition has declined and it believes the risk originally accepted has increased, the company must allow you time (not more than 90 days) to make required repairs.

Effective January 1, 2003, an insurer is prohibited from canceling your homeowners policy solely on the basis that one or more claims have been made against any policy during the preceding 60 months for a loss that is the result of a hate crime committed against the person or property insured if the insured provides evidence to the insurer that the act causing the loss is identified as a hate crime on a police report.

Notice

The company must send you a written notice explaining why it is canceling your policy. The notice must also explain two important items:

  1. You have the right to appeal the cancellation as explained below under Hearing Rights.
  2. You may be eligible to buy insurance from the Illinois FAIR Plan Association if you cannot find coverage elsewhere.

Mailing Time

The company must mail a cancellation notice to you at your last known mailing address, so it is important for you to notify your insurance agent or company if you move. The company must mail your cancellation notice:

  • at least 10 days before the cancellation date for nonpayment of premium;
  • at least 30 days before the cancellation date for all other reasons.

The company must keep proof that it mailed your notice, but it does not have to show proof that you received it.

Hearing Rights

If you believe your company failed to follow the required steps when it canceled your policy, you may appeal the cancellation to the Director of Insurance. To do so, you must:

  • have been canceled for a reason other than nonpayment of premium;
  • mail or deliver your written request for a hearing to the Department of Insuranceat least 20 days before the cancellation date, explaining in detail why you believe the company has improperly canceled your policy.

If your hearing is granted, we will send you written notice about the time and date of the hearing.

For More Information

Call our Consumer Assistance Hotline Toll Free at (866) 445-5364 or visit us on our website at insurance.illinois.gov


Disponible en Español

Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department. If your homeowner’s insurance company terminates your policy without your permission, your company has certain duties and you have certain rights. A company may terminate a policy without your permission in three ways:

  • rescission - when the company voids your policy back to the beginning. There is no coverage at all and the company will return the money you paid;
  • cancellation - when the company terminates your policy before the expiration date;
  • nonrenewal - when the company terminates your policy at the expiration date.

A company’s duties and your rights differ depending on whether your policy is rescinded, canceled or nonrenewed. Furthermore, your rights and your insurer’s responsibilities depend upon the nature of the policy, as well as the length for which the policy has been in effect. This fact sheet explains what happens when your private homeowner’s insurance policy is being nonrenewed at its expiration date.

Is My Policy a Private Homeowner’s Policy?

A private homeowner’s policy is sometimes referred to as a “policy of fire and extended coverage insurance.” These policies cover real property that is used principally for residential purposes, usually including a building that houses up to 4 families. Typically, the policies also cover any household or personal property that is commonly used for daily life. If your policy is not for residential purposes, but rather covers a commercial building, the following information may not be applicable.

Why Can My Insurer Nonrenew My Policy?

A company may nonrenew your private homeowner’s policy for different reasons depending upon the duration that your policy has been in force. If your policy has been continuously active less than 5 years, please see Nonrenewal of Private Homeowner’s Insurance Policy Active for Less Than 5 Years.  If your policy has been continuously active for 5 or more years, please see the appropriate section below labeledNonrenewal of Private Homeowner’s Insurance Policy Active for 5 or More Years.

Nonrenewal of Private Homeowner’s Insurance Policy Active for Less Than 5 Years

Reason for Nonrenewal

A company may nonrenew your homeowner’s policy for any reason except age or location of the property, or the age, gender, race, color, ancestry, marital status or occupation of the occupants.

If the company nonrenews your policy because the property condition has declined, the company must allow you time (not more than 90 days) to make required repairs.

A company is prohibited from nonrenewing your homewowner's policy based solely on credit report information. If credit information from your credit report is used to nonrenew your insurance policy, the insurer must provide you with the name of the national credit bureau that supplied the information so that you can get a free copy of your credit report. For more information about credit scoring, see our fact sheet entitled Understanding How Insurers Use Credit Information.

Effective January 1, 2003, an insurer is prohibited from nonrenewing your homeowner’s policy solely on the basis that one or more claims have been made against any policy during the preceding 60 months for a loss that is the result of a hate crime committed against the person or property insured if the insured provides evidence to the insurer that the act causing the loss is identified as a hate crime on a police report.

Notice

The company must send you a written notice explaining why it is nonrenewing your policy. The notice must clearly articulate the specific reason(s) for nonrenewal. The company may not simply state “fraud” or “misrepresentation,” but rather provide factual basis for such reason(s). The notice must also explain two important items:

  1. You have the right to appeal the nonrenewal as explained below under Hearing Rights.
  2. You may be eligible to buy insurance from the Illinois FAIR Plan Association if you cannot find coverage elsewhere.

Note: If your insurer merges or restructures with another company, or if your insurer reclassifies your policy (possibly due to an excess of claims), the company must mail you a notice about the change 60 days prior to a change in your policy.

Mailing Time

The company must mail a nonrenewal notice to you at your last known mailing address, so it is important for you to notify your insurance agent or company if you move. The company must mail your nonrenewal notice:

  • At least 30 days before the nonrenewal date if the policy has been in force less than 5 years

The company must keep proofthat it mailed your notice, but it does not have to show proof that you received it.

Hearing Rights

If you believe your company failed to follow the required steps when nonrenewing your policy, you may appeal the nonrenewal to the Director of Insurance. To do so, you must mail or deliver your written request for a hearing to the Department of Insurance at least 20 days before the expiration date, explaining in detail why you believe the company has improperly nonrenewed your policy.

If your hearing is granted, we will send you written notice about the time and date of the hearing.

For More Information

Call our Consumer Services Section at (312) 814-2420 or our Consumer Assistance Hotline toll free at (866) 445-5364 or visit us on our website at http://insurance.illinois.gov/

Nonrenewal of Private Homeowner’s Insurance Policy Active for 5 or More Years

Reason for Nonrenewal

A company may elect to not renew your homeowner’s policy for a limited set of reasons if it provides 30 days written notice, or for nearly any reason if it provides you with 60 days written notice (the limited reasons for 30 days notice are available below).  In either case, your insurer may not nonrenew your policy for reasons of age or location of the property, or the age, gender, race, color, ancestry, marital status or occupation of the occupants.  If the company nonrenews your policy because the property condition has declined, the company must allow you time (not more than 90 days) to make required repairs.

Furthermore, a company is prohibited from nonrenewing your homeowner's policy based solely on credit report information. If credit information from your credit report is used to nonrenew your insurance policy, the insurer must provide you with the name of the national credit bureau that supplied the information so that you can get a free copy of your credit report. For more information about credit scoring, see our fact sheet entitled Understanding How Insurers Use Credit Information.

Effective January 1, 2003, an insurer is prohibited from nonrenewing your homeowner’s policy solely on the basis that one or more claims have been made against any policy during the preceding 60 months for a loss that is the result of a hate crime committed against the person or property insured if the insured provides evidence to the insurer that the act causing the loss is identified as a hate crime on a police report.

30 days written notice

When the company has mailed written notice of nonrenewal of a policy that has been in effect 5 years or more only 30 days before the nonrenewal date, an insurer may only decide to nonrenew your policy for the following reasons:

  1. The insured initially obtained the policy through giving misleading or incorrect information to the insurer; or
  2. A significant change has occurred such that there is a measurably greater chance an unfortunate event will affect the property. 

For all other reasons, your company must mail you written notice 60 days in advance of nonrenewal.

Notice

The company must send you a written notice explaining why it is nonrenewing your policy. The notice must clearly articulate the specific reason(s) for nonrenewal. The company may not simply state “fraud” or “misrepresentation,” but rather provide factual basis for such reason(s). The notice must also explain two important items:

  1. You have the right to appeal the nonrenewal as explained below under Hearing Rights.
  2. You may be eligible to buy insurance from the Illinois FAIR Plan Association if you cannot find coverage elsewhere.

Note: If your insurer merges or restructures with another company, or if your insurer reclassifies your policy (possibly due to an excess of claims), the company must mail you a notice about the change 60 days prior to a change in your policy.

Mailing Time

The company must mail a nonrenewal notice to you at your last known mailing address, so it is important for you to notify your insurance agent or company if you move. The company must mail your nonrenewal notice:

  • At least 30 days before the nonrenewal date only if the reason for nonrenewal is one of the limited reasons above; or
  • For almost any other reason, at least 60 days before the nonrenewal date.

The company must keep proof that it mailed your notice, but it does not have to show proof that you received it.

Hearing Rights

If you believe your company failed to follow the required steps when nonrenewing your policy, you may appeal the nonrenewal to the Director of Insurance. To do so, you must mail or deliver your written request for a hearing to the Department of Insurance at least 20 days before the expiration date, explaining in detail why you believe the company has improperly nonrenewed your policy.

If your hearing is granted, we will send you written notice about the time and date of the hearing.

For More Information

Call our Consumer Assistance Hotline Toll Free at (866) 445-5364 or visit us on our website at insurance.illinois.gov


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Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department.

During the past few years, a growing number of Illinois residents have become concerned about mold in their homes or businesses. This fact sheet is designed to give you some general information about mold, and how Illinois insurers are responding to mold concerns. This information can generally apply to renters, condo owners, and business properties, as well as to homeowners.

Can Mold Become A Problem In My Home?

Yes. Molds will grow where conditions allow. Molds require two things to grow – a food source and moisture. Food sources can be anything from dry wall and insulation to carpeting or mattresses. Moisture can come from many sources, including high humidity levels, leaky pipes or appliance hoses, neglected or inadequately repaired roofs, improperly maintained air conditioners, landscape and drainage problems, etc.

Should I Be Concerned About Mold In My Home?

Yes. Indoor mold growth is unsanitary and undesirable. If you can see or smell mold inside your home, you should take steps to eliminate the cause and clean up and remove the mold.

If left unchecked mold growth can become more serious and may cause health-related problems and structural damage to your home.

Are Molds a Health Concern?

According to the Centers for Disease Control, exposure to mold does not necessarily result in a health problem. Molds have existed for thousands of years and there are over 100,000 kinds of mold. Most people touch, eat, or breathe some mold every day without ill effects. There is even mold in fresh air.

If mold growth is active, extensive, and persistent, it has the potential to cause health problems, the most common of which are allergic reactions such as wheezing, sneezing, coughing, eye irritation, etc.

While many people seldom experience ill effects from mold exposure, some individuals are more sensitive to molds than others. The same amount of mold may cause health problems in one person, but not in another. The Illinois Department of Public Health identifies those who may be at greater risk for more severe symptoms or illness as individuals with existing respiratory conditions such as allergies, asthma, or chemical sensitivities; individuals with weakened immune systems; infants and young children; and the elderly.

Do Homeowners Insurance Policies Cover Mold Damage?

It depends on what caused the mold and the policy coverage you have. Molds need water or moisture to grow, but not all causes of water damage are covered by homeowners insurance policies.

For example, standard homeowners policies do not cover water damage caused by “maintenance” problems, such as continuous or repeated water seepage or leakage, humidity or condensation problems, or landscaping or drainage problems. Homeowners policies also exclude water damage caused by floods. Therefore, if one of these water or moisture problems results in mold, it would probably not be covered by your policy.

Standard homeowners policies do cover some types of sudden and accidental water losses, including burst pipes, and sometimes sewer back up or sump pump failure if you have that coverage. However, even if your policy covers these types of water damage, some companies have begun to specifically exclude or limit coverage for mold that results.

In Illinois, if mold results from water damage following a covered fire or lightning loss, the mold damage would be covered, and the total of all damages, including the mold, is subject to the full policy limit.

How Do I Know if My Homeowners Policy Will Cover Mold?

Read your policy and all endorsements. Some companies have taken steps to avoid or limit their exposure to mold claims by:

  • Excluding all coverage for mold-related damage (except mold that results from a covered fire/lightning loss as stated above).
  • Excluding all coverage for mold-related claims, but offering buy-back endorsements, which provide some mold coverage if you pay extra money.
  • Providing a limited amount of coverage for mold-related claims, either by limiting the amount of money available to pay mold-related claims (e.g. $5000); or by paying for some mold-related expenses, such as clean-up, and excluding others, such as remediation and testing.
  • Providing coverage for mold-related claims in the policy and increasing the price of the policy to pay for anticipated costs.
  • Placing tighter restrictions on what kinds of homes they will insure, such as refusing to insure homes that have suffered previous water damage, or homes that are built of certain construction materials such as synthetic stucco.


If you’re unsure whether you have mold coverage or the amount of coverage you have, contact your insurance agent or company for further explanations.

Regardless of whether your insurance pays for any mold claims, you should take steps now to prevent mold growth in your home due to maintenance issues, and act quickly when water losses occur.

What Can I Do to Prevent Mold from Growing in My Home?

Since mold needs a food source and moisture to grow, the best thing you can do is to prevent moisture problems that allow mold to grow.

There are many sources of information listed at the bottom of this fact sheet that explain in more detail how to prevent moisture problems, but here are a few things to get you started:

  • Maintain lower levels of humidity in your home (preferably between 30-50%) by: venting bathrooms and dryers to the outside; using air conditioners and de-humidifiers; increasing ventilation by adding crawlspace and attic vents; using exhaust fans when cooking, dishwashing, and cleaning, etc.
  • Add insulation to reduce the potential for condensation on cold surfaces such as windows, pipes, exterior walls, roofs, or floors.
  • Inspect your home regularly for indications and sources of indoor moisture such as leaking pipes, appliance hoses, showers, tubs, sinks and toilets. Replace plastic hoses with steel-reinforced hoses. Check windows, doors, attics and ceilings for leaks or evidence of water stains or odors, particularly after rains. Fix plumbing, flashing, and roof leaks right away.
  • Don't carpet bathrooms, basements, kitchens or other areas prone to moisture. Clean bathrooms often with mold killing products and keep surfaces dry.
  • Cover dirt in crawlspaces with a moisture barrier plastic sheeting.
  • Prevent water from entering basements and crawlspaces by repairing holes and cracks in walls and foundation. Use landscaping to direct water away from your foundation.
  • Clean and maintain your gutters and make sure drainpipes carry water several feet away from your home.
  • Watch your utility bills. An abnormally high water bill could signal a water leak.
  • Before you travel, turn off the water at the main valve. Have a trusted friend or neighbor check the inside and outside of your home periodically while you're away.

What Should I Do if I Have a Water Loss in My Home?

Contact your insurance company right away to report the water claim even if you are unsure whether your insurance policy covers the water loss and/or resulting mold. Have your policy number handy and be prepared to answer questions about the extent and severity of the water damage. 

Regardless of whether your insurance policy covers the water loss or resulting mold, you should take immediate action to protect your property and prevent mold growth that could cause further damage.

Mold can start to grow as soon as 24-48 hours after a water problem occurs. Mold will probably not grow if you clean up the water immediately and stop the source of the leak. Here are some steps you can take:

  • Immediately stop the source of leaking or flooding by shutting off the water or contacting a plumber if necessary. If the loss is covered by insurance, your policy allows you to make reasonable and necessary repairs to protect the property. However you should not make large structural or permanent repairs until your insurer has inspected the damage.
  • Remove excess water with mops and/or a wet vacuum. If there is a lot of water damage, you may want to contact a water extraction/drying company for immediate action. If many homes are affected, you may be placed on a waiting list.
  • Dry the damaged areas and items as soon as possible (preferably within 24-48 hours) by moving rugs, pulling up areas of wet carpet, and removing wallboard and flooring materials. Increase circulation by opening closet and cabinet doors, moving furniture away from the walls, and running fans.
  • Keep all removed and damaged materials for your insurance company to view. Keep all receipts, photos and other relevant information necessary to document the loss and expenses you incurred to minimize the damage.

Should I Have My Home Tested for Mold?

Testing for mold is difficult, time-consuming, and expensive. The Illinois Department of Public Health does not currently recommend mold testing since there are no standards about how much mold is acceptable, and testing cannot determine which, if any, health problems will occur.

In most cases, if you can see mold, don’t waste the time or money testing it. Instead, fix the source of the moisture problem, and clean up the mold.

Should I Move out of My Home if I Discover a Mold Problem?

If you are concerned about possible health risks from mold growth in your home, you should consult a physician. While experts agree that there is no current scientific evidence that links specific levels of mold to serious health problems, some individuals appear to be more susceptible to mold allergies and problems than others.

If your homeowners insurance policy provides coverage for mold-related loss, you and your insurance company will discuss the need for you or a family member to move out of the house. If you need to move out, discuss with your insurer how much money is available for additional living expenses (ALE) and whether that amount is in addition to other mold coverage. Additional living expenses are limited under most policies and only cover amounts over and above your normal living expenses.

How Should I Clean Mold That is Growing in My Home?

The Illinois Department of Public Health, the Centers for Disease Control (CDC) and the federal Environmental Protection Agency, as well as other authorities, have consumer brochures and web sites that explain how best to clean up mold from your home. See their contact information at the bottom of this fact sheet. However, here are some general tips:

First, make sure that the cause of the moisture or water problem has been permanently fixed. If it hasn’t, the mold growth may recur.

  • You probably shouldn't clean the area yourself if you are pregnant, have asthma, other respiratory or pulmonary problems, or a weakened immune system.
  • Ventilate the area well by opening doors and windows.
  • Start with a non-ammonia soap or detergent and hot water or a commercial cleaner. Thoroughly scrub all contaminated surfaces. Rinse with clean water.
  • Clean and disinfect non-porous surfaces, such as tile, wood and concrete floors and walls, with a bleach mixture (one part bleach to ten parts water). Wear protective gloves, a dust mask or respirator, and eye protection and don't ever mix bleach with ammonia or products containing ammonia since the vapors would be toxic.
  • Apply the bleach solution by wiping it on with a sponge or rag. Be sure to wet the studs, wall cavities, and floors thoroughly.
  • Allow the bleach solution to dry naturally for a 6-8 hour period.
  • Porous, moist, fibrous materials, such as sheet rock, insulation, and paper should probably be discarded if they harbor mold.

If I Can't Clean or Remove the Mold Myself, How Should I Choose a Mold Remediator?

Currently, mold remediators are not required to be licensed and there are no standards or certifications for mold remediation specialists or other indoor air quality contractors. Because there is no state or federal oversight of these contractors, you should be cautious about signing contracts and avoid being taken advantage of by unscrupulous mold remediators. Here are some tips when choosing someone to clean up and remove any mold in your home:

  • Even if you don't have insurance coverage for mold, your insurance company may be a good resource. Ask your insurance company or agent if they have a list of recommended specialists, but keep in mind that the final choice is yours to make.
  • Ask the contractor how experienced he is in removing mold from homes and make sure that he has any necessary safety equipment to do the job.
  • Ask the contractor to give you a list of references and proof of education in mold remediation and related areas.
  • Ask to see written company operating procedures and proof that the company carries insurance.
  • Obtain a written contract that includes estimated completion dates for various stages of the work.
  • Diligently monitor and supervise the remediation and repair process to ensure that work is progressing and completed in a timely fashion.

The remediation and repair of your home can cost thousands of dollars. Therefore it is important to be selective in your choice of a mold remediation specialist.

What if I Have a Complaint About My Homeowners Insurance Policy or Claim as It Relates to Mold?

Call the Department of Insurance Consumer Assistance Hotline toll free at (866) 445-5364 or visit our website at:http://insurance.illinois.gov.

Where Can I Get More Information About Mold and Its Health Effects or Clean Up?

  • Federal Emergency Management Agency (FEMA)


Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department.

Fires and natural disasters are unforeseen and unpredictable, and the recovery process can be overwhelming.  If your property or home was insured you will have to work through your company’s claims process, and you may be approached by an “insurance adjuster” who claims he or she can obtain a more favorable settlement from your insurance company.  You should always be suspicious of any individual offering a service or benefit that sounds or appears “too good to be true” and contact the Department before entering into a contract or formal agreement that raises questions or suspicion.

This fact sheet provides information about public adjusters and answers some frequently asked questions.  For more information please visit insurance.illinois.gov or call the Department toll-free at (866) 445-5364.

What is an adjuster?

There are three types of insurance adjusters:

  • A “company adjuster" is an employee of your insurance company. They represent the interest of the insurance company and are paid by the insurance company. They will not charge you a fee.
  • An “independent adjuster" is hired on a contract basis by your insurance company to represent the insurance company's interest in the settlement of your claim. They are paid by your insurance company. They will not charge you a fee.
  • A “public adjuster" does not work for any insurance company, is not a public employee, and does not work on behalf of the State of Illinois, Department of Insurance, or any other public agency. They work for you to assist in the preparation, presentation and settlement of your claim. You hire a public adjuster by signing a contract agreeing to pay a fee or commission based on a percentage of your settlement, or other method of compensation.

Do I have to hire a public adjuster to deal with my insurance company?

No. Many consumer find that the services offered by public adjusters can be performed, for free, by trained insurance company staff.  You may wish to speak with Department staff before engaging the services of a public adjuster.

Your insurance company also has knowledgeable claim adjusters who are available to assist you with the claim process.

Is a public adjuster’s fee covered in my insurance policy?

No.  Insurance policies do not cover the fees of a public adjuster.

How does a public adjuster get paid?

You must pay for the services provided by a public adjuster.  Typically, public adjuster’s charge a fee equal to a certain percentage of the claim paid by your insurance company.  In other words, after your insurance company settles your insurance claim, the public adjuster could take a percentage of that settlement. 

Are public adjuster fees negotiable?

Yes.  All fees charged by the public adjuster can and should be negotiated.

Who will my insurance company work with after I hire a public adjuster?

Once you sign a contract with a public adjuster, the public adjuster will notify your insurance company, who will then send all correspondence to your public adjuster.  You should ask the public adjuster to routinely update you on the progress of your claim. The insurance proceeds will be sent to you and you must then give the adjuster the fee that you agreed to on the contract with him.

Do I have to sign a contract with a public adjuster?

Yes. Illinois law requires the public adjuster to provide you with a written contract which has been approved by the Director of Insurance.The contract should specify the services the public adjuster will provide for you and any salary, fee, commission, compensation or other consideration he or she will receive for those services. The contract you sign with the public adjuster is binding and can only be canceled by certified mail within 5 business days after the date the contract was signed.

Are there restrictions on when a public adjuster can solicit me?

Yes.  A public adjuster cannot solicit you while a “loss-producing occurrence,” such as a fire, is continuing or while the fire department or its representatives are engaged at your property.  A public adjuster is also prohibited from soliciting your business between the hours of 7:00 p.m. and 8:00 a.m.  If a public adjuster approaches you during these times you should report him or her to the Department. 

Are there standards of conduct that a public adjuster must follow?

Yes.  A public adjuster is required to serve with objectivity and complete loyalty for your interests alone and to render to you such information, counsel, and service as will best serve your insurance claim needs and interests.

Does a public adjuster have to be licensed?

Yes.  Illinois law requires public adjusters to be licensed with the Department of Insurance. Contact the Department at (866) 445-5364 to verify that the public adjuster is licensed and in good standing before signing any contract.

Where can I find more information?

Useful information on insurance coverage and how to handle the insurance claims process can be found in the Department’s consumer fact sheet entitled “When Disaster Strikes – What to do After an Insured Homeowners Loss.”  The fact sheet can be found on the Department’s website, insurance.illinois.gov, or by clicking here.  A list of agencies and organizations available to help ease the burdens caused by a major disaster can be found on our website or by clicking here.

Trained insurance professionals are also available to assist you for free at the Department of Insurance, which can be reached toll-free at (866) 445-5364.

For More Information

Call our Consumer Services Section at (312) 814-2420 or Our Consumer Assistance Hotline Toll Free at (866) 445-5364 Or visit us on our website at http://insurance.illinois.gov


Disponible en Español

Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department.

Why You Need Insurance

Homeowners insurance is an important purchase for many people. There are two major reasons to buy homeowners insurance:

  • To protect your assets.
    • Homeowners insurance covers the structure of your home and your personal property, as well as your personal legal responsibility (or liability) for injuries to others or their property while they're on your property.
  • To satisfy your mortgage lender.
    • Most mortgage lenders require you to have insurance as long as you have a mortgage and to list them as the mortgagee on the policy. If you let your insurance lapse, your mortgage lender will likely have your home insured. Compared to a policy you would buy on your own, the premium might be much higher and the coverage will be limited to damage to the structure of your home. The lender can require you to pay this higher premium until you get your own homeowners insurance again.

Coverages in a Homeowners Policy

Most homeowners insurance policies provide a package of coverages. The main types of coverage are described below. Keep in mind that you're covered only if the loss is caused by a peril your policy covers. For example, if your home becomes unlivable due to an earthquake and your homeowners policy doesn't cover earthquakes, your policy won't pay for loss of use of your home. Review your policy for the limits of your coverage.

  • Dwelling. Pays for damage to your house and to structures attached to your house. This includes damage to fixtures, such as plumbing, electrical wiring, heating and permanently installed air-conditioning systems.
  • Other Structures. Pays for damage to fences, tool sheds, freestanding garages, guest cottages and other structures not attached to your house.
  • Personal Property. Reimburses you for the value of your possessions, including furniture, electronics, appliances and clothing, damaged even when they aren't on your property, such as those at an off-site storage locker or with your child at college.
  • Loss of Use. Pays some of your additional living expenses while your home is being repaired.
  • Personal Liability. Covers your financial loss if you are sued and found legally responsible for injuries or damages to someone else.
  • Medical Payments. Pays medical bills for people hurt on your property or hurt by your pets.

Peril is an insurance term for a specific risk or reason for a loss. Some policies cover all perils except ones specifically excluded. At the other extreme are policies that cover only the perils named in the policy.

Types of Homeowners Policies

To be reimbursed for damage to your property, a covered peril (such as fire, theft or windstorm) must have caused your loss. Which perils your policy covers depends on the type of policy you buy. The most common types of homeowners policies are listed below. All of the policy types except the dwelling fire form cover your dwelling and its contents, as well as personal liability and medical payments. Read Table 1 to learn the specific perils each type of policy covers.

A type of homeowners policy is called a Form.

  • The Dwelling Fire Form covers only your dwelling. It does not cover your personal property, personal liability or medical payments. It also covers only a few perils. It's the type of policy your mortgage lender will buy for you if you let your homeowners policy lapse. It's also used for vacation homes and when you can't find other coverage.
  • The Basic Form insures your property against only the list of perils shown in Table 1.
  • The Modified Coverage Form is for older homes, where the cost to rebuild is greater than the market value. It covers the same set of perils as the Basic Form.
  • The Broad Form insures your property against the perils shown on Table 1.
  • The Special Form is the most popular of all homeowners forms. It insures your property against all perils, except those the policy specifically names as not covered. Perils commonly excluded are flood and earthquake but coverage may be available which will be addressed later the Guide.
  • The Tenants Form is for renters. It insures your personal property against all of the perils in the Broad Form.
  • The Condominium Unit Owners Form is for owner-occupants of condominium units. It insures your personal property and your walls, floors and ceiling against all of the perils in the Broad Form.

There are other types of insurance for other types of residences. If you own a townhouse, you may insure it through either an individual homeowners policy or an association master policy. If you live in a mobile home that has wheels and doesn't rest on blocks or a permanent foundation, in most states you'll buy a form of automobile insurance. This insurance offers far less coverage than homeowners policies. If your home is on land used for farming or raising livestock, ask about a farmownerspolicy.


Table 1. Perils Covered by Different Types of HO Policies

The standard homeowners’ insurance policy does not cover flood damage.

What is a flood?

The National Flood Insurance Program (NFIP) defines flood to be a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more adjacent properties (at least one of which is the policyholder's property) from: overflow of inland or tidal waters, unusual and rapid accumulation or runoff of surface waters from any source, mudflow, or collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels

What is flood insurance?

  • Flood insurance is a special policy that is federally backed by the NFIP.
  • You may buy flood insurance that covers up to $250,000 for flood damage to your home. A standard flood policy will cover structural damage to your home, including damage to your furnace, water heater, air conditioner, floor surfaces (carpeting and tile) and debris clean up.
  • For an additional premium, you also may buy flood coverage for up to $100,000 of damage to the contents of your home due to a flood.
  • Coverage is available up to $500,000 for non-residential buildings and their contents.

How Can I Buy Flood Insurance?

You can buy NFIP flood insurance directly from your property and casualty insurance agent or insurance company if your community participates in the NFIP. You can find out if your community participates by visiting the following NFIP Web link: http://www.floodsmart.gov/floodsmart/.

Your insurance agent or insurance company also can confirm whether flood insurance is available to you and what it would cost.

Plan Ahead

It is very important to plan ahead. A flood insurance policy will not go into effect until 30 days after you buy the policy.

Other Things to Know

  • According to FEMA, between 20 and 25 percent of flood claims occur in medium or low risk flood areas.
  • You can buy flood insurance for your home or business regardless of whether the property is in or out of a floodplain, as long as the property is located in a participating community.
  • You can obtain more information about flood insurance at the NFIP Web site at http://www.fema.gov/national-flood-insurance-program/.

Limits of Coverage

Your insurance agent usually will help you decide how much dwelling coverage to buy when you first get homeowners insurance. Your coverage should equal the full replacement cost of your home. Note that replacement cost and market value are not the same. The market value, which includes the price of your land, depends on the real estate market.

You should review your dwelling coverage from time to time to be sure it doesn’t drop below the cost to replace your home. If it drops below 80% of the full replacement cost of your home, your insurance company may reduce the amount that it will pay on a claim.

The limits of your coverage for other structures, for personal property and for loss of use of your home are expressed as percentages of your dwelling limit. The coverage is usually a set percentage (see Table 2). For example, if your dwelling coverage limit is $150,000 and your coverage for personal property is limited to 50% of your dwelling coverage, your coverage for personal property would be $75,000. Check your policy, as coverage limits might be based on percentages different from those in Table 2. You choose your coverage limits for your personal liability and for medical payments.

Table 2. Policy Limits

Coverage Component Typical Limit of Coverage
Dwelling You Choose
Other Structures 10% of Dwelling Coverage Limit
Personal Property 50% of Dwelling Coverage Limit
Loss of Use 20% of Dwelling Coverage Limit
Personal Liability You Choose
Medical Payments You Choose

Deductibles

A deductible is the money you have to pay out-of-pocket on a claim before the policy pays the loss. The deductible applies to coverage for your home and personal property and is paid on each claim. Higher policy deductibles mean lower policy premiums. A policy with a $1,000 deductible will have a lower premium than the same policy with a $500 deductible. In some locations, there are also catastrophe deductibles, which are expressed as a percentage instead of a dollar amount.

Having a higher deductible can be a good way to save money on your homeowners insurance premium and to submit fewer claims. However, be sure you can afford the deductible in case you have a loss.

Replacement Cost and Actual Cash Value

You can choose to insure your home and its contents for either replacement cost or actual cash value. Replacement Cost is the cost to rebuild your home or repair damages using materials of similar kind and quality. Actual cash value is the value of your home considering its age and wear and tear. Actual Cash Value coverage pays you for your loss, but often doesn't pay enough to fully repair or replace the damage.

Optional Coverages

You can add other coverages. Sometimes, you can add coverage by buying an endorsement; other times, you must buy another policy to cover a specific peril or a specific item of property. Some reasons you might want to add coverages are:

  • To cover perils most homeowners policies don’t cover. The National Flood Insurance Program writes most flood insurance policies, although some insurance companies also sell it. Many insurance companies sell earthquake insurance as a separate policy or as an endorsement to your homeowners policy. While homeowners policies in most states cover damage caused by windstorm and hail, policies in coastal areas often exclude this coverage, in which case you would need to buy a separate policy to protect from this risk. You might be able to buy endorsements to cover damage caused by mold or by sewer or drain backups and sump pump overflow since most homeowners policies offer limited or no coverage for these types of events.
  • To increase your current coverage. Guaranteed replacement cost coverage pays to completely rebuild your home, while a personal property replacement cost endorsement pays to replace your personal property. An inflation guard endorsement raises your dwelling coverage limit annually in line with inflation. Personal umbrella liability insuranceincreases your liability coverage above the level available in a homeowners policy. A scheduled personal property endorsement (or “personal article floater”) covers jewelry, furs, stamps, coins, guns, computers, antiques and other items whose value might be greater than the normal limits in your homeowners policy. An ordinance or law endorsement pays for the extra expense to rebuild your home in compliance with building codes and other ordinances or laws that didn’t exist when your home was originally built.

Business Use of Your Home

While homeowners insurance isn’t designed to cover most business uses of your home, some policies might cover some business uses, at least partially. For example:

  • Computers and laptops. If you use your home computer or laptop for business purposes, it’s often covered, but you should check your policy limits. Your laptop might be covered, even if it’s lost, damaged or stolen when it’s away from your home.
  • Daycare coverage. Most homeowners policies provide a limited amount of liability coverage if you care for a friend’s children and aren’t paid. But if you’re paid to provide daycare in your home, you must buy more insurance to cover your related liability.

Other Types of Home-Related Insurance

You might hear about other types of insurance, especially when you buy your home. Lenders usually require private mortgage insurance (PMI) if your down payment is less than 20% of the home’s purchase price. PMI protects the lender if you default on your mortgage. The PMI premium is often included in your monthly mortgage payment.

Title insurance protects you and the lender against any monetary loss due to errors in the title. You usually pay for title insurance as a one-time fee when you buy a home.

home warranty covers the mechanical breakdown of individual parts of a home, such as the electrical and plumbing systems. A warranty doesn’t cover the home’s structure, may or may not cover appliances, ends at a specific point in time (for example, one year) and has exclusions and limitations that you should review. Home warranties might not be regulated as insurance in your state.

How Insurers Determine Your Premium

Many factors affect the premium you pay, including which insurance company you choose. Different insurance companies charge different premiums for similar coverage. Decisions you make about how much insurance coverage to buy also affect your premium. Some of the other things that are likely to affect your premium are:

The characteristics of your home

  • The cost to rebuild your home. This is not the same as the purchase price (which includes the cost of the land). Your insurance agent might help you estimate replacement cost using information about your home and its contents.
  • Whether your home is made of brick or wood. The premium usually is lower for homes that are primarily brick or masonry than for wood frame homes.
  • The distance from your home to a water source or fire department and the quality of your community’s fire protection services.
  • The age and condition of your home. The premium often is higher for older homes and homes in poor condition than for newer homes and homes in good condition.
  • The claims history of your home and of homes in your area.

Your choices and characteristics

  • The coverages you choose, including optional endorsements.
  • The deductible you choose.
  • Insuring your home and autos with the same insurance company.
  • The length of time you’ve been with your current insurance company.
  • Your credit history. To access your credit report, the insurance agent might ask you for your Social Security number. In many states, insurers use your credit history as a factor to decide whether to sell you insurance and what price to charge you.
  • Your history of filing claims for water damage, fire, theft or liability on homes you’ve owned.

Other characteristics

  • Having protection devices in your home, such as smoke detectors, a burglar alarm, a sprinkler system, deadbolts on doors or security devices for windows. Many insurers offer a discount if you have any of these.
  • Having a wood furnace or wood stove.
  • Having a swimming pool, trampoline or playscape that could cause injuries.
  • The types of pets you have. Some insurers won’t insure you if you own certain breeds of dogs.
  • Operating a business from your home.

Smart Shopping

Different insurance companies charge different rates for the same coverage. Also, not all insurance companies provide the same level of claims service. Therefore, it makes sense to shop around for the best insurance company for your needs.Insurance companies use one of three methods to sell their products.

  • Independent agents represent several companies and can give you several quotes.
  • Exclusive agents only sell the products of one insurance company.
  • Direct market sales are over the Internet or by mail or telephone.

You can find insurance companies and agents through the phone book, on the Internet and television and by asking friends and neighbors.

Customer service is important to most consumers, particularly when they have a claim. You can get a sense of how well an insurer serves its customers from a complaint index. A complaint index measures how many complaints the Department of Insurance receives relative to the size of the company.

It’s illegal for unlicensed insurers or agents to sell insurance. Business cards aren’t proof that an agent is licensed. If you do business with an unlicensed agent or company, it might not pay your claims or refund your premiums if you cancel your policy. If an unlicensed agent or company contacts you, check with the Department of Insurance immediately, so it can investigate. Your actions may protect someone else from being victimized.

You also want to buy insurance from a company that’s financially sound. You can check the financial health of an insurance company by using ratings from independent ratings agencies such as Standard and Poor’s, A.M. Best and Moody’s.

Getting Premium Quotes

Getting premium quotes is a good way to compare different companies’ prices. But, first you should decide what coverages and policy limits you need. It’s important that you know how much it would cost to rebuild your home. An insurance agent or a contractor might be able to help you estimate the cost to rebuild your home.

When you get quotes, it’s crucial that you ask for the same coverages and limits and give the same information to each agent or company. To give you an accurate quote, the insurance agent or company will usually ask for a description of your house (such as where it’s located, its square footage, when it was built and the type of construction). He or she also might ask about items that increase your insurance needs, such as owning pets and expensive possessions. An agent might visit your home to take a photo or ask you for other information (such as the distance from the nearest fire department and the general condition of your home). Be sure to get rate quotes and key information in writing.

Make sure you ask the insurance agent if you qualify for any discounts. Some insurers offer a discount if you also buy your auto insurance from them or if you disaster-proof your home (for example, add storm shutters), update the home’s electrical or plumbing systems, get a new roof or add home security devices (for example, a burglar alarm).

Also, be sure to find out how much your premium will change if you choose different deductibles.

While you’re getting quotes, you should also ask the agent some of these questions:

  • Are the agent and the insurance company licensed by my state insurance department? For how long? (The Illinois Department of Insurance can confirm the answers to these questions.)
  • How can I find out the claims history of the home before I buy it? The claims history of the home might affect your premium.
  • If I submit a claim, how will it affect my premium when I renew the policy?
  • How will my credit history affect my premium?
  • What does the policy cover? What doesn’t it cover? What are the limits to the coverages?
  • How much coverage do I need for my personal property?
  • How much liability coverage should I buy?
  • Should I buy flood insurance or earthquake coverage? Your homeowners insurance policy doesn’t cover either.
  • What types of water damage are not covered? Is mold damage covered?

If you’re thinking of buying a home, you can ask an agent to estimate the cost of insurance.

Your Responsibilities

A homeowners insurance policy is a legal contract. It’s written so that your rights and responsibilities, and those of the insurance company, are clearly stated. You should read your policy and be sure you understand it. If you have questions about your insurance policy, contact your insurance agent or company.

When you buy homeowners insurance, you will receive a policy—not a photocopy. If you don’t receive a policy within 30 days, contact the insurance company, not the agent.

Keep your policy in a safe place and know the name of your insurer. If you still have questions, contact the Illinois Department of Insurance..

Other helpful tips:

  • Pay the premium on time. Most insurers don’t offer a grace period for paying the premium; the due date is the due date.
  • Keep a file of all paperwork you completed online or received in the mail and signed—as well as any other documents related to your insurance, including the policy, correspondence, copies of advertisements, premium payment receipts, notes of conversations and any claims submitted.
  • Make a household inventory.
    • Go through each room; write down and take pictures or videos of everything in the room.
    • Inventory everything, including valuable items such as antiques, electronics, jewelry, collectibles and guns.
    • Store your home inventory in a secure place at another location, such as your workplace, a safe deposit box, a relative’s house or online.
    • Annually review and update your home inventory, including your pictures/videos. Also update your inventory when you buy new items.
    • Keep receipts with your home inventory for all repairs and new items you buy, for proof if you file a claim.
  • Maintain your home.
    • A homeowners policy isn’t a maintenance contract; it insures against damage from perils such as fire, wind and hail. It doesn’t pay to repair items that simply wear out, like rotted porch railings. You’re responsible for the upkeep of your home, such as repairing your roof when it begins to leak or cleaning your chimney flue so it doesn’t catch fire.

Filing a Claim

Read your policy—it’s your guide to the types of losses that may or may not be covered. How often you file a claim and the types of claims you file often affect your premium and whether your insurer will renew your policy. If the cost to repair the damage is not much more than your deductible, you might want to pay for the repairs without filing a claim.

Most insurance companies report your homeowners claims to private nationwide claims databases (such as the Comprehensive Loss Underwriting Exchange, better known as CLUE). Insurance companies use these databases to see the claims you've submitted in the past.

To file a claim, contact your insurance agent or company as soon as possible, however, make sure the damage is more than your deductible since any claim whether paid or not is reported to CLUE . Ask about forms or documents you’ll need to support your claim. You’re also required to protect your home from further damage. For example, you might need to board it up or clean up water from a backed-up drain.

The insurance company will assign a claims adjuster to assess the damages and determine the payment. These adjusters may be employees of the company or independent contractors. You should cooperate with the adjuster’s investigation of your claim. The adjuster will probably want to meet with you at your house to inspect the damage. Jot down notes and keep track of the dates of any conversations you have with your insurance agent or adjuster.

If there are disagreements between you, the insurer and the claims adjuster, first try to resolve them with your insurer. Don’t feel rushed or pushed to agree with something you aren’t comfortable with. It might help to have your contractor meet with you and the insurance adjuster.

If you and the insurer still disagree about the value of the claim, check your policy for an appraisal clause. Another option is to hire an attorney or a public adjuster.

Public adjusters are not attorneys or government employees. They are freelance adjusters that charge you a fee. They are usually hired by the consumer to help settle a complex or difficult loss negotiation with an insurance company.

Be certain you understand what services the public adjuster will provide, and the fees he/she will charge (usually 10% of your claim.). Illinois law requires public adjusters to be licensed with the Department of Insurance. Contact our Department to verify a public adjuster’s license.

If you have trouble with or questions about your claim, you also may contact the Illinois Department of Insurance for help. The consumer services personnel can help you work with your insurer to resolve disagreements.

Losing Your Insurance

There’s a big difference between an insurance company cancelling your policy and not renewing it.

Cancellation means either you or your insurance company stop the coverage before the policy’s normal expiration date (which is usually 12 months after the policy starts). You can always cancel your policy for any reason. When you’re a new policyholder, your insurance company can cancel your policy for almost any reason within the first 60 days.. After that, it can only cancel you if you don’t pay your premium, if you’ve lied on your application or if your risk has changed substantially.

If your insurance company cancels your policy, it must give you 30 days notice and any refund shall be on a pro rata basis. If you cancel your policy, the company shall refund any premium on a short rate basis.

Non-renewal means the company refuses to renew your policy after it expires. Insurance companies generally have the right to not renew your policy. If your company chooses not to renew your policy, it must give you 30 days notice. All notices shall provide a specific explanation of the reason(s) for nonrenewal. You also may choose not to renew your policy.

Non-renewals on homeowner’s policies that have been in effect greater than 5 years, must be given 60 days notice.

What to Do if You Can’t Find Insurance

If you cannot find homeowners insurance, talk to your insurance agent about the Illinois FAIR Plan. The FAIR Plan is an association that operates like an insurance company. All property and casualty companies that sell basic property insurance in Illinois fund the plan.

To qualify for coverage with the FAIR Plan, you must have three unsuccessful attempts to buy property coverage from insurance companies and your property must meet basic fire, loss prevention, and safety standards.

The FAIR Plan offers most of the home, personal property, and personal liability coverages that you can get with a private insurance company. However, the FAIR Plan should be your last resort. You may be able to get a better deal with a traditional insurance company.

For More Information


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Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department.

A growing number of personal auto and homeowners insurance companies now use consumer credit information to decide whether to issue or renew policies, or to decide what premiums to charge for those policies.

This fact sheet is designed to help you understand how your credit information is being used, and how it may affect your insurance purchases.

Is it legal for an insurance company to use my credit information without my permission?

Yes. A federal law, the Fair Credit Reporting Act (FCRA), states that insurance companies have a “permissible purpose” to look at your credit information without your permission.

Why do insurance companies use credit information?

Some insurance companies believe there is a direct statistical relationship between financial stability and losses. They believe that as a group, consumers who show more financial responsibility have fewer and less costly losses, and therefore, should pay less for their insurance. Conversely, they believe that as a group, consumers who show less financial responsibility have more and costlier losses, and therefore, should pay more for their insurance.

Does using credit information discriminate against minorities or low-income consumers?

Insurers that use credit information and entities that have developed credit scoring models state that there is no difference in credit scores among different income levels because there are just as many financially responsible low-income consumers as there are financially responsible high-income consumers.

As of October 1, 2003, Illinois law prohibits insurers from using a scoring model or other process using credit, on new or existing business, if such model or other process using credit contains any of the following factors: income, gender, address, ethnic group, religion, marital status, or nationality of the consumer.

What kind of credit information are insurance companies using?

Although some insurance companies still look at your actual credit report, most companies now use a “credit score” or an “insurance score.” A score is a snapshot of your credit at one point in time.

Insurance companies and entities that have developed credit scoring models use several factors to determine credit scores. Each factor is assigned a weighted number that, when applied to your specific credit information and added together, equals your three-digit credit score ranging from 0-999, depending on the insurance company and the credit scoring model used. Generally, the higher the number, the more financially responsible the consumer.

Following is a list of the more common credit factors used in determining credit scores:

  • Major negative items - bankruptcy, collections, foreclosures, liens, charge-offs, etc.
  • Past payment history - number and frequency of late payments; days elapsed between due date and late payment date.
  • Length of credit history - amount of time you've been in the credit system.
  • Home ownership - whether you own or rent.
  • Inquiries for credit - number of times you've recently applied for new accounts, including mortgage loans, utility accounts, credit card accounts, etc.
  • Number of credit lines open - number of major credit cards, department store credit cards, etc. that you've actually opened.
  • Type of credit in use - major credit cards, store credit cards, finance company loans, etc.
  • Outstanding debt - how much you owe compared to how much credit is available to you.

How do insurance companies use credit information?

Companies use credit in two ways, to underwrite and rate your insurance policy.

Underwriting

Underwriting is the process where an insurer gathers information about you and decides whether or not they will insure you. Illinois law allows an insurer to deny you a new policy, or to cancel or nonrenew your existing policy based solely on information obtained from your credit report, as long as the insurer offers coverage through an affiliate company, even if the coverages, terms, or conditions offered in the affiliate are different.

Rating

Rating is a process that determines how much you pay for insurance when an insurer places you into a specific rating "tier" or level, or places you with a specific company within their group of companies.

Some insurers use credit information along with other more traditional rating factors such as motor vehicle records and claims history. Other insurers use credit information as the sole factor in determining rates. Illinois law allows an insurer to base your renewal rates solely upon credit information, as long as they offer you coverage in another tier of the same insurer, even if the coverages, terms, or conditions offered in the other tier are different.

How do I know if an insurance company is using my credit information?

Initial Disclosure

If an insurer uses credit information in underwriting or rating, Illinois law requires the insurer or its agent to tell you at the time they take your application, that the company may obtain your credit information. The disclosure must be in the same medium as the application. For example, if the application is taken in writing, the disclosure must be in writing. If your application is taken verbally or on the phone, the disclosure must be provided in the same manner. Ask the agent or company if they will check the credit information of other people insured on your policy, such as family members, and how their credit information will affect your eligibility, your coverages, or your premiums.

"Adverse Action" Notification

If your credit information causes an insurer to take a negative or "adverse action" against you, both the FCRA and Illinois law require the insurer to tell you about the "adverse action." Examples of an "adverse action" include denying, canceling, or nonrenewing your insurance policy, giving you a limited coverage form, not giving you the best rate, not giving you a discount, giving you a surcharge or higher rate, or not placing you in the company's best tier or program.

The company may tell you about the adverse action either verbally or in writing, and the company must give you up to four (4) of the top factors about your credit information that caused the adverse action. The adverse action notice must also list the name of the national credit bureau that supplied the information so that you can get a free copy of your credit report if you are eligible.

Ask the Agent or Company

f your credit information did not cause an adverse action, and if you are not a new customer to your insurer, but you still wish to know if your company is using your credit information, or how your credit information affects your insurance coverages or premiums, ask your agent or company directly.

Will having no credit history affect my insurance purchase?

Possibly. Sometimes an insurer will find "no hits," "no score," or a "thin file," which means they cannot find a meaningful credit history for you. This lack of credit information could occur if you're young and haven't yet established a credit history, if you don't believe in using credit and have always paid in cash, or if you have recently become widowed or single and all of your previous credit information was in your spouse's name.

Illinois law prohibits an insurer from taking adverse action against you solely because you do not have a credit card account. In addition, if the insurer finds no meaningful credit information for you, Illinois law requires the company to do one of three things:

  • treat you as if you have 'neutral' credit information -- as defined by the insurer;
  • treat you as if you have other than 'neutral' credit information, as long as the company certifies to the Director of Insurance that such treatment is actuarially justified; or
  • exclude the use of credit information as a factor and use only other underwriting criteria.

If you know that you have an established credit history, make sure your agent or insurance company is using your correct social security number, birth date, or other information to find your records.

What do insurance companies consider a good credit score?

A "good" score varies among companies. For one company, a 750 score may qualify you for their best (lowest) rate. For another company, the same 750 may not be high enough to qualify you for their best (lowest) rate.

Must an agent or company tell me my credit score?

No. In fact, the agent or company underwriter might not even know your actual credit score. Instead, all your agent or underwriter may know is that your score qualifies you for a particular tier or company within the group.

However, even if you know your credit score, it may not be useful to you. Since a score is just a snapshot of your credit information on a particular day, your score could change any time there is a change in your credit activity or a creditor reports information to a credit bureau.

In addition, insurance companies use different credit scoring models, so your score could vary from one insurer to another, depending on which factors a company uses in their model and the weights they assign to the factors.

Lastly, since the national credit bureaus don't share information, your score may change depending on which of the three national credit bureaus report the information that goes into the scoring model.

How can I improve my credit information if I have been adversely affected?

Find out which credit information factors had a negative impact on your credit score. Your agent or company should be able to tell you up to four (4) factors that had the most impact on your score.

Insurers and credit scoring model developers suggest several ways to improve your credit score:

  • Don't try to "quick fix"' your credit overnight or you could end up hurting your score. Instead, understand that the most important factors generally are: late payments, amounts owed, new credit applications, types of credit, collections, charge-offs, and negative items such as bankruptcies, liens and judgments.
  • Create a plan that will improve your credit over time. Pay your bills on time. Pay at least the minimum balance due, on time, every month. If you cannot make a payment, talk to your creditor. Work to reduce the amount you owe, especially on revolving debt like credit cards.
  • Limit the number of new credit accounts you apply for. Several applications for credit in a short time will usually have a negative affect on your credit score.
  • Keep at it. Your credit information will improve over time if you make changes now and continue to improve. If you show good credit behavior over time, your credit score may improve as a result.

What can I do if I suspect that my credit report contains inaccurate or erroneous information that adversely affects my credit score?

Review Your Credit Report

Under federal law, if you have been denied credit or insurance, if you are on welfare or unemployed, or if you are the victim of identity theft, you are entitled to a free copy of your credit report from the credit reporting bureaus.

The three national credit bureaus are:

Most consumer groups suggest you get a copy of your credit report once a year and review it for errors, even if you have not been denied credit or insurance.

As of March 1, 2005, consumers can get a free copy of his/her credit report from each of the three national credit bureaus (Equifax, Experian, and Trans Union) once every 12 months.

Contact information is as follows to order reports (please do not contact the credit bureaus directly):

Since the three national credit reporting bureaus do not share information with each other, if you correct an error on one report, it will not "fix" incorrect information on the other reports.

Tell the Credit Bureau About Any Errors

If you report an error, the credit bureau must investigate the error and respond to you within 30 days. The credit bureau will contact whoever reported the information (e.g. the bank, credit card company, collection agency, court clerk, etc.) to verify its accuracy.

If the disputed information cannot be verified, or if the reporting entity agrees that the information is incorrect, the credit bureau must remove, complete, or update the information. Also at your request, the credit bureau must send a notice of the correction to any creditor that has checked your file in the past six months.

If the reporting entity verifies that the information is indeed correct, the credit bureau will not remove the information from or change the information on your credit report. However, the FCRA permits you to file a 100-word statement explaining your side of the story, and the reporting bureau must include your statement with your credit information each time it's sent out. Make sure your insurance company has a copy of your statement, and ask if they will take it into account.

Once the errors are removed or corrected, it's a good idea to obtain a new copy of your credit report several months later to make sure the incorrect or erroneous information hasn't been reported again.

Tell Your Insurance Company About Any Errors

Don't wait until the credit bureau investigates the errors to contact your insurer. Tell your insurer right away and ask if the insurer will wait to use your credit information until the errors are corrected. Small errors may have little or no affect on your credit score, but big errors can make a significant difference in your insurance coverages or premium. If you or the consumer reporting agency notifies the insurer that the dispute has been resolved in your favor, Illinois law requires the insure to re-underwrite or re-rate you within 30 days after receiving the notice, and make any necessary adjustments. If the insurer has determined that you overpaid premium, Illinois law requires the insurer to refund any overpayment you made for the past 12 months of coverage, or the actual policy period, whichever is shorter.

Will a less than perfect credit score haunt me forever?

It depends. If your credit information has improved, ask your insurer to re-evaluate your insurance score and adjust your insurance coverages or premiums accordingly. Illinois law does not require your insurer to re-evaluate your credit information, so if your insurer does not re-evaluate your improved credit to your advantage, you may wish to shop for new insurance at renewal to see if better prices and/or coverages are available from other insurers. However, you should never cancel your current insurance until you are definitely accepted by another company, especially if you have recent traffic violations or claims.

Where can I go for help with credit problems?

If you can't resolve your credit problems alone, a non-profit credit counseling organization may be able to help you. Non-profit counseling programs are often operated by churches, universities, military bases, credit unions, and housing authorities. You can also check with a local bank or consumer protection office to see if they have a list of reputable, low-cost financial counseling services.

Some credit repair firms promise, for a fee, to get accurate information deleted from your credit file. Be wary of those entities because accurate information cannot be deleted from your credit record. You have the same access to credit reporting agencies that credit repair firms do and you are entitled to dispute credit report items for free.

Where can I get more information?

  • Ask your insurance agent or company if they have educational material that explains how they use your credit information.
  • Search the Internet, but be sure the information you find explains how insurers (not lenders) use credit information. Some credit vendors offer services that allow consumers, for a fee, to see their insurance credit scores.
  • Contact the Federal Trade Commission for information about the FCRA or their consumer brochures on credit. Call (877) 382-4357 toll free or visit their website at http://www.ftc.gov
  • Contact the Department of Insuranceby calling our Consumer Assistance Hotline toll free at (866) 445-5364 or visiting our website at http://insurance.illinois.gov

Final Points to Remember

  • There's a good chance your current or prospective insurer is looking at your credit.
  • Ask your insurance agent or company if they use credit information, how they use it, and whether it affects your insurance coverages, terms, conditions, or premiums.
  • Get a copy of your credit report from each of the three national credit bureaus and correct any errors. Tell your insurance agent and company about any errors and tell them your side of the story.
  • Improve your credit history if you have had past credit problems. Ask your agent or company for the top reasons (factors) that negatively affect your credit score and work to improve these factors. If you are paying higher premiums because of your credit information, ask your insurer to re-evaluate you when you improve your credit.
  • Shop around for insurance. Insurance companies use credit information in different ways, so your coverages, terms, conditions, and premiums can vary dramatically from company to company.


Disponible en Español

Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department.

There are agencies and groups available to help ease the burdens caused by major disasters - tornadoes, floods, or earthquakes. This fact sheet links consumers to organizations that offer information and assistance before, during, and after a disaster. Note: Some of the links may require the newest version of Netscape or Internet Explorer.

You may also want to review our fact sheet, When Disaster Strikes - What to Do After an Insured Homeowners Loss.

  • American Red Cross (Illinois Capital Area Chapter) http://www.redcross.org — The American Red Cross responds to more than 67,000 different disasters - helping people in emergencies and victims of disaster. Services offered by the American Red Cross include: armed forces emergency services, biomedical services, community services, disaster services, health and safety services, international services, nursing, and youth involvement. To find your Red Cross chapter, go to Find Your Local Red Cross on their web site and enter your zip code.
  • Disaster Insurance Information Office
  • The Disaster Insurance Information Office creates disaster insurance information offices to provide insurance information to displaced homeowners and businesses following a major disaster. The Office web site also offers links to insurance resources and company contacts. The National Insurance Consumer Helpline can be reached at (800) 942-4242.
  • Federal Emergency Management Agency (FEMA) http://www.fema.gov — FEMA, an independent agency of the federal government that reports to the President, assists consumers in preventing, preparing for, responding to and recovering from disasters. FEMA has ten regional offices, and two area offices. Illinois belongs to Region V, and the office is located at 536 South Clark St., 6th Floor Chicago, Illinois 60605. The FEMA Operations Center can be reached at (800) 621-3362.
  • Illinois Emergency Management Agency (IEMA) http://www.state.il.us/iema — With resources from state, local, and federal agencies and voluntary relief organizations, IEMA offers prompt and effective response and recovery to those dealing with disaster. The IEMA office is located at 110 East Adams, Springfield, Illinois and can be reached at (217) 782-7860.
  • Illinois Insurance Hotline http://www.illinoisinsurance.org
  • The Illinois Insurance Hotline (1-800-444-3338) is an information source for Illinois consumers. The Hotline is operated by the Illinois Insurance Association (IIA). The IIA is a non-profit service organization supported by the property and casualty insurance industry in Illinois. Hotline consultants are available to answer insurance questions from 9 a.m. to 4 p.m., Monday through Friday.
  • Institute for Business and Home Safety (IBHS) http://www.ibhs.org
  • BHS is a non-profit organization, with a membership of insurers and reinsurers. Disaster information, guides, and brochures can be found on the IBHS web site. The IBHS office is located at 1408 North Westshore Blvd., Suite 208, Tampa, Florida 33609 and can be reached at (813) 286-3400.
  • Insurance Information Institute http://www.iii.org
  • The Insurance Information Institute reports news stories, handles requests for information, and answers questions from consumers. The Institute publishes pamphlets and books on insurance-related topics. The Insurance Information Institute is located at 110 William Street, New York, NY 10038 and can be reached at (212) 346-5500.
  • National Flood Insurance Program (NFIP) http://www.floodsmart.gov
  • The NFIP, affiliated with FEMA, offers federally-backed flood insurance to communities with floodplain management ordinances. The NFIP Bureau and Statistical Agent Regional Office for Illinois is located at 1111 E. Warrenville Road, Suite 209, Naperville, Illinois 60563 and can be reached at (630) 577-1407.
  • University of Illinois Extension - Disaster Resources http://m.extension.illinois.edu/disaster/
  • Disaster Resources provides access to information on disaster preparedness and recovery, links to disaster agencies, organizations, and information networks. Extension office locations can be found on their web site or by calling the Extension's home office at (217) 333-5900.

What Our Department Can Do to Help

We suggest that you contact your insurance producer and/or insurance company first. If you would like the Department of Insuranceto assist you with a problem regarding your insurance company, you can file a complaint electronically or obtain a complaint form by calling one of the numbers listed below. Insurance analysts are available to answer general questions.

Assistance for Spanish-speaking consumers is available through both the Hotline and our Chicago office.

For more information about how our Department handles complaints, see our Understanding the Complaint Process fact sheet.

For More Information

Call our Consumer Assistance Hotline Toll Free at (866) 445-5364 or visit us on our website at http://insurance.illinois.gov

Disponible en Español

Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department.

Disasters are unforeseen and unpredictable. In Illinois, the most likely disasters to strike your home (depending on your location) are tornados, floods, and earthquakes. If your property is damaged or destroyed, you will likely have many questions and be faced with many decisions. Concerns about temporary shelter, emergency repairs, and the costs of restoring or rebuilding your home can be overwhelming.

This fact sheet provides information on what to do before a disaster strikes, how to handle claims, and insurance coverage information.

For information on organizations that assist in disaster related circumstances, review our Disasters – Who Can You Contact? fact sheet.

Before Disaster Strikes

Homeowners or renter’s insurance is your protection against a devastating loss. It is important to have some form of insurance coverage for your property and personal belongings. If you rent, your landlord may insure the building you live in, but the landlord’s insurance doesn’t cover your personal belongings. For information about shopping for homeowners insurance, see our Shopping for Homeowners Insurance fact sheet.

Here are some things you can do before a disaster strikes to make claim handling a little easier:

  • Inventory your personal property. Record model and serial numbers for more expensive items (i.e. televisions, DVRs, computers, etc.). Keep receipts for these items – they provide information such as: purchase price, purchase date, name of store, etc. You may even consider video recording or taking pictures inside your home. Note: Inventory records should be kept at a location other than your home.
  • Make photocopies of your insurance policies and keep the copies in a secure location away from your residence. Keep important papers together so they will be readily available when you need them.
  • Have your insurance producer and insurance company’s telephone numbers readily available.
  • Be familiar with the coverage of your insurance policy. Make sure you understand the difference between actual cash value (ACV) and replacement cost coverage for your contents. ACV replaces contents at cost minus depreciation. Replacement cost replaces your contents at today’s prices.
  • Remember: basic homeowners insurance policies do not cover flood, earthquake or mine subsidence damages. Coverage for these perils can be added to your homeowners insurance policy for additional premium. Contact your insurance producer for more information.

After Disaster Strikes

You should contact your insurance producer or company as soon as possible after a disaster strikes. Provide as much detail as you can about damage to your property. After a natural disaster, insurance companies may communicate the proper procedures for filing a claim via local newspapers, radio or television.

If your insurance company does not have representatives on the scene available to help you, call the company directly and ask for the claims department. The company’s contact number should be listed in your policy or can be obtained through the Department of Insurance. Be sure to provide all phone numbers where you may be reached, especially if your home is uninhabitable. Your insurance company will need to contact you.

In order to take charge of your situation, it is very important that you fully understand your rights and responsibilities. Recognize that after a disaster strikes you may be emotionally distressed. This is normal. Have a trusted friend or family member assist you. If your insurance policy has been lost or destroyed in the disaster or if you are confused about the policy benefits or exclusions, ask your insurance producer or company exactly what coverages you have purchased. Ask for a copy of the policy.

Temporary Repairs

To protect your property from further damage, you should make all necessary temporary repairs, such as boarding up windows and patching holes in walls or roofs, as soon as possible--even if you have not yet seen the company representative. Listed below are some tips on making temporary repairs to your property.

  • Contact your insurance company if you need emergency money to help make temporary repairs.
  • If possible, take photographs to show the way things looked before you began cleaning and making repairs.
  • It is your responsibility to mitigate against the possibility of further damages. This may include contacting your utility providers (i.e. water, gas, electric) to have utilities discontinued if necessary.
  • Keep all bills and receipts from repairs.
  • Do not dispose of items you believe may be a complete loss until the company representative has examined them.
  • Board up windows and holes in the walls or roof.
  • Cover furnishings with heavy-duty plastic or tarps, or store elsewhere.
  • Be sure to get prior agreement from your insurance adjuster before you contract for repairs.
  • Be cautious when signing repair contracts. Deal with local, reputable contractors. Contact the Better Business Bureau or the Attorney General’s Office to check on a contractor’s reputation. Discuss payment terms before you sign any contract.
  • If there is a lot of water in your home, try to get it out and ventilate your property to allow for drying.
    Clean and dry furniture, bedding, rugs, and carpet as soon as possible.
  • Try to prevent metal objects (appliances, drapery rods, etc.) from rusting by drying and rubbing or spraying with oil.
  • Have electrical equipment checked by a professional before use.
  • Take small valuables (jewelry, silverware, etc.) to a safe place.

Services Provided by Your Company

An adjuster from the company may come to your home and prepare a written damage estimate for the company. Be sure to get the name and telephone number of your adjuster in case you need to contact him/her or provide information to the company. You should obtain a copy of the estimate report, and do not hesitate to ask questions if you don’t understand it. If you have questions or need additional assistance regarding your adjuster or company, contact the Department of Insurance.

You can also hire a public adjuster to help you with a claim. Public adjusters are usually hired by the consumer to help settle a complex or difficult loss negotiation with an insurance company. Generally, the public adjuster receives a percentage of the settlement reached (usually 10% of your claim.) Choose a public adjuster carefully. Be sure you understand what services the public adjuster will provide and the fees he/she will charge. Illinois law requires public adjusters to be licensed with the Department of Insurance. Contact our Department to verify a public adjuster’s license.

The Claim Process

The claim process may begin in one of two ways: your insurance company may send a claim form, known as a “proof of loss form,” for you to complete; or a claims adjuster may contact you before you are asked to fill out any forms. A claims adjuster is a person who is professionally trained to assess the damage. He/she may be a company employee or work under contract with the company.

Your policy divides your claim in two separate parts – one for the house itself and one for the personal property or contents. You may also be entitled to reimbursement for additional living expenses. The check or draft payment for the contents will be made out to you. However, the check or draft for the house may be payable to you and your mortgage holder if there is a mortgage on your house.

You may receive an advance check immediately after the disaster to cover such items as additional living expenses and clothing. It is important for you to keep receipts for all items purchased with this money because when the claim is finally settled, these expenses will be deducted. For example, clothing and personal property receipts will be deducted from the amount allowed for contents; living expenses (i.e. motel bills or temporary housing expenses) will be deducted from the amount allowed for additional living expenses.

Personal Property Damage

It is beneficial for you to have an inventory, description, and replacement cost for your damaged items. You will need to list where you bought each item, how much you paid for it, and how much it will cost to replace. It may also be helpful to include brand names and model numbers if you know them. The more information you can supply, the better your adjuster will be able to assist with your claim. Do not throw out damaged furniture or other items of value. The adjuster will want to see them.

If you do not have or cannot locate a complete inventory, try to picture the contents of every room and then list and describe all the damaged or destroyed items. Include furniture, major appliances, electronics equipment, pictures or accessories in each room, as well as hobby items such as fishing or camping equipment, tools, other maintenance items and seasonal items such as holiday decorations and outdoor furniture. Finding out replacement costs may help speed up the settlement process.

Building Damage

Obviously, you should not endanger yourself or your family. If your home appears to be unsafe to live in, report this fact to the insurance company and reside elsewhere. You should make a list of all structural damage to property that you want to bring to the adjuster’s attention. If the company representative agrees the house is structurally unsafe, the company may hire a structural engineer to inspect your home. Your insurance provider may pay for the inspections.

However, if you and your contractor cannot agree with the company’s determination, you may have to pay the costs of a mutually agreed upon structural engineer to inspect the house. If possible, get written bids from reliable, licensed contractors. The bids should include details of the materials to be used and prices on a line-by-line basis. This information should make the claim process faster and easier.

If the structural engineer determines that the dwelling is repairable, the insurance company is obligated only for the repairs. If the dwelling is not repairable, the company will adjust your claim in accordance with your policy limits and will reimburse you for the cost of the inspections.

If Your Company Does Not Respond to Your Claim

Insurance companies will most likely give top priority to critical facilities such as hospitals, police, and fire stations, and then to homes that were entirely destroyed. Depending upon the severity of your property damage, it may be some time before the company representative contacts you. In the meantime, you should take temporary measures to protect your property from further damage and begin listing all damaged items that you plan to report.

If it is necessary to vacate your home, be sure to report the address and phone number where you can be reached.

Personal Property Replacement

The type of policy you have will determine the replacement of household contents and other personal property. Most insurance policies pay the actual cash value – an amount equal to what the items were actually worth at the time they were damaged or destroyed. For example, it might cost $1,000 to replace your sofa at today’s prices. If the average useful life of a sofa is 20 years, and your sofa was 10 years old on the day it was destroyed, the company would pay you $500.

If you paid an extra premium for replacement cost coverage on your personal contents, the company will first pay you the actual cash value as described above. Once you have actually replaced the items and submitted your receipts, the company will then pay you for the difference. Using the above example, the company would initially pay you only $500 for your damaged sofa. After you buy the new one for $1,000, the company would then reimburse you another $500 – the difference between the actual cash value and the replacement cost. Some companies also use replacement services that will locate certain items, such as appliances, for you.

As you begin replacing damaged items, be sure to keep all receipts. It may be advisable to submit accumulated receipts to the company every two weeks or so, rather than sending them in one at a time. Most policies require that you replace the contents within a specified time period from the date of loss. If you cannot meet this time period, ask your company representative for an extension. You can also submit a claim for storage costs that you incur until your home is ready for occupancy.

Valuables – Antique Furniture, Valuable Paintings, Expensive Jewelry, Etc.

Most homeowners policies place specific dollar limits on items such as jewelry, paintings, and silver, and will only pay the actual cash value of antiques (which may or may not be equal to their appraised prices). If you own these items and they are worth more than the basic policy limits, you have to purchase additional coverage to fully insure these items. If you have not done so, they may not be fully covered in your regular homeowners policy.

Adding Items to Your Claim

Illinois insurance regulations do not permit any check or draft from your insurance company to indicate “final payment” or “release of claim” unless the policy limits have been paid or the claim is being disputed. For example, if you forgot to list your Christmas decorations, but have already accepted a check, simply contact the company representative. Unless the company has paid the entire limits of your contents coverage, you are entitled to further reimbursement. It is not unusual for an insurance company to re-open a claim for additional payment. However, it is important that you file an accurate claim in a timely fashion.

Building Repair/Replacement

Repair or replacement of your home will depend on the type of policy you have. If your policy pays actual cash value, the company will pay the cost to repair or rebuild your house minus depreciation. Companies use many different factors to determine how much to deduct for depreciation, but with an actual cash value policy, you should not expect to be reimbursed for the full amount of repairs.

Replacement cost policy – If you purchased a replacement cost policy, and have met the company’s “insurance to value” requirement (the actual cost in today’s market to replace your home), the company will first pay you the “actual cash value” as described above. Once the actual repair or rebuilding is completed, the company will then pay you the difference up to the policy limits. If you choose not to repair or rebuild, the company is obligated to pay you only the actual cash value. Many policies require you to rebuild at the same location, but you may be able to negotiate this requirement with the company representative.

Guaranteed replacement cost policy – If you purchased a guaranteed replacement cost policy, and have met the company’s “insurance to value” requirement (the actual cost in today’s market to replace your home), the company will pay the full cost to repair or rebuild your house, even if it is more than your policy limits. For example, if your policy limits are $100,000 and it costs $120,000 to rebuild your house, the company would pay the entire $120,000 under this type of policy. Some companies will only pay a certain percentage above your policy’s limit (e.g. 25%).

If your home costs more to repair/rebuild than your policy allows, you may want to ask representatives at the local disaster application center or the toll free disaster tele-registration hotline if you are eligible for financial assistance.

Building Codes

Your homeowners policy may cover the costs of meeting local/state building codes and ordinances when your home is repaired/rebuilt. Check with your agent to determine whether your policy includes a building code endorsement that will pay these expenses. In most cases, homeowners policies do not cover the expense of bringing a house up to code or meeting certain ordinances (including floodplain requirements) if the house did not meet these requirements when it was destroyed. If your policy does not cover these costs, check with the agencies at the local disaster application center to see if you are eligible for financial assistance.

Choosing a Contractor

Be cautious when hiring a contractor – make sure you are hiring someone reputable. Here are some things to consider when looking for a contractor:

  • Hire a local contractor. Deal only with established firms or individuals who can provide references and are willing to give you a signed contract.
  • Check with the local disaster application center, your local building code department or the Better Business Bureau for guidance.
  • Don’t rush into signing a contract. Collect a number of estimates for the job.
  • Obtain written estimates before repairs begin.
  • Do not sign contracts for major repairs until your insurance company representative has determined how much damage there is and how much the company will pay.

Payment arrangements with your contractor should be handled carefully. Here are some things to consider regarding payment:

  • If the repair work is extensive, the contractor may ask for periodic partial payments as the work progresses, but it is highly unlikelythat a reputable contractor would request full payment in advance.
  • The contract should specify that payments be made as the work is completed.
  • If you have a mortgage on your home, the lending institution may also have specific requirements about how the insurance funds are expended.
  • If there is a discrepancy over the cost of repairs or the contractor has found hidden damage, you should first contact the insurance company representative and try to resolve the difference. If you are still unable to resolve your differences, contact the Department of Insurance at one of the numbers listed at the bottom of this fact sheet.

Where can I live while my house is being repaired?

Ask your company representative if you are insured for “Additional Living Expenses.” This coverage will pay for costs you incur that exceed your normal living expenses. For example, if you normally spend $1500 per month for mortgage/rent, utilities, food, and transportation, and these living expenses increase to $2000 per month because of the disaster, the insurance company will reimburse you $500. Be sure to save all receipts.

You should also ask your company representative if there are any restrictions on amounts allowed for hotel rooms. If you stay with a relative or friend, the company may require proof of actual payments to reimburse your host for lodging. Extra expenses, such as higher utility bills, incurred by your host would definitely be considered.

Endorsements/Additional Coverages

Flood

Standard homeowners policies do not cover flood damage. However, if you have a flood insurance policy, your company or the National Flood Insurance Program will assign an adjustor to handle your claim.

If your home is not covered for flood damage, you should ask the representatives at the local disaster application center or the toll free disaster tele-registration hotline if you are eligible for financial assistance.

Mine Subsidence

Standard homeowners policies do not cover damage due to mine subsidence unless you paid an additional premium for a mine subsidence endorsement.

Earthquake

Standard homeowners policies do not cover damage due to earthquakes unless you paid an additional premium for an earthquake endorsement. If you do not have earthquake insurance, any damage that can be directly attributed to the quake would not be covered.

If you purchased an earthquake coverage endorsement, your company will assign a representative to evaluate your damage. If you did not purchase earthquake coverage, you should ask the representatives at the local disaster application center or the toll-free disaster tele-registration hotline if you are eligible for financial assistance.

Homeowners insurance contracts generally have a stated deductible (e.g. $250) for claims such as fire and theft. The deductible for earthquake coverage is a stated percentage (e.g. 5%) of the amount of insurance you carry for each coverage under the policy.

If, for example, a homeowners policy provides $100,000 of coverage on the dwelling, $50,000 on the contents, and $10,000 on an unattached garage and the earthquake deductible is 5%, there would be an earthquake deductible of $5,000 on the dwelling, $2,500 on the contents and $500 on the unattached garage.

Since all insurance contracts are not the same, you should ask your insurance agent to review your policy and earthquake deductible.

Your Damaged Automobile

Your car is not covered under your homeowners policy. If you have the appropriate comprehensive or collision coverages in your automobile insurance policy, your company should reimburse you for damage to your car just like any other auto claim. Check with your insurance agent.

What Our Department Can Do to Help With Your Claim

We suggest that you contact your insurance producer and/or insurance company first. If you would like the Department of Insurance to assist you with a problem regarding your insurance company, you can file a complaint electronically or obtain a complaint form by calling one of the numbers listed below. Insurance analysts are available to answer general questions.

For more information about how our Department handles complaints, visit our Understanding the Complaint Process fact sheet.

For More Information

Call Our Consumer Assistance Hotline toll free at (866) 445-5364 or visit us on our website at http://insurance.illinois.gov