Joseph A. Porcelli – April 17, 2013
Super Storm Sandy – Are Insurer’s Claim Estimates Too Low?
Many victims of Super Storm Sandy have found that the settlement offered by their insurance company falls short of the actual costs associated with rebuilding and restoring the damages incurred. There are several reasons for this disparity.
Most insurance carriers employ outside claims adjusters to conduct site inspections of the damaged homes, condominiums and businesses. These outside claims adjusters are typically overwhelmed with insurance claims, so there is a real incentive for them to conduct the site inspections quickly, which may result in errors in the scope and pricing of repairs. Another reason the settlement offered falls typically short is that the software used by the insurance company to calculate the claims does not adequately reflect the reality of the devastation caused by Super Storm Sandy.
In the past decade, there have been computer software programs used by insurers to estimate construction costs. These programs calculate structural damage, repair and rebuilding expenses. Unfortunately the models are based on tract housing and do not take into consideration such things as historic, custom or expensive dwellings. Furthermore, Super Storm Sandy ravaged areas and communities comprised of high valued real estate. As a result, the estimates produced by these software programs will most likely be insufficient to reimburse you for the actual cost of rebuilding or replacing your home.
Builders and contractors retained by property owners do not use this type of software program to produce their estimates. They base their cost estimates on sub-contractor bids and their general knowledge about the costs and time involved in a potential job as well as the current cost of materials found locally.
Another factor that these software programs do not take into consideration is the principal of supply and demand. The amount of damage produced by Super Storm Sandy was cataclysmic. As a result, contractors are inundated with requests for bids and estimates. The demand for skilled labor far exceeds the supply, so contractors and builders are not able to compete for work. Therefore those left to rebuild have little room to negotiate pricing, often creating a gap between the claim settlement offered by the insurance company and the actual cost of restoring and repairing their homes.
Retaining an attorney with expertise and knowledge in the area of insurance settlements can provide you with the protection and guidance necessary for a successful claim.