What to Do When Insurers Start Rejecting Superstorm Sandy Claims

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Hurricane Sandy DamageBy MANDI WOODRUFF

Superstorm Sandy is expected to cost a staggering $50 billion, with as many as 200,000 claims for wind damage and 20,000 claims for flood damage filed by consumers.

The sooner those claims are filed the better, but that doesn't necessarily mean everyone will get what they ask for.

One of the concerns, as pointed out by the Consumer Federation of America, is that there may not be enough money in the pot to cover everyone:

Payments by private insurers for wind damage to homes and business properties from Hurricane Sandy will likely exceed $10 billion dollars. Flood claims paid by the National Flood Insurance Program (NFIP) will be at least $8 billion dollars and will likely exceed $10 billion, exhausting the NFIP's existing $4 billion in payment authority.

To make up this shortage, FEMA is authorized to borrow up to $500,000 with an additional $1 billion available with Presidential approval.

"Even combined, these borrowings will be insufficient to pay all flood claims related to Hurricane Sandy," said J. Robert Hunter, Director of Insurance for CFA.

Whether it's due to fund shortages or not, the reality is that a lot of people will either see their claims flat out denied, or get checks for far less than they'd hoped for.

If that's the case, then your next step will be simple: Ask why. Either your insurer will be able to point out exactly which language in your policy backs up their conclusion, or you might wind up finding something they missed. This is crucial for one reason alone, says the CFA:

"Once the insurance company tells you the reasons for its action, it cannot produce new reasons for denying payment or making a low offer at a later time. You have locked them in -- a major advantage for the consumer."

All sorts of things can go wrong with claims. You might not realize you've agreed to pay a deductible, which could account for a missing chunk out of your claim (remember that in some states, insurers have been ordered to drop deductibles for hurricane coverage since Sandy was downgraded to a tropical storm).

Your insurer also might have slipped in new or ambiguous policy limitations you weren't aware of, which could be cause to call in help from an attorney.

Whatever the case, if you find reason to fight your reward, here are some simple steps from the CFA on what to do next:

Complain to senior staff in the insurance company. Use the records you have kept since the claim process began. The more serious the insurance company sees that you are in documenting how you were treated, the more likely they will make a more reasonable offer.

Complain to your state insurance department. All states will at least seek a response to your complaint from your company. A few states may actually intervene on your behalf with the insurance company in clear cases of bad claims handling. It is important to dispassionately present your side of the story, using the notes you have been taking.

See a lawyer. Remember, the notes you took are vital. In addition to an award covering your claim, if your treatment was particularly bad, the courts in many states will allow additional compensation when the insurance company acted in "bad faith."

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Hurricane Sandy Destruction Photos: An Epic Storm
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What to Do When Insurers Start Rejecting Superstorm Sandy Claims

A general view of submerged cars on Avenue C and Seventh Street in Manhattan after severe flooding caused by Hurricane Sandy, with widespread power outages and significant flooding.

Lower Manhattan goes dark during Hurricane Sandy. Power has been out in parts of New York all week and might not be turned back on until the weekend. It may make many consider whether to buy a standby generator.

The town of Long Beach, N.Y., is submerged by the storm. It was one area where homeowners were desperately trying to prepare for Hurricane Sandy's onslaught.

A person tries to cross the street in Atlantic City, N.J., as Hurricane Sandy churns toward the East Coast. The city was like a ghost town, with casinos shuttered, tourists fleeing and many parts of the town inundated in knee-high water.

A home in Manalapan, Fla., shows the severe damage it sustained when Hurricane Sandy passed through. Many homes were left ravaged in the wake of the storm, leaving homeowners worried about what their insurance would cover.

A wave crashes against the shore in Montauk, N.Y., while a person stands on a porch as Hurricane Sandy moves up the coast.

Ocean waves kick up near homes along Peggoty Beach in Scituate, Mass.

Aerial view of the coast in Belmar, N.J., after Hurricane Sandy left widespread damage along the Eastern Seaboard. Homeowners are likely to be turning their attention to how to recover from the storm.

Homes are left destroyed on Highland Street in the Tri-Beach area in Milford, Conn., by Hurricane Sandy. For people in hurriance-prone areas of the country, here's how to hurricane-proof your home.

Waves wash over a ruined roller coaster from a Seaside Heights, N.J., amusement park, after the pier beneath the Star Jet coaster collapsed into the Atlantic Ocean during Hurricane Sandy. New Jersey got the brunt of the massive storm, which made landfall in the state.

Caleb Lavoie, 17, of Dayton, Maine (front), and Curtis Huard, 16, of Arundel, Maine, leap out of the way as a large wave crashes over a seawall on the Atlantic Ocean during the early stages of Hurricane Sandy in Kennebunk, Maine.

Sailboats rock in choppy water at a dock along the Hudson River Greenway in New York.

Waves pound a lighthouse on the shores of Lake Erie near Cleveland. High winds spinning off the edge of Hurricane Sandy took a vicious swipe at northeast Ohio, uprooting trees, cutting power to hundreds of thousands, closing schools and flooding parts of major commuter arteries that run along Lake Erie.

Firefighters look up at the facade of a four-story building on 14th Street and Eighth Avenue in Manhattan that collapsed onto the sidewalk during Hurricane Sandy.

Downed power lines and a battered road is what Hurricane Sandy left behind as people walk off the flooded Seaside Heights island.

Richard Thomas walks through the floodwaters in front of his home after assisting neighbors in Fenwick Island, Del.

People wade and paddle down a flooded street as Hurricane Sandy approaches in Lindenhurst, N.Y.

An ambulance is stuck in more than a foot of snow near Belington, W.Va, in Sandy's aftermath. The storm buried parts of West Virginia under more than a foot of snow, cutting power to at least 264,000 customers and closing dozens of roads. At least one death was reported.

The view of storm damage over the Atlantic Coast in Mantoloking, N.J. Americans sifted through the wreckage of Hurricane Sandy after the storm passed, with millions left without power. The storm carved a trail of devastation across New York City and New Jersey, killing dozens of people in several states, swamping miles of coastline, and throwing the tied-up White House race into disarray just days before the vote.

A woman walks over the flooded streets of Hoboken, N.J., after Hurricane Sandy hit. The storm was one of the largest in history to hit the East Coast.

A parking lot full of yellow cabs is flooded as a result of Hurricane Sandy in Hoboken, N.J.

A 168-foot water tanker, the John B. Caddell, washed ashore on New York's Staten Island from Hurricane Sandy's powerful winds.

Brian Hajeski, 41, of Brick, N.J., reacts after looking at debris of a home that washed up on to the Mantoloking Bridge in Mantoloking, N.J., the morning after Hurricane Sandy rolled through.

Foundations and pilings are all that remain of brick buildings and a boardwalk in Atlantic City, N.J., after they were destroyed by Hurricane Sandy.

This aerial photo shows burned-out homes in the Breezy Point section of Queens, N.Y., after strong winds whipped a fire into an inferno. The tiny beachfront neighborhood had been evacuated before it was inundated by floodwaters, transforming a quaint corner of the Rockaways into a smoke-filled debris field.

A fire fighter surveys the smoldering ruins of a house in Breezy Point. More than 100 homes were destroyed in a fire which swept through the oceanfront  community during Hurricane Sandy.

A car is buried in sand that was washed in from Hurricane Sandy in Long Beach Island, N.J.

In this aerial photo, people survey destruction left in the wake of Hurricane Sandy in Seaside Heights, N.J.

Jim Margiotta digs sand out from under his garage door, which was caused by Hurricane Sandy, in Long Beach, N.Y.

This aerial photo shows a collapsed house along the central Jersey Shore coast.

Heavy surf caused by Hurricane Sandy buckles Ocean Avenue in Avalon, N.J.

Cars are submerged at the entrance to a parking garage in Manhattan in the aftermath of Hurricane Sandy. A wall of seawater and high winds slammed into the city, destroying buildings and flooding tunnels.

A woman stands near destroyed homes in the aftermath of Hurricane Sandy in the Rockaway section of Queens, N.Y. The death toll has risen to nearly 100 in the U.S., with 41 in New York City alone.

Boats are piled on top of each other at the Morgan Marina near Sayreville, N.J.

A man walks by the remains of part of the historic Rockaway boardwalk in Queens, N.Y., after large parts of it were washed away during Hurricane Sandy.

Waves break in front of a destroyed amusement park wrecked by Hurricane Sandy in Seaside Heights, N.J.

This aerial photo shows burned-out homes in the Breezy Point section of Queens, N.Y., after a massive fire that was fanned by Hurricane Sandy's winds.

Robert Connolly, left, embraces his wife, Laura, as they survey the remains of the home owned by her parents that burned to the ground in Breezy Point. At right is their son, Kyle.

Andrew Seemar, 13, removes items from a room as he and his mother, Kathleen, clean up after their home in Brick, N.J., was flooded during Hurricane Sandy.

Andrew Seemar, 13, removes items from a room as he and his mother, Kathleen, clean up after their home in Brick, N.J., was flooded during Hurricane Sandy.

Rescuers bring people out by boat in Little Ferry, N.J., in the wake of Hurricane Sandy.

Olivia Loesner, 16, hugs her uncle, Little Ferry Deputy Fire Chief John Ruff, after she was rescued from her flooded home in Little Ferry, N.J.

The remains of homes destroyed by a fire that swept through the Breezy Point neighborhood in New York City's borough of Queens.

Brian Hajeski, 41, of Brick, N.J., reacts as he looks at debris of a home that washed up on to the Mantoloking Bridge in Mantoloking, N.J., the morning after Hurricane Sandy rolled through.

Virgen Perez, left, and her husband, Nelson Rodriguez, center, look around their home which was flooded by Hurricane Sandy in Atlantic City, N.J.

Johnny Adinolfi is comforted by neighbor John Vento, right, as he stands in what was once the living room of his home in the aftermath of Hurricane Sandy in Massapequa, N.Y.

People take photos of water filling the Bowling Green subway station in Battery Park in Manhattan as New Yorkers cope with the aftermath of Hurricane Sandy.

This satellite image shows the monstrous size of Hurricane Sandy before it made landfall on the East Coast.


The 11 Costliest Hurricanes in U.S. History
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What to Do When Insurers Start Rejecting Superstorm Sandy Claims

The devastation wrought by Hurricane Sandy is a good reminder that the strength of a storm is less important than where it makes landfall. Despite its enormous size, it was classified as only a Category 2 storm at its peak, and by the time it made landfall in the Northeast, it had been reclassified as a "post-tropical storm" (a designation that will force insurers to pay more in claims than they would have for a storm classified as a hurricane).

Hurricane or not, though, Sandy's landfall near New York City and other major population centers in the region immediately vaulted it onto the list of the most expensive storms in the nation's history. While the first wave of cleanup and recovery continues throughout the region, there's little doubt that the massive flooding and wind damage associated with Sandy will ultimately cost tens of billions of dollars, to say nothing of the human toll.

Click through our gallery to find out how Sandy stacks up to other devastating Atlantic storms.

* - Costs adjusted to 2010 dollars on basis of U.S. Dept. of Commerce Implicit Price Deflator for Construction. The storms from 2011 and later are not adjusted. The National Climatic Data Center (NCDC) rates Hurricane Katrina's damage at $133.8 billion 2007 dollars.

Landfall Category: 1

U.S. Damage: 11.7 Billion

Date of storm: June 18-23, 1972

U.S. areas affected: Florida(Panhandle), Georgia, Carolinas, Northeastern U.S.

This June 23, 1972, photo shows people in  Harrisburg, Pa., being rescued by boat from their homes after Hurricane Agnes caused the Susquehanna River to overflow its banks, leading to heavy flooding.

Source: Weather Underground

Landfall Category: 4

U.S. Damage: $9.7 billion

Date of storm: Sept. 17-22, 1989

U.S. areas affected: Georgia, North Carolina, Puerto Rico, South Carolina, Virginia, U.S. Virgin Islands

A South Carolina man displays a photograph of his house taken before Hurricane Hugo destroyed it in September 1989.

Source: Weather Underground

Landfall Category: 3

U.S. Damage: $11.8 billion

Date of storm: Sept. 20-26, 2004

U.S. areas affected: Alabama, Arkansas, Florida, Louisiana, Mississippi, Tennessee, Texas

Rosa Machado (center) of Lafite, La., walks through waist-deep flood water as a neighbor's trailer burns following Hurricane Rita's late September passage through the area.

Source: Weather Underground

Landfall Category: 1

U.S. Damage: $15.8 Billion

Date of storm: Aug. 26-28, 2011

U.S. areas affected: Connecticut, Delaware, Massachusetts, Maine, Maryland, North Carolina, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, Virginia, Vermont, Washington DC

Hurricane Irene crippled 10 states during its slow climb up the Eastern Seaboard, causing massive flooding and power outages. The brutal storm made landfall in North Carolina and traveled to Maine.

Billy Stinson (C), his wife Sandra Stinson and daughter Erin Stinson (R) comfort each other as they sit on the steps where their cottage once stood before it was destroyed by Hurricane Irene on Aug. 28, 2011 in Nags Head, N.C.

The cottage, built in 1903 was one of the first vacation cottages built on Roanoke Sound in Nags Head. Stinson had owned the home, which is listed in the National Register of Historic Places, since 1963. "We were pretending, just for a moment, that the cottage was still behind us and we were just sitting there watching the sunset," said Erin afterward.

Source: Weather Underground

Landfall Category: 4

U.S. Damage: $15.8 Billion

Date of storm: Aug. 13-14, 2004

U.S. areas affected: Florida, North Carolina, South Carolina

At least 13 people were killed when Hurricane Charley left a path of destruction across Florida then continued north and struck the Carolinas.

Pictured: Debris from homes destroyed by Hurricane Charley litters the waterways that surround much of Punta Gorda, Fla.

Source: Weather Underground

Landfall Category: 3

U.S. Damage: $19.8 Billion

Date of storm: Sept. 15-21, 2004

U.S. areas affected: Alabama, Delaware, Florida, Georgia, Louisiana, Maryland, Mississippi, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia

Residents of Pensacola Beach, Fla., pass by an SUV half buried in sand as they walk back to their homes on Sept. 22, 2004, to inspect the damage caused by Hurricane Ivan.

Source: Weather Underground

Landfall Category: 3

U.S. Damage: $20.6 Billion

Date of storm: Oct. 24, 2005

U.S. areas affected: Florida

After striking Mexico from the Caribbean Sea, Wilma turned northeast, strengthened over the Gulf or Mexico, and made landfall near Cape Romano, Fla., on Oct. 24 as a Category 3 hurricane. The eye crossed the Florida Peninsula in less than five hours, and it moved into the Atlantic just north of Palm Beach as a still forceful Category 2 hurricane.

Pictured: A public phone is surrounded by flood waters near a block of hotels as Hurricane Wilma lashes Cancun, Mexico, on Oct. 21, 2005.

Source: Weather Underground

Landfall Category: 2

U.S. Damage: $27.8 Billion

Date of storm: Sept. 12-14, 2008

U.S. areas affected: Arkansas, Illiniois, Indiana, Kentucky, Louisiana, Missouri, Ohio, Pennsylvania, Texas

Flood waters from Hurricane Ike were reportedly as high as eight feet in some areas, causing widespread damage across the coast of Texas in September 2008.

Pictured: A home in Gilchrist, Texas, is left standing among debris left by Hurricane Ike.

Source: Weather Underground

Landfall Category: 5

U.S. Damage: $45.5 Billion

Date of storm: Aug. 24-26, 1992

U.S. areas affected: Florida, Louisiana

Andrew came ashore in Florida near high tide, pushing a 16.9 foot storm tide (the sum of the storm surge and astronomical tide) into Biscayne Bay, a record for the southeast Florida peninsula.

Source: Weather Underground

Landfall Category: Post-Tropical Storm

U.S. Damage: Early estimates indicate damage and economic losses as high as $50 billion

Date of Storm: October 29-31, 2012

U.S. Areas Affected:  Connecticut, D.C., Delaware, Florida, Maine, Maryland, Massachusetts, New Hampshire, New York, New Jersey, North Carolina, Ohio, Pennsylvania, Rhode Island, West Virginia, Vermont, and Virginia.

Pictured: NEW YORK, NY - OCTOBER 29:  Rising water, caused by Hurricane Sandy,  rushes into a subterranian parking garage on October 29, 2012, in the Financial District of New York, United States. Hurricane Sandy, which threatens 50 million people in the eastern third of the U.S., is expected to bring days of rain, high winds and possibly heavy snow. New York Governor Andrew Cuomo announced the closure of all New York City will bus, subway and commuter rail service as of Sunday evening.

Landfall Category: 3

U.S. Damage: $105.8 Billion

Date of storm: Aug. 25-30, 2005

U.S. areas affected: Alabama, Florida, Georgia, Louisiana, Mississippi, Tennessee

Katrina unleashed torrential rains and a potent storm surge that led to disastrous flooding that left about 1,600 people dead, destroyed  thousands of homes and marred the presidency of George W. Bush, whose administration was severely criticized for its handling of the crisis.

Pictured: President Bush (center) tours the devastation in New Orleans with Mayor Ray Nagin (right), Louisiana Gov. Kathleen Blanco and Vice Adm. Thad Allen.

Source: Weather Underground


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