Gunn Law Blog

Preparing For and Presenting a Hurricane Flood or Windstorm Claim

Below, I am posting a brief list of basic resources that may help with the claim process.

Just a few of quick points for emphasis.  First, DO NOT DISCARD damaged property until the adjuster has inspected and photographed the loss.  It is very important that you have your own photographs of the damages.  Even if all you have access to is a disposable camera, take lots of pictures that show the loss as soon after the storm as possible.

Second, keep a "critical post-loss events" notebook or diary on paper or PDA.  Insureds may be examined under oath weeks, months, or even years after the storm.  Memories made during the post-storm frenzy may fade.  Record your dates of communication, persons involved, and summary of what was discussed.  Also, record your efforts to make the required temporary repairs to the covered property.  Although the Work Product Doctrine may protect these notes from discovery, prepare them in a professional way, as they may be used in coverage litigation.  Avoid describing the adjuster in colorful terms, as a judge or jury may not appreciate your frustration and get a negative impression of you.

Third, know the deadline for submitting your Sworn Statement in Proof of Loss.  This is a condition to coverage under most polices.  The Texas Windstorm Insurance Association requires a Proof of Loss within 91 days of the claim acknowledgment, unless the time is extended IN WRITING.  Do not rely upon a verbal extension from an adjuster.  The National Flood Insurance Program requires a proof within 60 days of the flood.  ONLY FEMA may consent to extend the 60-day period.  Even the written extension by the servicing insurance company is not sufficient to extend the time to submit a fully compliant proof of loss.  Failure to meet this condition is fatal to coverage and precludes any enforcement of payment allegedly due under the Standard Flood Insurance Policy ("SFIP") by a "Write-Your-Own" private insurer participating in the National Flood Insurance Program ("NFIP").  See, Suopys v. Omaha Property & Casualty, 404 F.3d 805 (2005).   

I hope that this helps you achieve a prompt and fair settlement.

Regards,

Lee Gunn

Flood Insurance

HURRICANE PREPARATION:
Quick Steps Consumers Can Take Now to Make Filing A Claim Easier After the Storm http://www.naic.org/documents/consumer_alert_gustav.htm

Allstate Home Inventory Software

Texas Windstorm Insurance Association Claims

AIG: Needed Regulatory Accounting Of A Failed Trust

Taxpayers now own 80% of American International Group, Inc., as a result of an $85 billion "bridge" loan.  The insuring public deserves to know the cause and that those responsible for this financial disaster are held appropriately accountable.  As the ripples of economic consequences created by the corporate greed that drove the reckless business risks undertaken expand, it is clear that ultimate accountability of the involved corporate leaders is imperative.  Otherwise, we are creating a "moral hazard" by having de facto government insurance against the consequences of corporate malfeasance.

Certainly, AIG executives' conduct deserves public scrutiny in the same way any creditor would scrutinize any borrower.  The basic questions that must be addressed are; why do you need this loan, and how can I be sure that you can pay it back?  To answer the why, regulators must look at the business practices of AIG that placed so many policyholders at risk.  Next, to assure the ability to pay back the loan, a clear separation of the insurance business from investment risk-taking must be a mandate.

Insurance is, at its core, a holding of premium dollars in trust for the benefit of the policyholders.  By pooling the financial risks of society, insurers facilitate the orderly funding of health care, risks of commerce, and the compensation of those damaged by natural disasters and negligence.  Insurance performs a public function and is highly regulated by the states.  The coordination of the regulatory schemes is facilitated, in part, by the National Association of Insurance Commissioners.  The financial conduct of licensed and authorized insurers is overseen by the states.  Strict requirements for adequate liquidity in the form of cash reserves to pay claims, minimum surplus funds in excess of expected claim payments, and restrictions to low risk investments, such as bonds, for to these funds, provides the necessary solvency and security that is essential to a viable insurance system.

So, how can the consumer of AIG's insurance products be at risk for the improvident investment practices of AIG Financial Services?  After all, AIG FS is a separate company, not subject to the same strict solvency requirements of the regulated, publically audited insurance companies within the AIG holding companies.  Will the needed investigations reveal that AIG was impermissibly leveraging its insurance assets to prop up the failed practices of AIG FS?  Did AIG disclose these practices to insurance regulators?  If the insurance assets were not placed at risk by improper cross-collateral practices, then why were the adequately funded and "healthy" insurance companies at risk?  If the insuring public was not at risk, then what public purpose was served in using public dollars to salvage a failed business?

I hope that consumers will get these answers and that the investigative media and public regulators will provide both truth and accountability.  Otherwise, the government is simply encouraging bad business by insuring against its consequences to the wrongdoer; the definition of a moral hazard.

Regards,

Lee Gunn

The Hurricanes of 2008: An Opportunity To Do Better for Policyholders

It is September 15, 2008.  An assessment of Hurricane Ike's damage is just underway.  The 2008 season has already lead to some estimates of covered property loss in excess of $20 billion caused by this year's named storms.  As Galveston and Houston start the process of recovery, it is a time for the insurance industry to make a commitment to do better for policyholders than was done in 2004/2005.  The hard lessons learned should enable and encourage prompt and fair claim payments.  Let us hope that the policyholders are given the "Benefit of the Doubt" they are legally due if a debate exists over whether the damage is wind versus flood.

Hurricane Andrew made landfall in south Florida on August 24, 1992.  Before it was done, it would be the then costliest storm in US history causing $26.5 billion in property damage, $38.1 billion dollars in 2007 dollars.  The financial fallout from Andrew would lead to major insurance reforms, including the State of Florida's increased involvement in the operation of windstorm insurance through the Florida Residential Property and Casualty Joint Underwriting Association and the Florida Windstorm Underwriting Association.  In 2002, these entities were combined to become Citizens Property Insurance Corporation, a state-run insurance company now the largest provider of wind coverage in the state.

From 1992 until the 2004/2005 seasons, the US was largely spared from devastating hurricanes.  In 2007 dollars, there would be seven hurricanes in 2004/2005 that exceeded the $7.92 billion in damage done by Hurricane Georges in 1998.  In 2004/2005, the storms caused over $175 billion in damages in 2007 USD.  From 1992 through 2003, the property damage from large named storms approximated $28 billion in 2007 USD.

In this context, perhaps the lack of a prepared response from governmental emergency services and the insurance industry seen in 2004/2005 can be somewhat explained, although not forgiven.  Today, our leadership in government and insurance have the harsh experience of the 2004/2005 storms to draw from.  From all reports, government has performed much better in 2008.  The City of New Orleans successfully implemented a pre-arranged $7 million contract to evacuate residents by bus.  The largest enabled search and rescue, to be followed by assessment, is underway in Texas.  FEMA is moving in to provide food and water to those in need before the tidal surge has receded.

Now, the challenge and opportunity is there for the insurance industry to deliver on its promises of financial security in a time of tragedy.  The prompt adjustment of claims is essential if we are to avoid the mistakes of 2004/2005.  Putting our businesses back to work and residential policyholders back in their home promptly will minimize the ripple effects of the property damage.  Now is not the time to look for ways to avoid a claim payment.  A fair and reasonable allocation between causes of loss and immediate payments of ALE, business interruption and undisputed repair costs is what the insurance industry is called upon to provide.

It is a reality that there will be good faith disputes over the scope and amount of covered losses from these storms.  Our courts will see these disputes in the coming weeks and months.  The Katrina-era case law and legislative reforms recently enacted should provide better guidance to all concerning the legal issues.  Approaching claims with an open mind and with and intent to pay fairly should minimize the need for the courts to resolve the claims.  By providing prompt and fair adjustments, insures will meet the challenge of the 2008 season and reduce the number of policyholders who look to the courts for claim resolution.

Regards,

Lee Gunn

Hurricane Gustav early damage assessments

It is the morning after Gustav's landfall and the early assessments are favorable for New Orleans.  It is clear that the hard-learned lessons from Katrina have resulted in a much better organized and funded initial preparedness plan.  It is too early to really know what property damage was done to the areas to the west of New Orleans which received the highest winds associated with the center of the storm.  Risk Management Solutions places early insured losses at $4 billion to $10 billion, not inclusive of flood claims.  AIR Worldwide Corporation estimates losses at between $2 billion and $4.5 Billion, noting that Rita was more intense and did $5.6 billion in insured loss.

As Hurricane Gustav makes its way north, Hannah makes its way toward the U.S. coast, Ike chugs behind Hannah, and other disturbances are off of the coast of Africa, we are reminded to stay vigilant.

Stay well,

Lee D. Gunn IV

Gunn Law Group, P.A.

777 S. Harbour Island Blvd., Suite 765

Tampa, FL  33602

(813) 228-7070 - ofc

(866) GUNNLAW - toll free