Hurricane Insurance Fraud: Understanding Wind Vs. Flood Damage & How FEMA Works

UPDATED: Jul 13, 2023Fact Checked

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Jeffrey Johnson

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 13, 2023

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UPDATED: Jul 13, 2023Fact Checked

Hurricanes generally involve both wind and flood damage to a structure. However, coverage for flood, or water, damage is a separate form of insurance obtained from FEMA and wind damage is covered under most homeowners insurance policies. Understanding how the different coverages work can be extremely complicated for policyholders, and an provides an opportunity for insurers to engage in bad faith insurance practices or hurricane fraud.

Wind vs. water damage

R. Jason Richards, a Florida attorney whose firm represents victims of hurricane fraud, explained the differences between wind and water damage:

Flood coverage is a separate form of insurance. It is a single-risk insurance policy that insures against all ‘direct physical loss by or from flood.’ Your flood policy will not cover wind damage and your homeowners’ policy will not cover flood damage.

How FEMA works

FEMA (the Federal Emergency Management Agency) is the federal agency responsible for coordinating response efforts to federal disasters, risk reduction, and recovery. Richards says that as part of these duties the agency oversees the National Flood Insurance Program, which issues flood policies. These flood insurance policies can be issued by FEMA directly or by private insurers called write your own (WYO) companies, such as independent insurance agents, who can issue policies in their own names, collect premiums, and pay claims.

Unfortunately, FEMA hasn’t always done well by policyholders. Richards explained some of the agency’s shortcomings:

Although many of FEMA’s shortcomings were brought to light following the aftermath of Hurricane Katrina, one of the agencyýs more practical shortcomings is that it fails to coordinate with its fellow wind adjusters when adjusting claims where both the peril of wind and flood contributed to the loss. In such cases, it seems prudent to have both the flood and wind adjuster work together to assess the damage and try to come to agreement regarding damage and liability to avoid the inevitable finger pointing that follows when damages go unpaid. Unfortunately, this doesn’t happen.

Hurricane fraud / bad faith claims

What can you do if that finger pointing results in your insurance company refusing to honor your valid claim? Richards answered:

First, make sure you have provided the insurance company with all the preliminary information necessary to enforce your claim, such as a sworn proof of loss, receipts, contractor’s estimates, etc. If the insurance company still refuses to pay what you feel is owed, contact an attorney to discuss your case. Depending on the amount at issue, it may be advisable to file a small claims lawsuit, but at least the attorney can advise you of the best course of action to take.

If your insurance company has delayed or denied your valid benefits, click here for a free Insurance Bad Faith Case Review.

Case Studies: Understanding Hurricane Insurance Fraud, FEMA, and Bad Faith Claims

Case Study 1: Hurricane Insurance Fraud – Wind vs. Flood Damage

John, a homeowner in a hurricane-prone area, experienced extensive damage to his property due to both wind and flood. However, he faced challenges in understanding the coverage provided by his homeowners’ policy and the separate flood insurance policy obtained from FEMA. This case study examines wind and flood damage coverage complexities and the possibility of insurers engaging in bad faith practices.

Case Study 2: FEMA’s Role in Managing Flood Insurance

Mark, a policyholder affected by a hurricane, discovered discrepancies in the way FEMA handled claims involving both wind and flood damage. Despite the agency’s responsibility to coordinate response efforts and issue flood policies, Mark faced difficulties in having the flood and wind adjusters work together to assess the damage.

Case Study 3: Dealing With Hurricane Fraud and Bad Faith Claims

Sarah, an insurance policyholder, found herself in a situation where her insurance company refused to honor her valid claim for hurricane damage. Despite providing all the necessary information, including receipts and estimates, Sarah’s claim was delayed or denied. This case study explores the steps Sarah took, including seeking legal assistance, to address the bad faith claims and potential hurricane fraud.

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Jeffrey Johnson

Insurance Lawyer

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

Insurance Lawyer

Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.

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