Connecticut homeowners who still haven't been paid by their insurers over damage from Superstorm Sandy are running out of time to sue their insurers, I reported for the Connecticut Post and the Stamford Advocate.
Here's the full story:
Homeowners whose insurance companies still have not paid them for Superstorm Sandy damage and may need to sue their insurers will soon run out of time to do so.
Even though Connecticut law provides for six years for lawsuits to be filed over broken contracts, the state has a law on the books that lets insurers limit the time in which disputes about homeowner policies can be taken to court.
And it is industry practice to include in standard homeowners' insurance policies a time limitation on lawsuits, according to several Connecticut attorneys.
Ryan Suerth, a Hartford-based solo practitioner who represents policyholders in insurance disputes, said going to court is a "last-ditch effort" because no one wants to hire a lawyer after already going through a long process to try to get paid by one's insurer after a disaster.
But Suerth said "the only person who is going to look out for the policyholder" is the policyholder.
The law used to let insurers limit homeowners bringing lawsuits to within a year of disasters, but it was changed in 2009 to 18 months. Now homeowners' insurance disputes can't go to court unless they are started within "eighteen months next after inception of the loss," according to the statute.
"The moral of the story," says Leonard Isaac, an insurance litigator with law offices in Waterbury and West Hartford, is that "if your policy has a limit that's the minimum provided by Connecticut law, the lawsuit has to be served on the insurance company within 18 months of when your loss took place. That means it has to be delivered by the marshal to the insurance company by that time."
Policyholders thinking about taking their insurance company to court can't show up on a lawyer's doorstep a week before the deadline, Isaac said, because time has to be allowed for the lawsuit to be served on time to meet legal deadlines.
Isaac said he has had people consult him after major storms, particularly winter storms, when they've run out of time to sue. After major storms, many people think the "insurance company is moving slowly but they're moving," but then it can be too late to seek legal recourse, he says.
The National Flood Insurance Program, which is administered by the Federal Emergency Management Agency, only allows for lawsuits to be filed within a year of a policyholder's loss, Suerth added.
Gerard O'Sullivan, program manager of the Insurance Department's consumer affairs unit, recommends that consumers who are having problems with their insurance claims call the department. It will see if they can mediate the claim and bring it to a conclusion without the need for litigation, O'Sullivan said.
Gregory Podolak, an attorney representing policyholders with Saxe Doernberger & Vita in Hamden, suggests policyholders crack open their policies and see if they have a limitation-of-suit provision in there.
If they are running up against a deadline, policyholders can see if their insurers will agree to "toll" that part of the contract, Podolak said. An agreement to temporarily put on hiatus the requirement that policyholders only can go to court within 18 months of when Sandy struck would allow insurers to avoid premature lawsuits, he said. That's especially the case if "you are adjusting your agreement in good faith and cooperation," Podolak said.
Isaac suggests that policyholders can use public adjusters to help negotiate with their insurance companies.
Michael McCormack, who represents policyholders as well as insurance industry clients in regulatory proceedings with Hinckley Allen & Snyder in Hartford, said that insurance companies limit the time in which lawsuits can be brought because they "don't want to be subject to a claim six years down the road. They want to have notice and resolve claims."
Not all claims against insurance companies are limited, but in these situations, things get more difficult quickly. Policyholders can still sue over truly wrongful behavior by insurance companies like acting in bad faith, McCormack said, but such behavior is rare and is harder to prove.
Suerth said he finds it unfair to allow contractual limitations on the six-year statute of limitations because it "doesn't help the policyholders and there are other insurance policies out there that don't have any limitations at all."
There are other insurance issues arising out of Superstorm Sandy that people may not be aware of, attorneys said.
Many policyholders are not aware that, without going to court, they can invoke a clause in their polices if they're in a dispute over the value of their loss, McCormack said. Connecticut law requires that disputes over the amount of loss in standard homeowners' police go to an outside neutral process called appraisal.
Insurance companies don't always advise their insureds that a dispute over the value of loss can be taken to this form of arbitration, Isaac said.
"Instead they say this is all we're going to pay. They say take it or leave it," Isaac said.
The appraisal process is more consumer-friendly because it's less expensive than litigation, McCormack said.
Isaac estimates that half of the disputes he sees are over the value of the loss.
Both the policyholders and the insurance company get an appraiser, and there is a neutral umpire to make a final determination on the claim's value.
Both parties pay for their own appraiser, and a neutral umpire is paid by both sides to decide the dispute over the value of the claim, O'Sullivan said.
Natural disasters like Sandy are a reminder to make sure people have the insurance coverage they want, insurance experts say.
"One of the important things of any catastrophe like this" is for people to determine if they are comfortable with their deductibles and to understand that flood insurance is separate from a homeowner's policy and must be obtained separately, O'Sullivan said.
Michael E. DiGiacomo, a forensic accountant with BlumShapiro in Shelton who often is called in to evaluate claims, said that his impression of Sandy is that many businesses did not have the proper insurance coverage in place to recover for their losses.
For example, businesses wanted to keep their insurance costs down and forewent coverage of the interruption of their businesses, DiGiacomo said.
"Sandy just brought that to light because of how devastating it was," DiGiacomo said.
In light of Sandy it might be a good idea for businesses to go over their policies with their brokers to make sure they have the coverage they want, DiGiacomo said.
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