Friday, February 15, 2013

Claims Changes in the Wind?

The aftermath of Superstorm Sandy is still being felt throughout the New York, New Jersey, Connecticut coasts.  Claims payments, especially for flood insurance, are not coming as quickly as some would like.  Banks, with mortgages on damaged properties, are holding up checks causing inquiries by government officials to be made.  And regulatory and legislative changes are being considered throughout the region that, if enacted, will affect how claims are handled in the future.

Shortly after Superstorm Sandy, New York enacted an emergency regulation requiring claims arising from the storm to be handled on an expedited basis.  Inspections by insurance companies on claims had to be made within six days of notice of claim instead of the normal fifteen days -- a time frame large insurers said was impossible given the number of claims and the number of insurance adjusters.  A report card was and continues to be posted on the website of the New York Department of Financial Services on claim responses.

New York also issued a circular letter that allowed claims to be made and documented without first having to wait for an adjuster's inspection.  Some of the text of the circular letter stated as follows:

Accordingly, insurers must accept homeowners' documentation of losses rather than requiring an inspection first where an immediate cleanup is reasonably necessary to protect health and safety, or protect further damage to property.

For claims under homeowners' insurance, if dwelling debris must be removed before the adjuster is able to examine it, insurers should accept as proof of loss documentation such as photographs, videos, material samples and inventories prepared by policyholders as alternatives to formal inspection.

Now New Jersey is considering amending its insurance law to allow for a private right of action for bad faith claims practices against insurance companies.  Coupled with governmental pronouncements about the applicability of hurricane deductibles and the consideration of changes to the anti-concurrent causation clause in many homeowners' policies, there may be big changes for insurers and consumers coming in the wake of Superstorm Sandy.

These developments are important to watch because they will have an impact on the availability and affordability of insurance for communities in areas now clearly exposed to disasters caused by hurricanes and other cyclonic events.

1 comment:

  1. In an article in Law360 on March 13, 2013, there is a report about bill A. 5780, which would provide for a private right of action for policyholders with coverage issues arising out of areas declared a disaster by the governor. This is similar in some respects to what is being proposed in New Jersey. The article discusses the pros and cons of the proposal and whether it will do anything to help policyholders other than provide for a payday for policyholder lawyers.