Insurance Companies Face Lawsuits
Many insurance companies are coming under fire for denying residents coverage. This leads to much frustration and confusion because for several homeowners this is just one hardship after another. Residents who have lived through the wreckage of a hurricane now find themselves entangled in legal battles with their insurance providers.
For instance, in 2012, Louisiana Citizens Property Insurance Corp. settled lawsuits with policyholders over the slow handling of claims after Hurricane Katrina struck. The judicial process prevailed for homeowners in Louisiana, since they were able to collect what they were owed.
Why Is This Happening?
What seems to be a trend amongst most lawsuits are issues involving misinterpretation of certain terms, and misunderstandings as to what exactly is covered in a policy claim.
In 2012, the word basement was the center point of a lawsuit involving insurers Fidelity, Travelers, and State Farm. The issue surrounding the dispute was based on whether ground-floor units were classified as a basement or not. After Hurricane Irene struck, residents in New Jersey claimed that these insurance companies misinterpreted what the term covered.
Patrick Donnelly, a resident represented in the case, had a claim denied because his ground floor was identified as a basement. Since Donnelly’s first floor isn’t elevated and technically not a basement, the matter became very technical.
What is Being Done To Stop This?
Many residents take insurance companies to court to settle any disputes. However, not all lawsuits turnout to be in the favor of the plaintiffs.
In 2006, a federal judge ruled that homeowner policies from Nationwide Mutual did not cover storm-surge damage brought on by Hurricane Katrina. Homeowner policies typically cover wind and rain damage, but not flood damage. There was a grey area on whether hurricane-fueled storm surges were covered. The decision was a setback for many homeowners needing to rebuild but lacking access to resources.
Why Even Bother Buying Insurance?
Even though some residents may feel purchasing insurance policies may not be worth the money, most people cannot afford to completely rebuild their homes and lives. If policy claims are not being honored, residents should still not opt out of purchasing hurricane insurance.
Depending on where residents reside, they could be at risk of property damage. It’s always a great idea for homeowners to do some research and know what perils they may face and what they can afford when purcashing a policy. It basically all comes down to what hurricane insurance policy best fits their specific needs and what they are comfortable with.