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Hurricane Insurance Fraud

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The aftereffects of a hurricane can be as devastating as the storm itself. Rebuilding is a difficult process, and people whose homes and property are damaged or destroyed expect their insurance companies to provide the services they have been paid for. Unfortunately, this isn't always the case.

By law, insurance companies are required to act in "good faith" and respond to hurricane-related insurance claims in a timely, "reasonable" manner. Hurricane insurance fraud — or failure on the part of an insurance company to properly process or fund legitimate claims — is an all-too-common problem. While occasionally homeowners are able to successfully appeal the rejection of their claims, many hurricane fraud victims end up needing the help of a hurricane fraud attorney.

What Qualifies as Hurricane Insurance Fraud?

Hurricane insurance fraud is just one form of "insurance bad faith." Bad faith comes in various forms, from deliberate failure to investigate legitimate claims to outright denial of these claims. Any deliberate behavior intended to delay or deny the processing or payment of a hurricane insurance claim may be deemed "bad faith" in a court of law and may warrant compensation over and above the original policy benefit. This may include any of the following:

  • Denying a claim
  • Inadequate payment
  • Delay of payment
  • Failure to pay
  • Failing to investigate a claim
  • Offering to settle a claim for an amount that is less than it is worth

Laws that Protect Consumers from Insurance Bad Faith

Most states have laws to ensure that insurance companies meet their obligation to deal with claims in good faith. In some states, for example, insurers must make a written offer to settle property damage within 30 days of receiving proof of a loss by an insured customer. However, examples of insurance companies acting in bad faith are still not uncommon.

One of the most blatant examples of this occurs when insurance companies cite the flooding clause as justification for denying claims made by inland residents who live outside the immediate impact zone. This and other examples of deliberate willingness to deceive insured customers are considered bad faith, and the insured customers are considered hurricane insurance fraud victims.

Compensation for Hurricane Fraud Victims

Victims of hurricane insurance fraud or bad faith can sue for breach of contract, bad faith and any emotional distress caused by the situation. In many jurisdictions, judges and juries use pre-established formulas to arrive at an appropriate figure for compensation for these types of consumer fraud. Because of the financial and emotional stress caused by the inability to rebuild, damages awarded in these cases can go far beyond what is covered in the insurance policy, and may cover any or all of the following:

  • Interest on the money that should have been provided
  • Consequential damages, or money the insured party had to pay out due to the denial
  • Mental and emotional distress
  • Punitive damages (to punish the insurer so as to prevent future unlawful conduct)

When Should You Hire a Lawyer?

If your property is damaged in a hurricane, it is very important that you follow the appropriate steps as outlined in your insurance policy, because courts sometimes dismiss cases when the insured party fails to follow the proper procedures.

In most cases, the first step is to file a claim. If your claim is denied, obtain a written copy of the denial — along with any explanation. If there is an appeals process, be sure to follow the instructions in your policy. You also may want to consider doing some background research — you have already begun by reading this article — and look into your state's bad faith insurance statutes.

However, only an experienced hurricane fraud lawyer can determine if you have grounds for a lawsuit. Insurance companies have armies of attorneys dedicated to fighting claims, including bad faith and hurricane-related claims. Fortunately, many law firms exist that were formed by lawyers who previously worked for insurance companies. These firms understand the defensive strategies used by insurance companies and are able to challenge them in their own language, which significantly increases the likelihood of a positive outcome for your case. If you feel you may be a hurricane insurance fraud victim, contact a hurricane fraud attorney.

Hurricane Fraud Examples: The 2005 Season

The year 2005 wreaked havoc on the southern coastlines of the United States. Residents from Texas to Florida were adversely affected by a series of ferocious hurricanes, including Wilma, Rita and Katrina. Unfortunately, many people found themselves with the added worry of having to negotiate legitimate claims with their insurance providers.

Before a hurricane even hits land, insurance companies begin to prepare. Much of this preparation is for the benefit of their insured customers; however, insurance companies also mobilize their legal teams to fend off the impending torrent of fraudulent claims — and in some cases legitimate claims as well. During the 2005 hurricane season, there were many instances of a systematic denial of legitimate claims.

For example, while it is true that many insurance policies specifically exclude flood damage, and therefore do not cover some damage associated with hurricanes, there are many cases where insurance companies wrongly characterized damage from wind-driven rain and other forces of nature as "flooding." In several cases, insurance companies even denied claims on inland properties unaffected by flood-causing factors such as storm surge.

Many legitimate claims were simply denied. Other homeowners were told to file with the Federal Emergency Management Agency (FEMA), which does, in fact, provide assistance for uninsured claimants. But even those people who received aid from FEMA may have received more under a properly processed insurance claim. To make matters worse, in November 2005 FEMA ran low on money to help flood victims, leaving hundreds of thousands of people stranded with nowhere to turn. Some rejected claims have since been reversed through the appeals process, but these represent a minority of cases.

This widespread denial of hurricane insurance claims was in no way due to a lack of money; profits in the property insurance and casualty insurance industries for 2005 were considerable. While people have continued to suffer from the devastating effects of the 2005 hurricane season, the insurance companies have continued to operate profitably. If you feel your hurricane insurance claim was unlawfully denied by your insurance company, an insurance fraud attorney can help you determine if you are eligible for additional compensation. A hurricane insurance fraud lawyer can help compel the insurance companies to live up to their contractual obligations.

Did You Know?

Many Gulf Coast residents have already been successful suing insurance companies, including State Farm, Allstate, Nationwide and others.

Insurance Uninsured

Homeowners insurance typically does not cover hurricane-related flood damage.


The U.S. insurance industry collects nearly $1 trillion in premiums each year.