The Federal Emergency Management Agency (FEMA) has made an unprecedented decision to reopen all flood damage claims filed by homeowners in the wake of Hurricane Sandy.
According to NPR, FEMA is reopening these claims due to thousands of allegations that insurance companies purposely lowballed their damage estimates for policyholders as a way to save money. As a result, these homeowners got payouts significantly less than the money needed to repair their damaged homes.
These homeowners were able to appeal the amount given in their claims through FEMA’s appeals process, which was formalized in 2004 following Hurricane Isabel. However, this appeals process has worked in favor of the insurance companies — and against Sandy victims — in almost every case.
“Not only did the government not have my back; the government had put a knife in my back,” Doug Quinn, of Toms River, N.J., said of his attempt to appeal his insurance provider’s decision to give him just half the value of his virtually ruined home.
The utter failure of the FEMA appeals process to side with Sandy victims is largely due to the system being “rigged” in favor of the insurance companies, industry insiders told NPR. Rather than being reviewed by actual FEMA officials, many claims appeals go back to the same servicing companies that determined the amount of the original claim.
“In any catastrophic event like Hurricane Sandy, you will find both insurance companies and policyholders disputing over amounts paid or amounts received,” said David Miller, licensed public adjuster at Miller Public Adjusters, LLC. “When the process to appeal the disputed amounts is flawed, it raises questions with the integrity of the entire process.”
As a result of this failed appeals process, FEMA will be reopening nearly 144,000 claims filed in the aftermath of Sandy. The agency will also be looking for evidence that insurance companies and the engineering firms that worked for them falsified damage reports when evaluating homes which eliminated flooding as the cause of damage.
“I am glad to see the policyholders are given the right to a fair claim settlement,” continued Miller. “When you have a large dispute or a complex claim, hiring a professional licensed public adjuster may the best option to ensure your interests are protected and a fair claim settlement is awarded.”
The FEMA claims controversy has led to the resignation of the head of the National Flood Insurance Program (NFIP), and other NFIP employees have been transferred or fired as well, according to Insurance Business America. Legislators for both New York State and New Jersey are calling for widespread reform within FEMA.
“There needs to be top-to-bottom reform so that this can never happen again,” New York Senator Kristen Gillibrand said in a statement.