Jim Hood is the former Attorney General of Mississippi. During his time in office, Hood has seen firsthand how corrupt insurance companies can be, especially when dealing flood insurance fraud.
While being interviewed by Dmitry Lipinskiy and Roofing Insights as a member of a guest panel, Hood remarked that often he sees policyholders run into issues with insurance companies regarding the language in policies; specifically, with insurance companies claiming that while they are obligated to cover wind damage, they’re not liable for the accompanying flood damage that typically comes during storms and natural disasters.
Hood is confounded by the fact that insurance companies don’t cover flood damage during storms, but he also recognizes why this occurs.
“There’s an incentive for those adjusters to blame the damage on the flood,”
Hood says, adding that the state of Mississippi has a program in place that the taxpayers fund, which consequently alleviates the insurance companies from having to take responsibility for floods during trying times.
Hood says there are alternative options that customers can explore in order to circumvent this taxpayer-funded program.
“Under Mississippi law, if the homeowner can prove it was wind that caused the damage [to their home], then the burden shifts to the insurance company to prove how much of it was flood-related,”
This strategy proved effective, but back in 2005 when Hurricane Katrina struck, insurance companies sent out mass emails to their adjusters and engineers stipulating that they were to reverse that model.
What that ultimately meant was that adjusters and engineers were now trying to deny claims based on wind damage, something that until Hurricane Katrina they were willing to cover.
Naturally, a miffed Hood and his team of officials sought legal recourse.
“We filed a suit, but it took several years, and by then most people had settled or gave up,”
“But then we got a ruling stating that Mississippi law had been clear since 1969 [that homeowners had to prove wind damage, and not insurance companies].”
Hood’s rationale for going after the insurance companies was simple.
“I don’t like our taxpayers having to pay for something that insurance companies reap the profit from,”
From afar, one would hope that insurance companies would act in good faith and take care of their policyholders during some of the most challenging moments of their lives, but for some reason, that simply isn’t occurring.
The same happened in 2012 when Hurricane Sandy wreaked havoc along the east coast.
Back then, Douglas E. Quinn, the Executive Director of the APA (American Policyholders Association), found that instead of insurance companies denying claims without much evidence, they had gone a step further and were instructing their engineers to fake causation reports.
Explains Quinn during the Roofing Insights panel:
“Insurance companies hired engineers who spoke to causation. In the rare instances where the engineer on site actually agreed that there was storm damage, they would then send it back to their firm for a process called peer review, and in that process we caught them changing those reports to say that there wasn’t storm damage and therefore not covered by their flood insurance.”
Quinn emphasizes that despite all the corruption surrounding storms, the APA is not against insurance companies. In fact, he believes in the value of their services.
“It’s a very important tool for the average American to handle loss,”
he notes, at the same time acknowledging that insurance companies have to act in good faith in order for the partnership to be optimal.
Unfortunately, Quinn says that the insurance companies have been falling short, a reality that personally affected him during the Hurricane Sandy catastrophe when his home was flooded.
After assessing the damage, Quinn’s insurance company only offered him the equivalent of $0.37 for every dollar of damage.
“They sent an engineer from U.S. Forensic out to examine my home,”
“They came back later and said that all my damage was there before Sandy. They said it was shifting of supporting soils, or what’s known as the earth movement exclusion, which conveniently was not covered under the insurance policy.”
Strangely enough, his insurance company, despite the earth movement exclusion, still offered him $90,000.
But that figure was way under the $250,000 that Quinn’s home was insured for.
When Quinn first heard that his insurance company was only willing to offer him $90,000, he thought it was a mistake, but after doing some research, he soon realized that the shortening of claims was not only part of his insurance company’s strategy, but also warranted a criminal investigation.
Worse, Quinn was not an anomaly.
It has been reported that over 144,000 other homeowners were shorted on their insurance claims during Hurricane Sandy.
Do you have a crazy story in regard to dealing with your insurance company?
Let Roofing Insights know in the comments below, and don’t forget to subscribe to all of Roofing Insights’ social media channels so you never miss any of their upcoming content!