November 6, 2012 — Experts estimate that damage from Hurricane Sandy will reach $50 billion, with around $10-20 billion in insured losses. In the coming weeks and months, insurance companies will likely receive 200,000 claims for wind damage and 20,000 claims for flood damage.

Most insurance claims for flood damage go through the National Flood Insurance Program (NFIP), which can pay about $4 billion in damages. However, Hurricane Sandy flood damage claims are estimated to be between $8-10 billion. The Federal Emergency Management Agency (FEMA) can borrow up to $1 billion from the federal government, on authorization from President Obama. Even with the additional federal funds, however, the flood damage will likely exceed available funds.

As insurance companies face potential fund shortages, it is possible that consumers will see their insurance claims denied, delayed, or vastly under-compensated.

When this happens, it is vital that the consumer ask their insurance company why the claim was not compensated fairly. Once the insurance company responds with a reason for their action, they can’t offer new reasons later on. It is also important that claimants keep a diary of every conversation they have with an insurance agent — including the agent’s name, the date, time, and content of the conversation.

There are many possible reasons why your Hurricane Sandy insurance claim was denied. Your insurance company may have required you to pay a hurricane deductible, despite the fact that government officials in New Jersey and New York have said that homeowners should not pay a hurricane deductible (usually 1-5% of a home’s value) because Hurricane Sandy was downgraded to a post-tropical cyclone shortly before making landfall.


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