Lawyer Warns Homeowners about Timely Insurance Settlements

Photo taken in September shows hurricane damaged property on St. John.
Photo taken in September shows hurricane damaged property on St. John.

Homeowners filing post-hurricane damage claims are being warned to check the terms on their insurance policies. The lawyer who issued this warning recently reached out to St. John residents to share the word with them.

Most homeowners insurance policy holders in the Virgin Islands do not fully understand how the claims process works, their rights as consumers or what they can expect, said attorney Leigh Goldman.

In particular, he said, policies that stipulate a one-year statute of limitations require sworn proof-of-loss statements be filed immediately.

If damage to the home was the result of Hurricane Irma, the statute of limitations may run out as early as Sept. 7 of this year, Goldman said. Other policies, with two or three year timelines, do not face such urgency.

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“Insurers have up to 30 days to respond,” he said. “If you don’t do it now you’re going to have a very tight time to get a settlement.”

The longer insurers can string out the settlement process, he said, the greater their advantage to decide the size of the payout.

In his effort to get the word out, Goldman organized a May 17 meeting for residents of St. John, but inclement weather forced a cancellation. He said he would make a second attempt sometime in June.

A town meeting was held in November between St. John residents and St. Thomas attorney Jeffrey Weiss. St. John realtor Roger Harland said about 75 people turned out to hear the discussion on insurance claims.

Some private lawyers have seen an uptick in business from unhappy consumers who claim insurance companies grossly underpaid them for storm damage. Goldman said he’s had between 80 and 100 homeowners visit his office with insurance-related complaints.

Others have taken the self-help approach.

St. John homeowner Myrna George said she thought the extra money she paid on her home insurance policy would be more than enough.

That is, until Irma did her damage and the insurance company said an extension added on to the home raised the assessed value.

“I had a $225,000 insurance policy and received $150,000 in damages. Insurance company said I was under-insured because my house is worth $860,000. First time I was told I was underinsured. Adjusted submitted that I receive $18,000,” George said.

The homeowner complained to the Division of Banking and Insurance, hoping for some relief.

“I went to Banking and Insurance and they said the math was wrong … should be $22,000.. I had to negotiate on my own in a very unfamiliar area for they could not help me,” she said.

One aspect of the problem became so troublesome, the government official overseeing banking and insurance matters issued an emergency order directing insurers to notify their customers.

In his emergency order Lt. Gov. Osbert Potter directed all property and casualty insurance companies licensed to do business in the territory to tell customers if the policies they purchased could meet their needs in the event of a disaster.

And, in those instances where shortfalls were identified, Potter told insurance companies “to conduct a second review of each Hurricane Irma and Hurricane Maria related claim for which a determination of underinsurance was made.”

Goldman said many homeowners in the territory do not know what their insurance policies promise to do. Some have never read them at all, which means they are more likely to find themselves without the knowledge to defend themselves if they feel they’ve been shortchanged.

In a statement issued in January, Potter, in his capacity as Commissioner of Banking and Insurance, said the division has been busy processing complaints.

That work, he said, is carried out by the office of Financial Regulation.

“One of the major challenges is the issue of underinsurance, which is insurance coverage that is insufficient to cover total dollar amount of losses. Generally underinsurance is associated with the policy holder’s failure to co-insure 80 percent of the property’s replacement value.”

As of February’s emergency decree, the territory’s insurance companies are required to notify customers in writing if a determination of underinsurance is found.

And, it appears, the word may be starting to spread. At the St. John office of Theodore Tunick and Co. insurance, administrator Catherine Lee says more customers are coming in to increase their coverage.

Shared content for Virgin Islands Source and St. John Tradewinds.

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