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Insurers expect to pay $1 billion in claims

Insurance companies dispatched armies of claims adjusters yesterday to help businesses and consumers slammed by Hurricane Isabel, and the Small Business Administration is preparing to lend millions in low-interest loans to aid with the recovery.

Claims from businesses and consumers with losses from Isabel are expected to cost insurers about $1 billion, according to the Insurance Information Institute, a trade association for property and casualty insurers.

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"It could have been much worse," said Carolyn Gorman, a spokeswoman with the trade association's Washington office.

In Maryland, bankers also said they will work closely with customers who sustained damage to their houses and businesses in the aftermath of the storm that ravaged the state Thursday, flooding homes, knocking down power lines and uprooting trees.

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President Bush declared Maryland a disaster area yesterday after he received a letter from Gov. Robert L. Ehrlich Jr. requesting emergency aid.

"I have determined that this incident is of such severity and magnitude that effective response is beyond the capabilities of the state of Maryland and the affected local governments and that supplementary federal assistance is necessary," Ehrlich wrote in a letter to Bush.

While the governor awaited word early in the day, insurance representatives were out in force, advising consumers on how to file claims for storm-related damages.

Gorman said the hardest hit would be helped first. "You should think of it as a triage operation," she said.

If individuals suffer damage, they should immediately review their insurance policies, which spell out how much time policyholders have to file claims, although they are encouraged to do so as soon as possible.

Sometimes policyholders are surprised by what is and isn't covered.

Flood insurance, for example, is a product of the federal government and sold through insurance companies. But simply having water in your basement, even a lot of water, doesn't qualify for coverage unless a whole neighborhood or area is under water, Gorman said.

Flood insurance also won't cover personal items in the basement, such as a sofa, but it will pay for damage to the furnace, water heater or other machinery that keeps the house going, she said.

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If water rises to the first floor of a home, then flood insurance will cover personal property, she said. But it will only cover the depreciated value of the items, not the replacement cost.

Homeowner's insurance will kick in if your house is damaged by, say, a tree knocked down by the storm. If you've experienced damage to your home or business, contact your insurer. Some have set up special toll-free numbers to handle Isabel claims or are accepting claims online.

Take photos to help a claims adjuster, experts advise. Also, policyholders should make temporary repairs to prevent further damage and keep a copy of the receipts for any repair work, experts said.

Even if insurance doesn't cover certain repairs, keep the receipts because the repair costs might be tax deductible, said Joe McCormick, corporate relations manager with Allstate Insurance Co.'s regional office in Virginia.

Make an inventory of damaged personal property, including a description, the age of the items and purchase cost. Keep a copy for yourself and make one for the adjuster.

Be wary of con artists showing up at your door offering to remove fallen trees or make home repairs, Gorman warned.

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Sometimes workers claim that a homeowners' policy will cover the cost of the work, and it's only after the homeowners shell out hundreds or thousands of dollars that they discover it isn't true, she said. Often, too, contractors will show up after a disaster, asking for, say, $10,000 to buy materials to repair a roof and never return, she said.

Insurance companies typically keep a list of reputable contractors they have worked with, although policyholders are not obligated to use them, Gorman said.

Help will also come from the U.S. Small Business Administration Disaster Area Office in Niagara Falls, N.Y.

When Hurricane Floyd ripped through the state in 1999, the agency made $3.4 million in loans to 214 residents and business owners.

The SBA makes low-interest-rate loans through its disaster loan program to homeowners, renters and business owners, said Perry Pedini, a spokesman for the Disaster Area Office. The agency will lend up to $200,000 to homeowners and renters to repair damages to their dwellings, and up to $40,000 for residents to repair or replace damaged items within the structure, Pedini said.

The SBA also lends businesses up to $1.5 million to repair damaged buildings or help them recover if business has been interrupted.

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"SBA loans can certainly be used as a bridge for disaster victims to begin their repairs until their insurance settlement is received," Pedini said.

SBA disaster loans are currently available at rates as low as 2.812 percent for individuals and 2.953 percent for businesses, Pedini said. Payments on the loans are typically deferred for four months.

More than 90 percent of disaster loans are approved at the "subsidized" rates, he said.

Pedini said disaster victims' first call should be to the Federal Emergency Management Agency.

If FEMA opens disaster recovery centers where businesses and individuals can apply for the loans, the SBA will dispatch representatives. The SBA also has a toll-free number and a Web site for disaster victims.

The agency will dispatch an SBA representative to visit the property. Loans are approved within seven to 21 days, Pedini said.

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Bankers also said they would help customers who are struggling in the wake of the hurricane.

August Chiasera, regional manager of M&T; Bank's business banking division for Maryland, Washington and Virginia, said that beginning Monday, 40 to 50 loan officers will start placing thousands of calls to small business operators to assess their needs.

"Monday is not going to be business as usual, and we know that," Chiasera said.

Bank of America is considering helping customers by reducing interest rates on home equity loans, extending monthly loan payments and offering emergency credit line increases to Bank of America credit card holders, said Terri Bolling, spokeswoman for Bank of America in Baltimore.

ISABEL

BY THE NUMBERS

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1

baby -- named Isabel -- born after mom went into labor at a storm shelter

2.2

inches of rain fell in Cumberland, Md.

7

-foot tidal surge floods Baltimore Harbor

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9

pumping stations flooded in Baltimore County

19

Dumpsters sent to Fells Point to help residents clean up

24

water rescues by city firefighters

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59

mph winds forced closure of the Bay Bridge for the first time in 50 years

74

people rescued from Millers Island

92

shelters set up across Maryland

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126

traffic lights out in Baltimore City

500

businesses that sell food in Baltimore must be reinspected before they reopen because of flooding

534

trees fell in Baltimore

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630

National Guard troops on duty in Maryland

3,000

BGE utility workers working to restore power

540,000

sandbags at the ready across the state

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645,000

BGE customers without power in Baltimore region at height of storm

1

million pounds of dry ice distributed by BGE

1.25

million people without power across Maryland at height of storm


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