By Duwayne Escobedo
Hurricane Ivan’s winds ripped apart Gary and Rhonda Buyers’ roof, dumping rain inside. Then Buyers looked out and saw waves breaking on his street, as Ivan began whipping up Gulf of Mexico and Santa Rosa Sound water into their Tiger Point neighborhood. A gust tore open their front door.
The Buyers decided it was time to evacuate to their next door neighbors’ two-story house. By that time, the storm surge at their home—nearly a half-mile from the Sound—had reached chest high.
“I decided we better go or stay and drown,” says Gary, a 60-year-old legal investigator.
They “floated” to the Matthews’ house next door with their two dogs. Problem was, Danny Mathews had just nailed his front door shut. His wife, Debbie, quickly opened a dining room window that wasn’t boarded up and the Buyers made it inside to safety.
“We thought we had a safe house,” says Gary, explaining that during Hurricane Opal in 1995 they had no storm surge and just a few shingles blown off their house. “We still had cell phone service and called the Matthews. Our neighbors saved our lives.”
The couple, who have four grown children, thought their traumatic ordeal was over.
It isn’t.
They got off to a stormy start with their homeowners insurance company—Allstate.
GOOD HANDS?
The Buyers have mucky, soggy floors, a torn up roof, and all their drenched furniture drying out in their front yard and a piece of plywood with their insurance company’s name and policy number spray painted on it. The first Allstate adjuster that came out told them their place was “livable.” He blamed the damage on flooding and told them the insurance company would only pay for damages above 4-feet, the Buyers report.
Too bad. So, sorry.
Rhonda Buyers pulled together demeanor crumbles into tears as she describes the insurance disaster. Gary’s eyes also well with tears. The storm battered couple’s nerves are frayed.
“We’ve always done what we have to do,” Rhonda says. “We didn’t give a second thought to our coverage. It’s devastating to begin putting your life back together and have an insurance adjuster tell you he can’t do it. Everything we owned was in this house.”
Gary explains they don’t have flood insurance because their home isn’t in a flood zone. He doubts whether they can rebuild, if Allstate, like Ivan, creams them too. He adds: “They were callous about it. Even before they walked in, they’re saying, ‘Oh, well.’ Where is their sense of being human?”
Enter trial lawyer Mike Papantonio.
Papantonio met a second Allstate adjuster at the Buyers’ storm-ravaged home.
This insurance man promised to have a professional engineer investigate the damage and to cut a check to at least begin roof repairs.
It’s not the first cry for help that Papantonio has received in Ivan’s aftermath.
“People are dealing with the shock of what happened,” he says. “They want to get back to their homes. Then, you have to suffer a second time because the ‘Good Hands’ people tell you they can’t really help you.”
BREWING INSURANCE BATTLE
The stories have so enraged Papantonio that he’s organizing a dream team of insurance lawyers to help people just like the Buyers. Papantonio says the legal muscle will be similar to the Conoco lawsuit, which resulted in a $70 million settlement earlier this year with Pensacola residents whose properties were contaminated by the Agrico Superfund site.
In the Conoco legal battle, Papantonio brought together Robert Kennedy Jr., Waterkeeper Alliance president, Jan Schlichtmann, who battled Massachusetts polluters, and Allan Kanner, who directed the Three Mile Island class-action lawsuit.
To battle insurance companies in the wake of Ivan and also Charley, Frances and Jeanne, the Levin, Papantonio law firm has so far joined forces with Morgan, Colling & Gilbert, a 40-attorney Orlando law firm known for aggressively taking on the insurance industry. Troy Rafferty is heading the Levin, Papantonio effort along with John Morgan of Morgan, Colling & Gilbert.
A Web site and phone numbers are being set up soon for people who need help to prevent an insurance disaster.
“We’re not chasing this because we need more business,” Papantonio says. “I’ve heard all these stories and they are ridiculous. In two houses with the exact same damage and the exact same facts, one adjuster says, ‘I can’t help you,’ and another adjuster says, ‘Oh, we’ll be more than happy to do all of this.’ I’m not going to sit around and do nothing. I’m going to make sure people are treated decent and the insurance companies do the right thing.”
Once the final damages are assessed from an unprecedented four hurricanes hitting Florida in six weeks—damages that are expected to reach $20 billion—the aftermath of all the storms is likely to be continued in courtrooms across the state for many months to come.
STORMY CARRIERS
Insurance industry experts say, the hurricanes are expected to spawn a barrage of insurance and other related lawsuits, ranging from storm-related automobile accidents to financial losses incurred by businesses.
Former federal insurance commissioner Robert Hunter, now with Consumer Federation of America, tells MSNBC: “Insurance companies are good at writing those little checks while the cameras are there to cover the disaster; the problems can arise after the cameras go and the time comes for writing the big checks.”
Hunter encourages homeowners to keep good records and document contacts with insurance carriers. He says if you feel the adjuster’s offer is too low or coverage denial is wrong, complain to insurance company management. If you still don’t get satisfaction, check with the Florida Office of Insurance Regulation. As a last resort, there’s always a lawyer, he says.
“Not all insurance companies handle claims badly,” Hunter says. “But be vigilant or you run the risk of being short-changed.”
Florida Insurance Regulation Commissioner Kevin McCarty says state regulators plan to keep a close watch over insurance carriers.
“We have set a high bar for the insurance industry to clear in responding to these events,” McCarty says. “So far, the companies have met these high standards, and we look forward to them continuing to do so.”
State Farm, the state’s largest insurer, has brought in about 3,500 adjusters to begin gathering information on the extent of the damage to its customers’ homes, says spokesman Tom Haggerty.
“We’re always willing to review claims,” he says. “But there’s always some people who are not happy and elect to file a lawsuit.”
FEELING ‘SUB-HUMAN’
James and Lisa Daehne, like the Buyers, definitely are unhappy with their insurance carrier. Ivan destroyed their home inside and out with its winds, rains and storm surge in the Davenport Bayou neighborhood near Navy Point.
The Daehnes say one neighbor told them he got a $30,000 check from his insurance company to begin rebuilding and another said her agent loaned her an SUV. Meanwhile, she has made repeated calls for two weeks, with no response.
“Our house looks like a giant dump,” Lisa says. “It’s getting toxic. With no resolution, we’re feeling sort of sub-human.”
Morgan and Papantonio promise help is on the way.
Morgan’s Orlando law firm is already flooded with requests to help fight insurance companies there in the wake of Charley and Frances.
“Everyone’s coming out of a mushroom cloud, a stupor, and realizing the adjusters are not going to help,” Morgan says. “We’ve got to watch the big three—State Farm, Allstate and USAA—because they’ve got the most to lose.”
Papantonio wants homeowners to know they’re not powerless against the giant insurance industry, which he points out made $89 billion from investments last year.
“Some insurance companies are doing absolutely the best they can,” he says. “But the ones who aren’t need to pay attention. We’re going to focus a consortium of lawyers on this problem.”
duwayne@inweekly.net
10 FAQ’s You Should Know
Q: Does the contractor who fixes my home need workers’ compensation insurance?
A: Yes. If a worker is injured on your property you may be liable for his injuries if the contractor doesn’t have workers’ compensation insurance
Q: The public adjuster who I hired to adjust my claim because I thought the insurance estimate was too low asked me for money up front. Can he do that?
A: No. There was an order issued after the hurricane that no up front money may be charged and the cap on adjusting fees is 10% of the recovery.
Q: Will FEMA pay my deductible?
A: No. FEMA initially claimed that it might to be able to assist with deductibles but it has never done so before and FEMA has not made any payments for any deductibles that have been reported. For low income persons FEMA may be able to give grant money for additional living expenses and low interest loans may be available to cover persons without insurance.
Q: Can the insurer raise my deductible from 2%-5% without my express approval?
A: We don’t think so. The 2%-5% deductible hadn’t been used since the law was passed in 1996 which allowed the insurance company to raise deductibles for hurricane damage. We think that the insurer should have had you sign a document allowing for the increase in your deductible.
Q: Can the insurer cancel my coverage if I make a hurricane claim?
A: No. There was an order issued after the hurricane that policy may be cancelled or non-renewed for making a hurricane claim.
Q: My insurance premium was due on September 1 and I couldn’t pay it because of the hurricane. Will my insurance be cancelled?
A: No. There was an order issued after the hurricane that if your payment was due on or after September 1 the time limit is extended until October 15 for the insurer to receive payment.
Q: My automobile insurance policy was up for renewal on September 1. Can my insurer non renew or cancel the policy?
A: No. No insurance policy can be cancelled until after October 15, 2004.
Q: My homeowners’ insurance policy was up for renewal on September 1. Can my insurer non renew or cancel the policy?
A: No. No homeowners’ insurance policy can be cancelled until after November 30, 2004.
Q: My mortgage company never paid my homeowners’ insurance and now I dont have coverage. What do I do?
A: Under a new law the mortgage company is responsible for any damage to your property that would have been covered by your insurance. Also, all costs and fees to reinstate the insurance have to be paid by the mortgage company if the insurer sent notice of the payment due.
Q: The insurer only wants to replace part of my roof and it will look bad. What can I do?
A: Under a new law the insurance company has to do enough for there to be a “reasonably uniform appearance.” Having a mismatched roof would not seem reasonable but it would be up to a jury to make the decision.
Hurricane Disaster: Big Boost to Rates
By Joseph B. Treaster
While Florida was cleaning up from Hurricane Jeanne, its fourth hurricane in six weeks, insurance executives and analysts are predicting the cost of coverage will rise sharply for millions of homes and businesses in the Sunshine, um, make that the hurricane state.
With the industry expecting to pay roughly $20 billion in claims from the storms, the analysts and executives say premiums could jump 15 percent to 30 percent when policies are renewed, compared with an average of perhaps 3 percent for the rest of the country.
“The insurance companies have got to take price increases where they have losses,” says Christopher Winans, an analyst for Lehman Brothers. “So there’s no doubt about it, if you want to live in Florida you’re going to have to pay higher premiums. The companies have got to replenish lost capital.”
Robert P. Hartwig, chief economist for the Insurance Information Institute, a trade group in New York, estimates that the industry will probably receive two million claims from the four storms, including Hurricane Jeanne, which hit over the weekend. Some analysts say the total damage could hit more than $50 billion.
Some damage will be covered by federal flood insurance, but for many of the losses there is simply no insurance, placing a burden on homeowners and state’s economy. But Florida, a pivotal state in this election year, is expected to receive abundant federal assistance.
“People will definitely feel” the price increases, Winans says, but he and others say the jolt will be far less than after Hurricane Andrew, which set a record for insured losses in Florida 12 years ago that in today’s dollars is about equivalent to the $20 billion racked up by the latest fearsome foursome.
“After Hurricane Andrew, rates went up 100 percent statewide and 300 percent in Southeast Florida,” says Sam Miller, the executive vice president of the Florida Insurance Council, a trade group in Tallahassee. “There will be increases. But you’re not going to see the massive rate increases that we had after Hurricane Andrew.”
The increases for more than 6 million homes and businesses will have to be negotiated with state regulators and the industry. Executives say the rises probably will be apportioned along the unusual paths of the storms.
Until now the insurance companies and weather experts had expected the heaviest damage from any storm to be in Southeast Florida—places like the Florida Keys, Miami and Fort Lauderdale. And insurance rates for those areas had been raised the most in the past.
But the latest hurricanes inflicted more damage on Southwest and Central Florida as well as the Panhandle, including Pensacola. Those areas will probably see the greatest price increases, analysts claim.
“We may decide that we’re not charging enough in southwestern Florida,” Miller says, “whereas we might think we’re fine on the southeast coast.”
Another result, says Hartwig of the insurance trade group, may be that insurers like Allstate and State Farm, the leaders in Florida, may decide to drop hurricane coverage in the places hardest hit, and seek to shift responsibility to an insurance organization created by Florida to provide minimal coverage for hurricanes.
When the latest hurricanes struck Florida, most homes covered by the special organization, the Citizens Property Insurance Corp., were along the coasts, from Gulf Breeze to Miami.
Part of the premium increase is expected to come in the form of an assessment of 5 percent to 10 percent on every home insurance policyholder in the state by the Citizens Property Insurance Corp. Susanne K. Murphy, the corporate counsel, for Citizens insists in an interview that she does not know whether an assessment would be necessary.
But at the end of June, Citizens had $1.1 billion in cash available to pay claims, Hartwig says. Murphy says Citizens was facing estimated claims of $1.29 billion from the first three hurricanes and has no estimate of costs for Jeanne yet. “I think it’s fairly certain that Citizens will need to institute an assessment,” Hartwig says.
In addition to raising prices after Hurricane Andrew, the insurance companies were able to get regulators to approve hurricane-loss deductibles of 2 percent to 5 percent. They also benefited from being able to shed coverage in the riskiest areas and from the creation of a state catastrophe fund that pays 90 percent of an insurer’s losses, after costs to the industry for a hurricane have exceeded $4.5 billion.
That $4.5 billion has become, in effect, the industry’s hurricane deductible. But it was designed with a $20 billion hurricane like Andrew in mind, in the hope that the bulk of the losses would be borne by the catastrophe fund. For each hurricane, however, there is a new deductible.
This year, the insurers are facing four deductibles, giving them much higher losses than anticipated and partly explaining why significant price increases are a certainty. How much is the question for Florida homeowners.
New York Times News Service
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