What to Do When Insurers Start Rejecting Superstorm Sandy Claims

Hurricane Sandy DamageBy MANDI WOODRUFF

Superstorm Sandy is expected to cost a staggering $50 billion, with as many as 200,000 claims for wind damage and 20,000 claims for flood damage filed by consumers.

The sooner those claims are filed the better, but that doesn't necessarily mean everyone will get what they ask for.

One of the concerns, as pointed out by the Consumer Federation of America, is that there may not be enough money in the pot to cover everyone:

Payments by private insurers for wind damage to homes and business properties from Hurricane Sandy will likely exceed $10 billion dollars. Flood claims paid by the National Flood Insurance Program (NFIP) will be at least $8 billion dollars and will likely exceed $10 billion, exhausting the NFIP's existing $4 billion in payment authority.

To make up this shortage, FEMA is authorized to borrow up to $500,000 with an additional $1 billion available with Presidential approval.

"Even combined, these borrowings will be insufficient to pay all flood claims related to Hurricane Sandy," said J. Robert Hunter, Director of Insurance for CFA.

Whether it's due to fund shortages or not, the reality is that a lot of people will either see their claims flat out denied, or get checks for far less than they'd hoped for.

If that's the case, then your next step will be simple: Ask why. Either your insurer will be able to point out exactly which language in your policy backs up their conclusion, or you might wind up finding something they missed. This is crucial for one reason alone, says the CFA:

"Once the insurance company tells you the reasons for its action, it cannot produce new reasons for denying payment or making a low offer at a later time. You have locked them in -- a major advantage for the consumer."

All sorts of things can go wrong with claims. You might not realize you've agreed to pay a deductible, which could account for a missing chunk out of your claim (remember that in some states, insurers have been ordered to drop deductibles for hurricane coverage since Sandy was downgraded to a tropical storm).

Your insurer also might have slipped in new or ambiguous policy limitations you weren't aware of, which could be cause to call in help from an attorney.

Whatever the case, if you find reason to fight your reward, here are some simple steps from the CFA on what to do next:

Complain to senior staff in the insurance company. Use the records you have kept since the claim process began. The more serious the insurance company sees that you are in documenting how you were treated, the more likely they will make a more reasonable offer.

Complain to your state insurance department. All states will at least seek a response to your complaint from your company. A few states may actually intervene on your behalf with the insurance company in clear cases of bad claims handling. It is important to dispassionately present your side of the story, using the notes you have been taking.

See a lawyer. Remember, the notes you took are vital. In addition to an award covering your claim, if your treatment was particularly bad, the courts in many states will allow additional compensation when the insurance company acted in "bad faith."

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Sp Ock

A fairly one-sided article. How about telling people to only file legitmate claims for covered losses. How about telling people it is fraud to pad a claim or to claim damage was caused by something other than what really caused it. How about reminding everyone -- yet again -- that flooding is not covered under a home insurance policy. A flood policy is needed to cover flooding.

The author's comment, "Your insurer also might have slipped in new or ambiguous policy limitations " shows a complete lack of research or fact-checking. Insurance companies cannot "slip" anything into their policies. In both NY and NJ, the state insurance departments tightly regulate the industry. Any material policy changes must be approved by the regulators before a company can implement them. If there is a material change in coverage, a policyholder notice must be sent to every single policyholder. The problem is that most people don't bother to read their policy. Now whose fault is that???

November 28 2012 at 8:25 AM Report abuse rate up rate down Reply

please listen up.. the common wealth of pa. is where public adjusters started .. a good public adjuster , gets respect from your ins. company.. i no i have been dealing with these compaines for tweny seven years,, with the large loss that you r dealing with .. you need us !! yes we get a percentage , but the ins. compines dont like to pay .i would not have a job if the insurance compines where fair with the pay outs .. always use a public adjuster ..and please look up the good ones .. BBB is a good start..and to all of you out there , if you have allstate .. good luck with them .they denie everything.. their is a book written,called the three D's .. delay denie ,discourage ,ins. compines want to keep their money ,,this is why i have a job ,

November 17 2012 at 8:42 PM Report abuse rate up rate down Reply

Isn't it interesting how the lame stream media does not criticize Obama for his reaction to Sandy after taking Bush to the woodshed over Katrina? Hmmmmmm! Bias, you bet. The lame stream media protection their boy! Also, see how orderly teh victims of Sandy are. Hmmmmm ! White folks you know! Speaks volumes!!!!

November 13 2012 at 6:58 PM Report abuse +2 rate up rate down Reply

As an independent catastrophe adjuster I can tell you that we are instructed to find a way to pay the claim even if some of the claim might be questionable. We will allow for the damage if there is a gray area. Most people have never been in a large catastrophe and are not familiar with the process which can lead to additional distress. Claims are prioritized based on severity. People with trees in their living room will be seen before those with trees on their fence. There will be thousands of claims but there are not thousands of adjusters. The claims process takes time. Remember, you as the policy holder have a responsibility to make temporary repairs to mitigate further damage. That is your portion of the deductible. Get an estimate from a contractor if possible before the insuance adjuster arrives and provide that at the time of inspection. Many times the contractors estimate will include things that are not covered because the damage was not related to accidental direct physical loss (not storm related). This includes uncovered rot, previous shoddy workmanship or things that are not damaged that can be detached and reset in the course of repairs. Beware of any roofers that just show up at your door. Use local established roofers. And just because your neighbor is getting a total new roof doesn't mean you will get one. Each claim is based on that claims specific damage. Rising water is not covered whether wind driven or not and that is stated in your policy. If you have an endorsement for back up of sewer and drain there will be a coveage limit for your damage due to power outage and sump pump failure. The adjusters estimate is just that, an estimate. It is not written in stone and can revised as needed if additional damage is found. Using a public adjuster may or may not get you any more than the insurance estimate but one thing for sure is they will take a nice chunk of your settlement. Hope this was helpful.

November 13 2012 at 1:28 PM Report abuse +1 rate up rate down Reply

Now the real fun begins. It's bad enough that people, after a hurricane, have to deal with the loss of their homes, their belongings, their childhood memories, irreplacable items such a pictures, antiques, etc......after all of that misery, now you get to deal with the insurance companies that will find any way possible to screw you out of what they owe you. Good luck to you guys on the east coast, you're going to need it.

November 13 2012 at 12:18 PM Report abuse rate up rate down Reply

What a bunch of cry babies...there is plenty of wood laying around to rebuild.

November 13 2012 at 12:00 PM Report abuse -1 rate up rate down Reply

The best thing to do is hire a "public adjuster"! Google "Public Adjuster" or look at "AAPIA" It's the American Association of Public Insurance Adjusters"
These companies will even the playing field with the insurance company!

November 13 2012 at 11:21 AM Report abuse rate up rate down Reply
1 reply to kobishan's comment

Do not forget, however, they will charge you dearly for their service, and what you gain by their "help" may not cover their cost. My neighbor's tree fell on my garage, his house, and both his cars. We have the same insurance company.
Further, I had the insurance adjuster tell me that the "Public Adjuster's" interference with the claims processes for my neighbor's claim as well as his openly hostile attitude that he also instilled in the policy holder towards his insurance company may get him cancelled. My portion of his claim for damages was settled fairly and I got a check on the spot, as well as recomendations of some awesome contractors who did the work and billed the adjuster for cost overages. I would and have recommended them all. My neighbor, on the other hand, had a claim that took about 3-4 weeks longer to complete, although he did have more damages.

November 13 2012 at 1:51 PM Report abuse rate up rate down Reply

The homeowners need to fight the Insurance Companies, wind caused this not the flooding. If it wasn't for the wind there wouldn't have been the tidel surge, so its the winds fault.

November 13 2012 at 9:47 AM Report abuse +1 rate up rate down Reply
1 reply to robertt253's comment
Sp Ock

Typical policy excludes any form of surface water whether wind driven or not. Get a clue, the National Flood Insurance Program has been advertising for YEARS about this. Anyone along the shore should have Flood Insurance.

If you had a car crash and didn't have auto insurance would you expect your life insurance company to pay the bill to repair your car? No. Then why do you expect a homeowners company to pay for flood when the person didn't buy flood insurance. Please try actually reading a policy before posting uneducated comments.

November 28 2012 at 8:21 AM Report abuse rate up rate down Reply

Why is it, that the ONLY time anyone ever NEEDS their isurance company to do what they say they will do, is exactly the time you have to do the documenting, you have to contact the state insurance agency, and you will prbably have to contact a lawyer to defend YOUR rights as a policy holder!! The insurance lobby is huge, wealthy, and powerful. The "regulations" on insurance providers has been laxed and laxed again. Higher rates, large deductables, refusal to pay claims, law suits, and cancellation are the standard operating proceedure!! For an industry that is flush with cash, owns huge buildings in EVERY city, owns investment banking operations, sells anuities, mutual funds, and claims to be finincial advisers, where are they when you need INSURANCE? In court taking on individual policy holders who dared to take them to task. How about an insurance company that insures people in the 21st century!!

November 13 2012 at 8:02 AM Report abuse rate up rate down Reply

Remember, Insurance Companies, auto/home/health, are in business to make a profit and will always take a very defensive position on any claim that is a threat to that profit.

November 13 2012 at 7:29 AM Report abuse +2 rate up rate down Reply