Insurance Reimbursement After Hurricane Sandy: Buyer Beware

Nearly 300 Westport homes and businesses suffered damage from Hurricane Sandy, and property owners who intend to be reimbursed by their insurance company for repairs should proceed with caution.

Cohen and Wolf Principal Kenneth Bernhard, a former member of the Westport town counsel and current member of the Wilton town counsel, advises Patch readers of some “hidden” considerations that are not always obvious or discussed by FEMA or insurance adjusters.

“Documentation is critical,” said the former Westport town attorney. “You should not do anything without photos, assessments and receipts.”

Expenses like propane heaters, temporary storage, moving costs, hotels and all repairs should be documented in order for a customer to be reimbursed by an insurance company.

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“There are insurance companies that are helpful and there are some that are not so helpful. It is always buyer beware.” he said. “They are interested in paying as little as possible. You, as the homeowner, are in the business of getting paid 100 percent.”

Generally, an insurance company will make an offer, but negotiation is always part of the game, said Bernhard, a Levitt Pavilion board member.

Homeowners and business owners have the option of hiring an independent insurance adjuster or an attorney who is familiar with construction costs and insurance policies.

“There are people whose business is to negotiate insurance claims, and they will take about 10 percent,” he said. “They are able to make the marriage of what is covered by your policy and what it will actually take to restore your property to what it was before.”

A homeowner or business owner may be tempted to hire the contractor who gives the cheapest repair estimate because they want the job, he said. The property owner may then find that there were necessary repairs that were not included in the original estimate. In many cases, the homeowner would have already settled with their insurance company, at which point they would become responsible for making payments.

When flood damage is involved, things like mold, rust, and damaged electrical systems may not be visible immediately.

“It takes someone who works in the world of insurance adjustment of flood related damage to come into the picture,” Bernhard said.

If you know you’re going to be looking to an insurance company for reimbursement, you put yourself at a disadvantage by using a contractor that is not credible. Homeowners and business owners should use a contractor who is bonded, who will stand by their product, and who is fair in pricing, Bernhard said.

“People might be tempted to take a less than 100 percent reliable contractor. You obviously proceed at your own risk when you do that,” Bernhard said. “Insurance companies may not be as gullible or forgiving as the homeowner might be.”