Sandy Victims Turn to Legal Assistance in Insurance-Claim Fight

After her insurance company told her the damage to the roof of her Lavallette, N.J., cottage left by superstorm Sandy was minor, Diana Rocco made the recommended repairs. Yet on a rainy day two weeks later, she sat in her living room - as the rain poured in.

"I needed an umbrella in my house," she said about what she called the gross underestimate of the damage. "I cried and cried and cried."

Then she received a check from her homeowner's insurance company for $201.90 - not only for the $500 in roof repairs but for the damage to all her property.

Rocco, 67, of Medford, N.J., is all cried out.

"There's no more tears left in me," she said. And now she's all lawyered up.

After getting the advice of her son and daughter and son-in-law, all attorneys, she hired a law firm to battle her homeowner's insurance company.

She had no flood insurance. That would have covered most of her losses, which she estimated to be more than $200,000. Mortgage companies require flood insurance, but the mortgage on the property - bought more than 60 years ago by her family - was paid off long ago.

Problems with flood insurance claims

Lawsuits involving homeowner's insurance claims are not exotic fare in the field of law.

But flood insurance claims, such as the ones produced by superstorm Sandy, are uncommon in New Jersey. And that's why experienced lawyers from Gulf Coast states are showing up to guide New Jersey law firms, said Dennis Abbott, a retired Pensacola, Fla., attorney who co-authored a short layman's book on flood insurance claims, "Your Guide to Handling Flood Insurance Claims."

Lawyers are coming from the Gulf Coast "because we have hurricanes every year," said Abbott, a consultant to the law firm that Rocco hired, Wolff & Samson in West Orange, N.J.

Abbott was calling from Texas, where he was involved in a trial on a flood insurance claim stemming from 2008's Hurricane Ike, a case regarded as a "straggler" because of the time it took to get to trial.

"That's how much it can be delayed," he said. "But having a lawyer doesn't necessarily mean you have to litigate."

It's not unusual for policyholders to get checks for only 50% to 60% of what they've lost, he said.

Claimants can also file what's known as a supplemental claim if they receive a settlement they are unhappy with, he said.

"But it's not an easy process," he said.

Many claims, few complaints

Chuck Leitgeb, vice president of the Insurance Council of New Jersey, said companies handling flood insurance claims must follow strict guidelines set up by the National Flood Insurance Program for adjusting and dealing with those claims.

"If they don't they follow those guidelines, they can get penalized," he said.

He declined to comment on complaints about homeowner insurance polices because policies vary greatly as do the companies that handle them, although he did say the number of complaints received by the state Department of Banking and Insurance have been miniscule compared to the number of claims.

Leitgeb also mentioned an additional level of protection in New Jersey for people who want to challenge insurance settlements: a mediation program for homeowner, automobile and commercial property claims. Under the program, mediators review cases and assist in settlement discussions. Homeowners don't need a lawyer for mediation.

No claims yet

It's still early for Sandy-related court cases.

No claims against the Federal Emergency Management Agency or the National Flood Insurance Program have been filed in federal court in New Jersey in relation to Sandy.

Since late January, Legal Services of New Jersey, which helps low-income people with legal problems, has seen an uptick in calls to its hotline about insurance questions, flood insurance problems among them.

"What we're hearing from a lot of people is that they don't have enough money to get repairs done or to raise their homes," said Linda Babecki, assistant supervisory attorney for the organization and director of the Hurricane Sandy Legal Assistance Project.

Adam Derman, an attorney who is heading up Wolff & Samson's efforts to represent disgruntled flood insurance claimants, said Sandy victims are just now getting to the point where they are seeking legal counsel.

"People are seeing denials and partial denials, and they are losing confidence that no matter how much information they give or how many calls they make that they will recover the full amount they can see under their policies," he said.

Sandy was primarily a flood event, although many homes suffered other damage, he said.

Lawsuits have to be filed in federal court within a year of a denial or partial denial.

The more important date to remember for Sandy victims is the deadline for a proof of loss - a formal statement identifying the extent of losses - within one year of an event. Cases can be resolved before a complaint is filed, with a letter from the attorney, but that depends on the particulars of the case.

Different insurance

A big difference between flood insurance and homeowners insurance cases is that claimants in the former can cash checks on what they receive from their insurance company and still sue, Derman said. That's generally not the case with homeowners insurance claims. To cash those checks, a claimant must sign a release.

With filing a lawsuit, Derman offered a caveat: "It takes a long time. It's hard to wait until the resolution of a lawsuit to decide what to do with your house and what to do with your life. It can take a year or more."

When do you hire an attorney?

"You want to do the follow-through," Derman said, referring to supplying the insurance company with any additional material needed to further a claim. "Once you get a partial denial, that's probably the point where you start talking to an attorney."

One of the firm's clients, John DeAngelis of Toms River, N.J., a 49-year-old accounting manager, is going ahead with renovations while his flood insurance claim is pending. He is living in an 8-by-8-foot section of a construction trailer on his property with his two pugs. He is funding the repairs with savings and has a U.S. Small Business Administration loan waiting as a backup.

DeAngelis said he had $100,000 in damage covered by flood insurance and was offered a settlement of $65,000. He was given nothing for $30,000 in contents losses, although he had $50,000 in flood insurance to cover it, he said.

But DeAngelis has other insurance woes: He also is using Derman's law firm to fight a homeowner's insurance claim - for the damage caused by a 37-foot boat he found in his backyard after the storm surge receded.

"I'm doing this out of pocket," DeAngelis said about his repairs. "They gave me half of what I lost."