Insurance claims for property damage caused by storms or hurricanes are standard fare in Florida and in other states regularly plagued by such events. Superstorm Sandy, which was not a problem for Floridians, hit a number of other states near the end of 2012, causing extensive property damage from flooding. The National Flood Insurance Program stepped in to pay homeowners for the damage to their homes.
This opened a controversial chapter in insurance company claims processing. It is not yet over and has exposed a possible practice that some say is part of the DNA encoding that is endemic to the property insurance and insurance adjusting industry. The Sandy program was run by the Federal Emergency Management Agency (FEMA).
The agency employed private insurance companies that in turn commissioned engineers to go out and report on the condition of the damages. If the engineer reported that the damage pre-dated the storm, recovery was denied to the homeowners. In fact, it has been discovered that some of the engineering reports were doctored, changed or directed by the insurers to report pre-existing structural damage as opposed to sudden flood damage.
One Long Island family discovered that an engineer’s original report in their favor was changed under an insurance official’s orders to make it conclude the opposite. The report was changed and the claim denied. A U.S. magistrate judge has determined that there were possibly widespread “unprincipled practices” by insurers to essentially steamroll homeowners out of full and fair recoveries.
Although the insurers were getting paid by FEMA regardless of the outcome of the claim, lawyers for homeowners say that such devious insurance adjusting tactics are endemic and, in effect, an inherent part of the nature of the industry. Florida residents in the past have gone through similar experiences that raised questions about the good faith practices of insurance payouts for storm and property damage. The Sandy situation is in litigation, and the outcome may be instrumental in bringing about change, if the court decides to impose reform measures in the case.
Source: dailyrecord.com, “Insurers dogged by claims of slanted Sandy reports“, David B. Caruso and Michael Kunzelman, Dec. 27, 2014