‘Disaster After the Disaster:’ Fighting Insurance Over Tornado Damage

Insurance companies have become an obstacle to some people rebuilding from the Memorial Day tornadoes, a Dayton Daily News investigation found.

Source: Dayton Daily News | Published on October 21, 2019

The Dayton Daily News used Ohio public records laws to obtain all insurance complaints filed in Montgomery, Greene and Miami counties and identified 41 related to the Memorial Day tornadoes.

Of those, a common complaint was insurance companies refusing to replace damaged roofs, insisting instead on just replacing some shingles.

Dean Fadel, president of the trade group Ohio Insurance Institute, said: "Our members have a solid track record of complying with Ohio laws and regulations."

He said it's "important for consumers to make sure their coverage is up-to-date and that they consult with their insurance agent to understand the type of insurance policy they have purchased."

Many insurance companies operate in good faith, said Doug Quinn, executive director of the American Policyholders Association. But some -- including household names -- use a process he calls "delay, deny, defend."

"There seems to be a pattern where they are intentionally delaying claims," Quinn said. "That sort of puts pressure on people, who just want to get their lives back to normal, to settle for lower amounts."

'My poor house'

Julia Stewart of Beavercreek is still living in two hotel rooms with her husband and daughter nearly five months after the storm. She said the insurance company is forcing her out of the hotel this week but she doesn't want to move back into her home because the damage isn't fixed.

"We're scrambling because of the situation," she said.

Many of her neighbors' homes are repaired, but a blue tarp still covers her chimney. The insurance company claims visible cracks extending down to quarry stone surrounding the fireplace are not storm-related, she said. An engineer she hired said it was damaged by the tornado and, if not fixed, the entire thing will collapse and take an exterior wall with it.

"I'm petrified that I'm going to come home and my chimney is going to be in the front yard, along with my wall and half of my living room," she said.

The insurance company paid to re-shingle her roof. But after that, she found the trusses underneath are cracked and the roof is sagging. The insurance company said those problems weren't caused by the storm. Her engineer said they were.

This dispute has prevented them from fixing the HVAC system, which is why Stewart's family moved into a hotel for the summer and doesn't want to move back into the home as winter approaches. At this point Stewart, her husband and their 11-year-old daughter plan to move into their converted garage, which suffered little damage and can be heated with space heaters.

"I thought maybe we'd be back by Aug. 1 in the home," she said. "So to still be in October and facing winter time and losing housing, all of it is just a lot. It's a lot. My poor house."

Stewart said her next step is to complain to the Ohio Department of Insurance.

Thousands of tornado claims

The Ohio Insurance Institute estimates the Memorial Day tornadoes inflicted between $465 million and $480 million in insured losses across southwest Ohio, representing more than 30,000 claims. About 70 percent of those were personal homeowners or auto insurance claims, according to the institute.

One picture of how much people are getting from their insurance companies comes from forms filled out by property owners seeking a reductions in their taxable property values from the Montgomery County Auditor's Office. The form includes questions about how much damage the storm did and how much the property owner received from insurance.

Of the nearly 1,300 forms filled out, the Dayton Daily News found only about 200 answered those questions completely. Of those, most reported receiving far less money from their insurance company than the damage their property sustained.

Complaints to the Ohio Department of Insurance named 17 insurance companies. The company with the most complaints was Allstate. Allstate is the second largest insurer in the state, according to the Ohio Department of Insurance.

"Our commitment is to always settle claims fairly and quickly," said Allstate spokeswoman Meghan Cass when contacted by the Dayton Daily News about the company's dispute process.

"If the homeowner or their contractor are not in agreement on the covered damages, the homeowner can request an appraisal in which both parties (Allstate and the policyholder) select independent appraisers to meet and evaluate the covered damages. If the appraisers cannot come to an agreement, a mediator will review the information and make a decision about the covered damages," Cass said.

The decision on whether to repair or replace a roof is complicated, she said. Factors include the direction of the storm, the direction a house is facing, the steepness of the roof, how close the home is to other objects that could protect it, the roof's age and the quality.

"That's why some houses in a single neighborhood may sustain more roof damage than others after a storm," she wrote.

Fighting for more

Susan Barnes filed a complaint with the state on behalf of her father. Her complaint says her father's insurance company provided an estimate for roof repair, but his contractor said his Dayton home needed a new roof. It was a difference of thousands of dollars.

Barnes told the Dayton Daily News she filed the state complaint after the insurance company stopped responding to her requests for a second opinion. Within days of filing the complaint, the insurance company contacted her and said they changed their mind and were cutting a check.

"I'm sure there's a lot of people who didn't realize they could fight it or how to do it," she said. "I just feel bad for older people who didn't have an advocate to fight for them."

Sharista Houston tells a similar story. She filed a complaint with the state after her insurance company said her Fairborn home didn't suffer hail damage in the Memorial Day tornadoes and offered $1,700 to cover minor wind damage.

"We are asking that (the company) honor our three years of insurance premium payments and replace our roof in conjunction with Ohio law, the opinions of two roofers' assessments, and the fact that numerous other neighbors insurance companies are honoring their customers damages and some have actually already paid for new roofs," she wrote to the state.

Houston told the Dayton Daily News that shortly after the complaint, the insurance company called and was willing to work with her. She also had help from a contractor who helped her fight the insurance company. She doesn't know which of these factors contributed the most, but they ultimately offered her $11,800 for a new roof.

"You just keep getting supervisors on the phone. You just keep fighting and find a good contractor who will fight for you," she said when asked what advice she would give people in that situation.

Quinn, with the American Policyholders Association, said insurance companies know that people aren't likely to fight them. That's why it helps to get backing, whether from a contractor, engineer, private adjuster or state regulators.

"You are one-on-one against a billion dollar insurance company who has armies of attorneys and lobbyists and millions of dollars and they do this day after day," he said. "The average person on their best day cannot fight an insurance company, engineering firm and a law firm.

"Now make it not on their best day. You just lost your home in a tornado. How are you possibly going to stand up and fight the insurance company?"

How state handles complaints

The Ohio Department of Insurance's Consumer Services Division saved or recovered more than $5.6 million for Ohioans last year, received about 20,000 inquires, and handled about 6,000 complaints, according to its annual report. Most complaints were for health or auto insurance.

Once complaints are received, they are sent to the insurance company with a letter requesting documentation and a detailed response, department spokesman Chris Brock said. They then analyze the response to make sure the policy and law were adhered to.

"If we find there were issues with the way the situation was handled, we would suggest the company work with the consumer to resolve the issue," he said. "If we find the company complied with Ohio insurance laws and regulations and their policy provisions, we explain to the consumer why that was the case and work to educate the consumer on the process or situation for future reference."

Fadel, with the Ohio Insurance Institute, said the state does "a really good job in making sure insurance companies adhere to the policies and abide by the laws and regulations."

Advice for homeowners

Fadel and Allstate officials advise property owners to make sure they are properly covered and prepared. This includes doing a home inventory of everything in their house, with photos, and to store that information in a safe place.

"People need to make sure they are buying the right kind of coverage on the front end to make sure they have the right kind of coverage if something like this happens," Fadel said.

There are two main types of homeowners' insurance policies: replacement cost and actual cash value.

"Suppose, for example, a tree fell through the roof onto your eight-year-old washing machine," he said. "With a replacement cost policy, the insurance company would pay to replace the old machine with a new one. If you had an actual cash value policy, the company would pay only a part of the cost of a new washing machine because a machine that has been used for eight years is worth less than its original cost."

Most insurance companies recommend a dwelling be insured for 100 percent of replacement cost.

Another coverage gap can emerge if someone made significant improvements on their house, such as enclosing a porch, without informing their insurer, Fadel said.

A property owner's fight with an insurance company compounds all of the other issues they face in the wake of a disaster, Quinn said. It can traumatize them further and drag out the process of recovery for years. He calls it "the disaster after the disaster."

"For some people there will be a line in their life forever: before the storm and after the storm. And the main reason is insurance did not work the way it was supposed to," he said.