Insurance Company Tactics

Insurance companies are obligated by law to handle claims with good faith and fair dealing. Nearly all states have laws governing how insurers deal with claimants and call for insurers to make a written offer to settle a property damage claim in a timely manner – usually 30 days – after they have received “satisfactory proof of loss” for the claim from a policy holder. Unfortunately, when faced with a disaster like Hurricane Gustav that involves billions of dollars in damages, insurance companies often look for ways to avoid paying legitimate claims in order to protect their profits.

Our Hurricane Gustav insurance claim denial lawyers have already helped victims of other storms deal with unscrupulous insurance companies. For instance, we have worked with property owners whose legitimate Hurricane Katrina claims were denied by their insurance companies. Our experience with this disaster taught us a great deal about the tactics insurance companies will employ to avoid paying claims properly.

To save money on hurricane damage claims, insurance companies systematically low-ball claims, delay paying on them or arbitrarily change the terms of homeowners’ insurance policies. One of the major tactics that insurance companies used in Katrina was to find that property damage was caused by flooding, and not by wind. Conventional property insurance does not cover flood damage, so insurance companies used this tactic in an attempt to avoid paying thousands of claims.

In some instances, insurance companies handling Katrina claims may have acted fraudulently in finding that property damage was caused by flooding. According to a 2007 investigation by Bloomberg.com, one engineer who examined damaged Gulf Coast homes for insurers alleged that some of his reports were altered by the companies to say that homes were damaged by flood, and not by wind.   In response to this despicable behavior, more than 1000 Katrina homeowners sued their insurance companies over claims, the largest number of lawsuits ever to follow a natural disaster in the US.

In other Katrina claims, insurance companies purposely offered settlements that were far below the actual value of damages. At the same time, insurance companies would unnecessarily delay paying the claims, making it more likely that an exhausted policyholder would accept the low-ball claim.

Insurance companies are still reeling from the losses they sustained from Hurricane Katrina. For that reason, our law firm expects that many insurers will employ the same tactics that were used to deny claims for that storm when they address damage claims from Hurricane Gustav.