About 142,000 Hurricane Sandy victims have until Sept. 15 to file for a review by the Federal Emergency Management Agency of what they feel is low-balled compensation of their flood insurance claims related to the 2012 Atlantic storm. Meanwhile, with the clock ticking and many New Jersey policyholders uncertain as to how to proceed, members of the New Jersey congressional delegation sent a letter to FEMA Thursday requesting that the deadline be pushed back to Dec. 15.
Congressional hearings and investigative journalism revealed private insurance companies' widespread underpayment of claims under the National Flood Insurance Program or NFIP.
"The NFIP, a federal program, offers flood insurance, which can be purchased through private property and casualty insurance agents," according to FEMA.
Those who signed the letter include U.S. senators Bob Menendez and Cory Booker as well as U.S. representatives Frank Pallone, Bill Pascrell, Frank LoBiondo, Albio Sires, Leonard Lance, Donald Payne Jr., Rodney Frelinghuysen, Donald Norcross, Scott Garrett, Bonnie Watson Coleman and Chris Smith.
"Indeed, many survivors were reluctant to reopen their claim out of the fear that any additional funds recovered would simply be clawed back by the government," the delegation wrote. "In addition, lack of clarity regarding how additional payouts would be considered in substantial damage determinations adds to the confusion and hesitancy. While we commend FEMA for waiving duplication of benefit claims on FEMA funds and clarifying that additional funds will not affect substantial damage determinations, the uncertainty surrounding Community Development Block Grant - Disaster Relief financed grants has no doubt suppressed participation in the review."
The correspondence continued, "In addition, FEMA's outreach efforts have only recently begun to match the scale of the need. Thousands of homeowners still have countless questions about what information they need to provide and how they need to proceed in order to get every penny they're entitled to. FEMA has recently stepped up its outreach efforts, but is still behind the curve due to a slow start in the initial days and weeks following the announcement."
The low-balling of claims is nothing new in the insurance industry. There is a term that describes the general practice of denying claimants that which they are owed. It's called operating in "bad faith," which includes:
- Denying a valid claim
- Unreasonably delaying payment
- Insurance company's adjuster, looking out for the company's interest instead of the victim's entitlement, under-valuing the adjustment
- Offering to settle with the claimant for less than the claim is worth
- Failing to pay a judgment against the claimant from a lawsuit that the insurance policy requires the insurance company to defend
Of course, an ideal situation for these NFIP policyholders is that the review process results in a just outcome, without the claimants having to turn to litigation. The review is for someone who is not in litigation.
But, there is another side to that coin.
Getting an attorney involved in the insurance claims process can be a prudent move. Take it from the insurance attorneys at Reich & Binstock, a law firm that operates in all 50 states and has represented thousands of victims of bad faith insurance practices in recent years, including Hurricane Ike victims. When you must deal with an insurance company, an attorney skilled in handling insurance litigation can be a valuable asset in protecting your rights.
Insurance companies inherently represent their own interests, not necessarily those of the policyholder.