Claims handling issues are surfacing after Sandy. In particular, the new claims handling issues raise Bad Faith issues involving Flood Insurance Policies and the National Flood Insurance Program.
It is another measure of the storm's devastating effects that the areas in which the largest number of Flood Insurance Claims come from, are also the areas which we can reasonably and unfortunately expect to present the largest number of Bad Faith Claims too.
Claims handling questions are reported concerning low offers to compromise large Flood damage Claims. Policyholders have been living with the damage that Sandy caused since Sandy made landfall in October of last year. Besides low offers of compromise, Policyholders complain that Flood Insurance Adjusters are giving little time and short attention to evaluating the Policyholders' Claims. See Tara Siegel Bernard, "Fighting the Insurer Over Hurricane Sandy Damage" p. B1, col. 1 (New York Times Nat'l ed., "Business Day" Section, Saturday, March 2, 2013).
On the Insurance Coverage front, questions are being reported at the same time concerning the damaging effects of mold, and whether there is any Coverage for it. See Sarah Maslin Nir, "Questions Emerge About the Mold That Hurricane Sandy Left Behind / Severity of Harm Remains Unclear" p. A14, col. 4 (New York Times Nat'l ed., Saturday, March 2, 2013).
These unfortunate facts give rise to many questions which must be answered before Bad Faith Claims can arise. Flood Insurance Policies are issued under and as part of the National Flood Insurance Program. Are the Bad Faith Claims which follow Sandy claims handling preempted by this Federal law?
Are the Flood Insurance Companies immunized under the National Flood Insurance Program?
Who if anyone is subject to the applicable Unfair Claims Practices Act? The answer to that question is important to the Flood Insurance Company, to FEMA which administers the National Flood Insurance Program, and to individual adjusters.
Many Sandy Claims are understandably handled by Independent Adjusters hired by overwhelmed Carriers. The Independent Adjusters also have an interest in finding out if they are potentially subject to individual liability for their Sandy claims handling.
Some of these and similar questions have probably already been answered. They need to be answered now, it seems, as Bad Faith allegedly follows in Sandy's wake.
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