Hurricane Fraud and Insurance Claim Denials

When your home has been severely damaged or destroyed in a hurricane, the last thing you need is your insurance company denying or delaying your valid hurricane insurance claim. Unfortunately, that's what happened in thousands of cases after Hurricanes Wilma, Rita and Katrina, and lawyers say that many of those turned out to be situations of bad faith insurance or hurricane fraud. But, what is it and what remedies are available to victims?

What is hurricane fraud?

Fraud can come in many forms, according to R. Jason Richards, a Florida attorney whose firm represents victims of hurricane fraud. "From the policyholder's perspective, fraud typically occurs in the form of misrepresentations made by the insurance company during the handling of the claim. Conversely, fraud can also occur if a policyholder makes false representations or claims relating to damage. Fraud can also be perpetrated by third parties, such as contractors, who may knowingly submit bogus damage estimates."

Richards provided the following example of hurricane fraud:

One of the more egregious examples from Hurricane Katrina was a situation where an insurance company failed to include contractor's overhead and profit (O & P) in their damage estimates in an apparent effort to save the company money and shortchange the policyholder. Obviously, this presented a major problem for policyholders because O & P (typically 20% of the total damage estimate) is an expense that must be paid in order to have the work performed. If O & P is not paid by the insurance company as a cost of damage, the policyholder is left to foot the bill.

Remedies available to victims

There are legal and non-legal remedies available to victims of hurricane fraud. According to Richards, the non-legal remedies would be to address the issue with your insurance company and let them know what the issues are and why you feel you have been wronged. He told us, "If the insurance company doesn't respond appropriately, then the legal remedy would be to bring a lawsuit. Depending on the insurance company's conduct, it could be a bad faith claim or just a straight breach of contract claim."

An attorney fights the fight, so you don't have to

Hiring an experienced insurance attorney will increase the likelihood of your getting the best result possible. Attorneys who are experienced in handling these cases know the ins-and-outs of insurance as well as the defenses and tactics employed by the insurance companies in denying claims. Richards says, "In most cases, the attorney will likely have handled a similar issue before. Just as important, an attorney can help relieve much of the stress and frustration that comes with dealing with the insurance company on a daily basis concerning the loss. The attorney fights the fight, so you don't have to."