Schwaba Law Firm is assisting Hurricane Helene disaster victims who have suffered property damage and loss from the disastrous effects of Hurricane Helene in and around Western North Carolina, including Asheville, Boone, and other towns and communities. Many people are submitting claims and are already facing denials from their homeowner’s insurance, commercial general liability insurance, and farm insurance policies. These denials are expected to be based on a common exclusion in homeowner’s insurance policies that exclude from coverage water damage caused by flooding.
The Insurance Policy Language
Homeowner’s Insurance policies in North Carolina may exclude claims related to water damage with language similar to the following:
- Water damage meaning:
- regardless of the cause, flood, surface water, waves, tidal water, storm surge, or overflow of a body of water.
- We do not cover spray from any of these, whether or not driven by the wind;
But these exclusions may not apply to damage from other causes, including:
- Fire
- Electrical Power Outage
- Wind storms or hail
- Falling objects like downed trees, electrical power lines, or other buildings causing damage
- Smoke
- Vandalism, Theft, or Mischief
- Livestock – even in the case of drowning
- Accidental Discharge of a Fire Sprinkler System
- The Cracking of a Heating or HVAC system
The above are just some examples of compensable claims that may arise from the effects of Hurricane Helene that may be denied due to an insurance company claiming that the above damage was caused by “water damage” or “flooding.” Claimants should also be entitled to coverage if they have a flood endorsement included in their insurance policy, entitling them to coverage for any “water damage” that occurred.
Insurance Company Has a Duty to Deal With You Fairly
An insurance company must handle your claim reasonably. This means that your insurance company must timely and reasonably investigate and adjudicate your claim. The North Carolina Insurance Code requires insurance companies handling Hurricane Helene claims to do the following:
- Acknowledge the claim in writing within 30 days. N.C. Gen. Stat. §58-3-100(c)
- Acknowledge and respond to claims communications “reasonably promptly.” N.C. Gen. Stat. §58-63-15(11)(b)
- If the Policy requires the submission of a proof of loss, a blank form must be provided within 15 days of the receipt of the claim. N.C. Gen. Stat. §58-3-40
- Affirm or deny coverage within a reasonable time after receipt of proof of loss. N.C. Gen. Stat.§ 58-63-15(11)(e)
- “Promptly” settle claims where liability has become reasonably clear. N.C. Gen. Stat. §58-63-15(11)(f)
- Payment of settled claims must be made within 10 days. 11 N.C. Admin Code 4.0421(1)
- Provide a reasonable explanation of the basis for a claim denial. N.C. Gen. Stat. §58-63-15(11)(n)
An insurance company and their claims adjuster should never put the company’s interests ahead of their insureds. An adjuster has an obligation to fairly and honestly evaluate evidence and not look for reasons to deny a justifiable claim. An insurance company evaluating damage from a hurricane or flood must not seek out reasons to deny their insured’s claims, and then seek justification for the denial. If your insurance claim has been denied without a reasonable investigation, you may be entitled to a bad faith claim against the insurance company. If your insurance claim was misclassified as a denial based on water damage from the effects of Hurricane Helene, you may be entitled to a bad faith claim against the insurance company. And if your insurance company fails to handle your claim fairly and reasonably, you may have a claim for bad faith insurance handling.
Insurance bad faith claims in North Carolina are governed by North Carolina’s Unfair and Deceptive Trade Practices Act, (UDTPA), found in Chapter 58 and Chapter 75 of the North Carolina General Statutes.
General Statute § 58-63-15(11)(f, h, m, and n) sets standards for insurance companies’ claims handling practices as follows:
(11) Unfair Claim Settlement Practices.–Committing or performing with such frequency as to indicate a general business practice of any of the following: Provided, however, that no violation of this subsection shall of itself create any cause of action in favor of any person other than the Commissioner:
- Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear;
- Attempting to settle a claim for less than the amount to which a reasonable man would have believed he was entitled;
- Failing to promptly settle claims where liability has become reasonably clear, under one portion of the insurance policy coverage to influence settlements under other portions of the insurance policy coverage; and
- Failing to promptly provide a reasonable explanation of the basis of the insurance policy in relation to the facts or applicable law for denial of a claim or the offer of a compromise settlement.
Private rights of action are also available to insureds. According to Chapter 75, claimants alleging unfair and deceptive trade practices related to the claims handling practices of insurance companies may be entitled to treble damages – three times their original damages. Treble damages are awarded to prevent insurance companies and other corporations from deceptively denying just insurance claims.
Recommendations for Dealing With Your Insurance Company
Schwaba Law Firm has represented western North Carolina residents for years for insurance company denials, including property damage claims that are categorized as bad faith insurance denials. These unfair, deceptive, and bad faith denials have resulted in millions being awarded in settlements and verdicts to Schwaba Law Firm’s clients, including awards of punitive damages for the insurance company’s actions. Based on this experience, we recommend the following steps to take when dealing with your insurance company:
1. Document your Loss
To whatever extent, secure necessary documentation of your property and damaged items. These items may include any purchase documents, receipts, financing documents, and property assessments. Take photographs of all damage to the property and keep these items in your possession. All of these documents will assist you in determining the full extent of your loss and the amounts of compensation to which you are entitled from the insurance company.
2. Cooperate with Your Insurance Company as Much as Possible
you have an obligation under your homeowner’s insurance policy to cooperate with your insurance company. This means allowing the insurance company to perform a complete analysis of your claim, including allowing them to perform an inspection of the premises and all damaged property within it.
3. Answer Any Questions the Insurance Company May Have Related to Their Investigation
The insurance company may ask certain questions related to the Hurricane, your property/premises, items damaged and how the damage occurred. Answer truthfully. They also have the right to request a recorded statement. You have the right to have an attorney present as you answer their questions.
4. Do Your Evaluation of the Amount of Your Claim
You are not required to accept the amount of compensation being offered to you by the insurance company. Once you have determined the amount of your loss, submit your amount to your insurance company. The insurance company may offer something less than your claimed amount. You are free to negotiate with the insurance company if you believe the insurance company’s offer does not make you whole.
5. You Are Not Required to Sign a Release of Your Claim with Your Insurance Company
If you are negotiating with your insurance company, you are under no obligation to sign a release of any claims. Your relationship with your insurance company is not supposed to be adversarial. Pursuant to their policy, they have an obligation to compensate you for your loss, regardless of when that loss is discovered. As a result, you are not required to sign a release of any further claims to accept compensation for your existing claims.
6. Ignore Insurance Company Legal Advice or Representations That You Do Not Need a Lawyer
Insurance companies have been known to attempt to advise insureds of their legal rights. This advice is often wrong. They may also advise or persuade you to not hire a lawyer. Ignore this advice. If you feel the need to retain counsel, you have the right to do so. Most lawyers, including the Schwaba Law Firm, are only paid in the event a recovery is obtained for you.
7. Contact a Lawyer If You Believe Your Claim Is Not Being Adjudicated Fairly
You have the right to legal counsel during the claims process.
