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Insurance Coverage and Claims after Superstorm Sandy and Other Natural Disasters

Most residents of New York and New Jersey never had a reason to prepare for water or wind damage until superstorm Sandy came around. Now, many are checking to see whether they have insurance coverage and trying to get compensation for hotel stays, spoiled food, crushed cars, damaged floors, water logged electronics, lost business profits…the list goes on. For those who are unsure whether they have insurance coverage, the most common sources are policies that can be grouped into the following categories: commercial, standard homeowner (usually without flood coverage but with wind, fire, and water damage coverage), homeowner all risk (with a lot of exclusions written into the policy), business owner, manuscripted (for a particular loss), liability (with a separate provision for property damage), national flood insurance, and forced coverage (i.e. in mortgage situation). Keep in mind that a tenant may have coverage even if he or she does not own the building where the damage occurred and did not obtain a special policy for the area.

If you have a claim, you may want to consider the following.

  • Provide all carriers that may be involved with notice of an occurrence which could give rise to a claim. Do not assume that a carrier is on notice because someone whom you believe is an adjuster or investigator visited your property.
  • Make sure you have a full copy of the policy, including the declarations page, endorsements, riders, schedules, and forms. If you do not have a full copy of the policy, or your policy was destroyed in the storm, write to the broker, insurer, and/or opposing counsel immediately to let them know. Request that they expedite a copy to you, along with notice of all deadlines so that you may comply.
  • Review the policy carefully and diary the deadlines. Create a reminder system so that you will not miss any deadlines. If a deadline is missed, you may forfeit your claim or make it more difficult to prevail down the line.
  • Gather proof of your expenses and the value of your property, such as receipts, photographs, videos, serial numbers, and credit card statements. Retain an appraiser or request that the carrier provide one. Obtain a contractor’s estimate where applicable. Preserve and protect property where applicable. Separate damaged from undamaged goods where applicable. Prevent further damage where applicable.
  • File a sworn statement (affidavit) and proof of loss. Sometimes this must be filed within sixty days of your receipt of the demand for proof of loss by mail. The time to respond may be extended in writing by a person who is authorized to modify the contract.
  • Abide by the statute of limitations and start a suit when necessary. A fire loss in New York may be governed by a two year statute of limitations. Otherwise, you may be limited to a one or two year period to start your action. The policy may include a time limitation.
  • Remember that you may get actual cash value, replacement cost, or less.
  • Consider getting help from a public adjuster or attorney.
  • File an appeal when necessary.

Insurance claims take time. There are other options for those who find themselves in need of money to rebuild, replace, or repair. The Small Business Association (“SBA”) provides loans to homeowners, renters, and certain businesses for things like their office, primary residence, clothing, or car. The idea is that the SBA money can be used, then paid back when the insurance proceeds are received, or the money is otherwise recouped. The loan decision may be made as early as twenty one days after the application process is complete. The applicant is not required to take the full amount of the loan, or take any loan at all, even if the application is processed and approved. The application forms can be downloaded online. Applicants are eligible to get what they show their loss or need to be. They will not necessarily receive the maximum amount that may be taken. Applicants who are turned down have six months to request reconsideration of their application. The deadline to apply is December 31, 2012.

The Federal Emergency Management Agency (FEMA) Individual Assistance Program may provide financial assistance and services when there is no insurance coverage or not enough coverage available for things like personal property, temporary housing, replacement housing, funeral expenses, vehicles, medical expenses, and dental expenses. The assistance is not considered income for federally tested means programs. If just one member of the household (child or adult) meets the citizenship requirement, the household may be eligible for benefits. The application form is available online. The deadline to apply may be sixty day from the date of loss. There is a right of appeal within sixty days of receipt of the notification of denial.

An SBA loan can be taken as a supplement to FEMA benefits, but FEMA and SBA coverage cannot overlap. Individuals may be required to apply for SBA before applying for FEMA, depending on income.

The bottom line is, anyone who sustained damages from superstorm Sandy should act now if a claim of any kind will be made. For some, an insurance claim will be relatively straightforward. But for most, it will be a process that involves creativity, time, and diligence to recover fair and adequate compensation. All are urged to research their rights and contact an attorney who is familiar with insurance law.

The Wall Street Journal, Is Your Homeowners Insurance Falling Short?, By Ruth Simon, Leslie Scism, and Julie Steinberg, 12.07.12