Wednesday, February 27, 2013

Policy Holders Still Waiting for Payouts on Insurance After Hurricane Sandy

It appears that the victims of Hurricane Sandy have to jump quite a few unexpected hurdles before receiving their flood insurance claims. Even four months after the landfall of Hurricane Sandy, victims are still struggling to receive reimbursement from their flood insurers.

Insurance provisions can be extremely confusing; and policy holders in New Jersey are wondering if this wasn’t a deliberate decision by insurance companies in order to delay payouts. In some cases, according to an article in the Star-Ledger [1], the payments were delayed for so long that they are no longer sufficient to cover the damage combined with the expenses of temporary living. Many residents have found that the payments that were promised them have been significantly lowered without explanation. 

While many policy holders were under the impression that they had purchased full coverage; coverage that would pay for the entire loss of their $200,000 homes along with $60,000 worth of belongings. However, that amount doesn’t take into account the common practice of deducting the amount of property depreciation. So, if the home’s original purchase price $200,000, and the homeowner purchases the maximum amount of flood insurance, the payout isn’t automatically $200,000. Should the claim be approved, the payout will be minus the deductible, as well as minus the property depreciation.

If the payout is given at all. Of the more than 140,000 claims submitted for reimbursement, only 66 percent have been closed; and the fact that the claim has been closed is no guarantee that payment has been issued. Thus far, 5,900 have been closed without having been paid out. 

FEMA has reportedly given incentives to the private insurers that handle the flood insurance on FEMA’s behalf; FEMA withholds payments to the insurance companies until the claims are closed out and paid. However, the FEMA auditing process is strict, and if the auditors have determined that overpayments were made, then the money is taken back from the insurer directly.

Recouping flood insurance benefits has turned into a full-time job for many hurricane victims.  Policy holders often have to leave several messages for their adjusters before their calls are returned; and not all of them even are. 

The promised flood insurance payouts that might have sufficed two months ago are no longer acceptable for many victims that have had to seek shelter in hotels and motels. In order to cover the mounting living expenses, hurricane victims have had to dip into their retirement accounts. There are not only the hotel/motel bills to contend with, there are the expenses of travelling to work or school from sometimes distant locations, as well as the cost of eating out, since most hotel rooms are not equipped with kitchen areas.

When purchasing disaster insurance of any kind, make certain that you go over all of the provisions with your adjuster thoroughly. If you are unsure of the meaning of any part of your policy, ask your adjuster to clarify it for you; if he or she is unable to do so, do not purchase it.

Make a list of all of the valuables in your home, along with the original purchase price, date of purchase and serial numbers. It is a good idea to scan the list, along with all other important documents and either email them to yourself or subscribe to a data recovery service; in the event a disaster that destroys your property and possibly your computer and your files, you will still be able to access your paperwork.

[1] Beeson, Ed: Hurricane Sandy Flood Insurance Claims: An Exercise in Exasperation, Homeowners Say 2/24/2013

Tuesday, February 19, 2013

Lack of Correct Sandy Classification Led to Lack of Preparedness

Julian Omidi discusses the National Hurricane Center’s inability to classify super storm Sandy as a hurricane before the event, thereby inadvertently causing residents of the North East to fail to recognize the severity of the storm. Julian Omidi looks at the consequences this miscategorization may have had for those on the East Coast.

Even though we refer to super storm Sandy as a Hurricane, by the time it made landfall on the East Coast it was, technically, a post-tropical cyclone, according to the forecasters at the National Hurricane Center. While this may not seem like a tremendous difference to those of us who are unacquainted with meteorological events, the agency and local officials were very concerned that the downgrade would cause residents to fail to take the dangers seriously, according to a recent report in the New York Times.[1]

The National Hurricane Center takes its forecasts extremely seriously; accuracy of the classifications of various storms supersedes even the desire to protect the population from underestimating potential hazards.  By inaccurately referring to the storm as a hurricane, NHC agents could have harmed the credibility of the center, possibly causing the public to disregard future warnings.  Nonetheless, emergency management centers virtually begged the NHC to continue to call Sandy a hurricane – even though it wouldn’t have been strictly accurate.

Once a storm has been downgraded from hurricane to post-tropical cyclone, the NHC no longer has the authority to issue advisories due to a long and convoluted series of rules and regulations.  Local emergency management officials were left largely on their own to warn the public of the catastrophe, which may have caused the public to take the storm less seriously than it might have had advisories been given by the NHC directly.

On October 27, two days before the storm hit, the NHC officially downgraded the hurricane to a post-tropical cyclone, and left local emergency management agencies to issue specific warnings about the dangers to life and property.  Although cyclones might not seem a terrifying as hurricanes, they are more than capable posing a significant threat to human life, and this certainly proved to be true in Sandy’s case, since a total of 147 lives were lost in the United States and the Caribbean, and billions of dollars worth of property was destroyed.  

The NHC is currently working to modify its storm advisory rules so that official advisories about any tropical storm that poses a threat to life and property can be issued.  Currently, the parent agency of the NHC, the National Oceanic and Atmospheric Administration, has the authority to deliver advisories regarding tropical storms that are not officially classified as hurricanes, so long as these storms have the potential to cause momentous hazards.

Of the 147 deaths that occurred as a direct result of the super storm, 72 occurred in the North East region of the United States. More than 8 million residents were left without power for weeks afterword, and approximately 650,000 homes were either damaged or completely destroyed.

By Julian Omidi 

[1] Santora, Marc: Hurricane Center Seeks Expanded Authority to Issue Warnings New York Times 2/12/2013