Now that power has been restored for most (but not all) people who were impacted by Hurricane Sandy, the next step is navigating the insurance claim process in order to recover for the damage inflicted by this huge storm.
Two articles, one in the New York Times and another in the Connecticut Post provide some useful tips and information. I will summarize both:
The Post article provides an overview of what insurance consumers will be facing during the claims process, making three major points:
(1) They will not be subject to costly hurricane deductibles, because officials in the Tri-State area have told insurers that they do not apply because the winds did not reach hurricane velocity when the storm made landfall;
(2) Significantly, home and business owners without flood insurance can expect to have their claims denied if they are result of flooding, but even if you are without it, there may be FEMA or Small Business Administrations loans available to assist you in rebuilding; and
(3) If the insurance company delays paying a claim, consumers should contact their state insurance department and/or consumer advocate to make a complaint.
In the New York Times, Ron Lieber writes a useful and informative column entitled “Your Money” that has previously put in the spotlight how many people have insufficient uninsured motorist coverage in their auto insurance policies, putting them at risk if they are involved in an accident with an uninsured driver or one who has minimal liability coverage.
In his article, “After The Storm – Managing Your Homeowner’s Claim,” he provides specific information to aid homeowner’s who are making claims. He warns that homeowners should be wary when filing property damage claims with their insurance companies, since billions of dollars are at stake for them when evaluating claims.
First, he advises that insurers may send “independent adjusters” to evaluate property damage. But do not take this title at face value, for they are not really independent, but instead are working directly for the insurance company as independent contractors. In other words, they do not have your best interests at heart and are not impartial. Further, they get compensated for each claim processed, so their incentive is not to carefully evaluate each one. You should monitor their evaluation and make sure they are doing a complete and thorough job.
Lieber also highlights the distinction between wind and flood damage, and that while a typical policy will cover the former, only flood insurance will pay for the the latter. 46% of those who live within one block of the water do not have flood insurance. There may be a dispute between whether damage was caused by wind or by flooding. New York law holds that if wind is the dominant, proximate cause of the damage, there should be coverage, even if flooding was a contributing factor. However, some policies include an exclusionary clause for these situations, so that they do not have to provide coverage.
Finally, the article provides information about public adjusters. These are trained, licensed people who will evaluate the property damage and negotiate with the insurance company on your behalf. They often charge about 10% of the eventual payout. Public adjusters can be useful when there is a difference regarding the amount of damage.
Not mentioned in the article — and here is my own public service message as a policyholder attorney — is that when a homeowner or property insurance policyholder is denied coverage and wants to appeal that determination, an insurance attorney is required, because what is in controversy is a legal issue – an issue of insurance and contract law. Public adjusters, while certainly familiar with insurance policy terms, cannot file a lawsuit on behalf of a policyholder. In addition, if the insurer is willing to honor a claim, but there is an ongoing dispute about the value, it is common for an attorney to file suit and work with a public adjuster who will provide testimony about the value of a claim.