In areas affected by Superstorm Sandy, thousands of homeowners have appealed insurance settlements in court to object to "lowball" estimates for replacement costs. Dissatisfied with the provisions of their existing insurance policies, attorneys for policyholders have attempted to prove that insufficient settlements were due to mishandled claims.
In an effort to limit disputes, the Federal Emergency Management Agency (FEMA) urged insurance companies to handle as much of the objections as possible in mediation. When so many homeowners are affected by a single disaster, pursuing damages in court can overburden the legal system and present new legal expenses for insurance companies and homeowners who are already encumbered with property losses.
Denis Kelly, an attorney representing homeowners, said that those legal costs can outpace the amount of need his clients demonstrate for damages.
"How much does that whole process cost relative to what it is they're claiming?" he asked in an interview with NPR. "Are we going to have more than $55,000 worth of legal fees here to address a $55,000 claim?"
To help avoid valuation disputes, insurance providers and policyholders alike can make sure that their policies reflect the most accurate and up-to-date home valuation. With due diligence on the front end of reaching policy agreements, both parties can prepare for catastrophic incidents with greater confidence in the valuation process.
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