As businesses, it is no secret that insurance companies are out to make money. Denying insurance claims is one way to cut costs and improve the bottom line. But insurance companies also have a reputation to keep in order to remain in business and a responsibility to the communities in which they operate. Because of these conflicting priorities, an insurance company’s duties in exchange for compensation need to be explicitly outlined in a contract. Such a contract just happens to be your insurance policy, for which the insurance company receives premiums from you.
If an insurance company fails to pay fair compensation for a legitimate hurricane damage claim, the company is said to be acting in bad faith. Chances are that most of your neighbors are insured with the same handful of major providers available in your area. So the temptation to act in bad faith in the face of a disaster such as a hurricane tends to be great, since tens or even hundreds of millions of dollars may be at stake.
One of the top reasons insurance companies deny hurricane damage claims has to do with the cause of the damage. Homeowners insurance typically does not cover floods resulting from a hurricane since flood damage is often covered by the National Flood Insurance Program.
But in a recent landmark Katrina-related lawsuit, the judge let a jury decide whether the damage to a couple’s home was caused by flooding or excessive wind, and placed the burden of proof on the insurance company. Since the jury decided in favor of the couple, and since the insurance company had denied them their proper claim, the couple was awarded $2.5 million in punitive damages. The implication of this outcome to the insurance industry is enormous, because with hundreds of Katrina lawsuits still pending, it may end up costing them billions of dollars in payouts.
Additional arguments insurance companies have used to deny hurricane damage claims include that a moldy wall does not need to be torn down, or that they are only required to rebuild a home to its original condition and not to comply with newly changed building codes. In some cases, the policy may not be clear with regard to certain types of damage. But if the insurance company is aware that you have legal representation, there is a greater likelihood that you’ll be treated fairly.
If your property has suffered damage as the result of a hurricane, you may wish to consider taking the following steps:
- Take photos of the damage – if you have pictures of the property that were taken prior to the storm, try to include photos of the damage from the same angle.
- Contact your insurance provider as soon as you are able to.
- Keep a log of your contacts with insurance company representatives.
- Make a list of damaged personal property and furnishings.
- Make any temporary repairs needed to prevent further damage.
- Keep all receipts for hurricane related expenses, including for any temporary lodging for you and your family.
- Save all paperwork.
If you suspect that your insurance claim is being denied without proper reason, please call or email us to speak with an experienced insurance bad faith attorney.