You don’t have to wait for FEMA to contest an insurance claim

In 2012, Hurricane Sandy raged across the east coast. Although the storm hit some areas harder than it did others, it caused property damage from Florida to Maine. The damage resulted in 144,000 claims filed with insurance companies contracted by the National Flood Insurance Program.

We cannot provide clear numbers on exactly how many homeowner claims insurance companies paid out or denied, but we do know that thousands of homeowners believed their claims were seriously underpaid. About 4,000 homeowners took action and filed an appeal, but how fair was the process?

One homeowner had his claim approved, but the insurance company only paid him about half the value of house. In response, he gathered a wealth of information, including engineering reports and photographs. The thick file was, in his mind, proof that the insurance company should have paid him more. He thought FEMA would have to side with him, but he was wrong.

Statistics show that the Federal Emergency Management Agency sided with insurance companies in most of the decisions. FEMA claims that out of the 4,000 appeals, 15 percent resulted in ruling awarding more payouts to claimants.

Advocates dispute that number, but argue that the entire process is rigged — and it is not in favor of homeowners. David Charles is a public insurance adjuster, and he provided some information many homeowners would find shocking. Homeowners appeal their claims to FEMA, but the servicing companies that review the appeal are actually on the payroll of the insurance companies that denied the claim in the first place.

FEMA recently announced that it is willing to reopen all of the 144,000 claims filed after the storm. Claimants do not have to wait for proof of systematic bias to seek the assistance of an insurance lawyer.

Source: npr, “FEMA’s Appeals Process Favored Insurance Companies Almost Every Time,” Charles Lane, March 16, 2015 

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