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 http://www.nj.com/business/index.ssf/2013/02/sandy_insurance_story.html
