C
MMUNITY BUILDER Extra
Alexandria Detroit Lakes Morris East Ottertail Focus Park Rapids Wadena Saturday, October 30, 2010 • 8 Pages In this issue of Community Builder, a quarterly publication of local Forum Communications newspapers, we will go on the job with the tornado rebuilding effort, and learn about the people and procedures being used to get homes, the school and the lives rebuilt in Wadena.
Bridging the gap
What to do when your homeowners policy didn’t cover all of your losses RACHELLE KLEMME
rachellek@wadenapj.com
How can homeowners bridge the gap if insurance didn’t cover all their losses? According to local insurance agencies, banks and the LongTerm Recovery Committee, they have several options.
Understand your insurance policy
Jolene Johannes, one of two State Farm insurance agents in Wadena, said that some area residents might not realize how much they can get back from their policy. “You don’t want to leave money on the table if there’s still money available,” Johannes said. Replacement cost coverage and replacement cost coverage on contents allows policyholders to recoup some of their losses. “Insurance companies often will pay the actual cash value on the roof, on the siding and the windows, and when the work is done, you submit your receipts to recover the actual cost,” she said. “If you have replacement cost coverage.” Some policy holders may also have replacement cost coverage on contents which allows them to recover more
than just the actual cash value, which is the depreciated value of their property. “When the item is replaced, the policy holder submits the receipt and then they get coverage for the similar item,” Johannes said. “So if your refrigerator is 20 years old, and the insurance company pays you $50, and then you go to buy it back ... but the same kind of refrigerator is $700, as long as you have a receipt, the insurance company will pay that difference.” She emphasized that replacement cost coverage on contents is necessary for reimbursement. Katie Uselman of Pierce & Associates said – Katie that some area residents may have coverage for recoverable depreciation without knowing it. “Recoverable depreciation is when your adjuster comes out and says, ‘We believe the damages are $10,000. We’re going to give you $7,500 to start on your repairs, and when the work is completed, you can get the rest of those funds,’”
Uselman said. “A lot of people don’t know they have recoverable depreciation.” Johannes said that with some companies, including State Farm and American Family Insurance, policy holders who choose to insure their house at the full recommended value are actually insured up to 20 percent over the full value. Johannes said that communicating with one’s insurance agent is important. “If you’re going to go over the amount that the insurance estimated as your total cost, they you want to contact your insurance company first,” she said. “If the contractor finds additionUselman al damage, you want to be sure also to contact your insurance company right away.” Uselman said that understanding one’s insurance policy could help to avoid confusion in the future. “Review your policy annually. Your agent should be doing that with you,” she said. Johannes said that she called the State Farm agent in
“Review your policy annually.”
Greensburg, Kan. right after the June 17 tornado. She said that the Greensburg agent had some good advice about life after a tornado. “Every day, you look at all this damage and pretty soon ... you start thinking that your neighbors are better off financially than you,” Johannes said. “The last thing you want to say to that person whose house is OK is, ‘Oh, you’re so lucky.’ Because they in their mind don’t feel they are lucky.”
Investigate low-interest loans
Jamie Pettit, executive vice president and internal auditor at First National Bank, talked about the process of getting a loan to make up the difference between insurance payout and recovery costs. “The first thing we would do is review the appraised value of their property and see how much they currently owe on it, whether it’s with us or another lender, and then evaluate their ability to repay a loan if they need to take out a loan to bridge that gap.” Kip Browne of Wadena State Bank said that if there is insurance money left after mortgage on the first house, it can be used to get started on a new house.
“With the money they have left over, they can use that to go to a lender to get a loan to build a new home on that same location, or they can use the money that’s left over to go to a lender to buy a different home,” he said. Jeff Browne of Wadena State Bank, and also the treasurer of the Wadena-Otter Tail Long-Term Recovery Committee, said that residents can adjust an existing house loan. “Let’s say you have a house worth $100,000 and you owe $50,000 on it, and your debtto-income ratio is under 40 percent — in other words, if you make a thousand dollars a month, you want to see more than $400 in fixed obligations, which includes your house payments, car payments, student loans, anything that’s debt that’s paid over time. So if somebody is short $10-15,000, and the debt to income ratio is in line ... maybe they have 15 years left of the mortgage. Well they can probably go in and redo the loan for 65, keep the payments the same and you put it back on a 20 to 30 year amortization,” he said. Browne said that most people he knew of were adequately insured. Besides local bank loans, the Small Business Adminis-
tration (SBA) is a resource for affected homeowners to tap into low-interest loans. “I look at the credit bureau reports every month, and I’ve noticed there’s more Small Business Administration loans that are occurring, so people are going that direction,” Browne said. “And that’s a good way to borrow because it’s at 2 or 3 percent.” “The SBA low-interest loan program ended Sept. 7,” said Wendy Molstad, case worker at the Long-Term Recovery Committee. “But homeowners that would still like to apply can send in a letter why they didn’t meet the deadline, and they will take those cases on a case-by-case basis.” Molstad said that the USDA is another source for loans. She said that Rural Finance Authority has disaster loan programs for farmers, and that the Minnesota Housing Finance Agency (MHFA) has interest-free loans for people with low incomes.
Long term recovery committee
Help from the Wadena-Otter Tail Long Term Recovery Committee is another option for anyone affected by the See BRIDGING GAP on PAGE 6
Nordlund, family getting back to normal life BRIAN HANSEL
brianh@wadenapj.com
When Sue Nordlund climbed out of the basement of her home at 326 Eighth Street Southwest on the afternoon of June 17, she had one big reason for despair but six very good reasons to be thankful. Not only was she OK, her daughter, Denise, and four of her grandchildren, Stephanie, Mickaela, Casey and Chase, were all fine as well. The EF-4 tornado that had destroyed the brick-built Wadena Senior High School only two blocks away, and had pulverized the homes of some of her neighbors, had blown the windows out of Nordlund’s twostory home and dropped a big tree on her garage. The main floor of the home she has lived in for 29 years was littered with glass. Her lawn was full of glass, insulation and property which did not belong to her. Her daughter Denise ran upstairs to find the car she had arrived in was destroyed. Chase found a baseball bat he had tucked into his grandma’s garage sitting squarely next to home plate in the back yard – just begging for someone to pick it up and swing it. The baseball game would have to wait. Nordlund and her family put shoes on and joined the people who, like them, were emerging from their places of safety. “There were a lot of people around and the police were going around making sure everyone was OK,” Nordlund said. “It was just kind of shock, there was a lot to take in.” City officials ordered them to leave the neighborhood because of a gas leak. With the help of her daughter, her son-in-law Trevor and her son Jamie, Nordlund began putting her world back together. Trevor tackled one of the first big jobs, boarding up the windows.
Photo by Brian Hansel
Sue Nordlund’s two-story home at 326 Eighth Street in Wadena was one of more than 200 dwellings in Wadena to be destroyed or damaged by a June 17 tornado. Nordlund was in the basement at the time along with her three grandchildren, Chase, left, Casey and Mickaela, her oldest grand-daughter, Stephanie, and her daughter, Denise.
After contacting her insurance agent, Nordlund and her helpers started cleaning up. There was a lot of painting to do inside, a roof to repair, windows to replace, flooring to replace, carpet to lay. The house will get new siding in November. “There has been a lot of work done,” Nordlund said. In fact, the recovery process is still under way. Still, there were many reasons to be thankful. No one had been killed and Nordlund did not hear of any injuries in the neighborhood.
Getting back to normal is the goal. Grandma takes care of her grandchildren in the summer during the day while their parents are working. After the tornado, the grandchildren could no longer visit for awhile. “I know for a few days there was no way to move on these streets because there was so much going on, but that’s a good thing,” Nordlund said. Nordlund found an old stove in her yard and a pillow, and the television did not work because a 2x4
board had gone through the screen. That did not matter because for the first six days after the tornado she did not have power. “I am just glad that everyone came out OK and we can replace everything else that was damaged,” Nordlund said. “We’re just thankful for that.” Nordlund has a job at Larry’s Pizza in downtown Wadena, and in addition to fixing up her house, she kept working. Going to a job was actually good therapy and a good es-
cape from all the work at her home. “It wasn’t easy but sometimes you just have to make the best of what happens. There was just a lot of work to do and we kept working at it,” Nordlund said. Other people in her neighborhood lost so much more than Nordlund but she sees her neighborhood, and her life, slowly returning to normal. She just does not want to pick up another paintbrush anytime soon.
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