The process of completing, filing and supporting a claim after a flood loss is a daunting process.
People who suffered the trauma of losing or being displaced from their home have an epic task at hand. The work involves an enormous amount of information to be processed, endless decisions to be made and perseverance to see it through. It’s essentially a part-time job.
It’s also a job that most home and business owners have no expertise in. From adjusters to remediation companies to insurance agents, the homeowner is forced to deal with an array of professionals who know the rules of the game. The homeowner is without a playbook. So, most of the way along the process, the homeowner has the nagging feeling that s/he is being taken advantage of. There may be a temptation to even the playing field by calling in a hired gun, an attorney.
Don’t. That’s Daniel Goldberg’s advice. Head of the Goldberg Law Office, PLLC, he’s also a member of the Texas Trial Lawyers Association.
There usually are two points at which home or business owners want an attorney to step in, said Goldberg. There’s the front end: to have somebody to assist through the entire process. And, there’s the back end: to sue companies and/or FEMA for underpayment or denial of the claim after having gone through the entire process.
“There is a strong body of statutory law that governs how insurance companies must act or they will lose their license,” Goldberg told the JHV. “But, it’s a different game with flood insurance. And, that’s the critical issue.”
Flood insurance is provided through the National Flood Insurance Program, although it is sold by home insurance carriers. Flood insurance is administered by FEMA.
“Given that the government runs this sub-industry, they’ve created a set of rules that differs from all other policies,” explained Goldberg. “With non-flood policies, every state has an insurance code that requires companies to pay out according to their policies, which are contracts.
“With flood insurance, you, as the policyholder, are left with few remedies if and when you are mistreated, intentionally or unintentionally. It could be the result of a bureaucratic error. Or, it could be like Hurricane Sandy, where a group of attorneys uncovered that engineering reports were being altered purposefully to make it look like the damage was less than it really was.”
[Two years after Hurricane Sandy, FEMA agreed to review some 144,000 insurance claims after approximately 2,200 homeowners filed lawsuits over their insurance payouts, following charges that damage-assessment reports were fraudulently altered to minimize claims.]
The Texas Insurance Code does not apply to flood insurance, explained Goldberg.
“That means that if a policyholder is wronged, they can only sue in federal court,” said Goldberg. “And, they can only sue for the amount they believe should be paid under the policy. They cannot recover attorney fees, and there are no penalties.
“This puts homeowners and their attorneys in a difficult position. Every dollar that goes towards paying the attorney is taken away from the necessary repairs to the home. Attorneys expect to be compensated for their labor. If you pay them out of pocket, you won’t be able to recover those hourly fees. If you agree on a contingency-fee arrangement, then it could be 20 percent to 40 percent of whatever the attorney brings back. That amount will remain in the attorney’s pocket and not with the homeowner.”
That said, Goldberg believes there are times when a home or business owner might want to hire an attorney.
“Consider an attorney when you’re at the absolute end of the line regarding things that you can do to help move along your claim,” suggested Goldberg. “Wait until you’ve exhausted every route that exists to take care of your own claim. The end of the line might come about after the insurance company and/or FEMA refuse to pay out anything or are massively underpaying your claim or are just refusing to make a decision.
“Remember: No one else in the world will care about your home as much as you do. While delegating authority and getting others to handle certain aspects of the process is attractive, one shouldn’t assume anyone else will control the process as well as you can.”
The implication of Goldberg’s advice is that homeowners should ally themselves with those who are involved in getting a home back to where it was: the insurance adjuster, contractor, mortgage lender, city inspector and so on.
“Work with them and get them to work with each other,” said Goldberg. “Be the homeowner who is prepared, who educates himself, who is assertive, diplomatic and shows appreciation.
“Encourage all parties to work with each other. And, follow up so they do talk to each other. Do these things and you’re less likely have a problem that would necessitate hiring an attorney,” he said.
From Goldberg’s point of view, he – like most attorneys – will look for certain things before accepting a client’s flood insurance-policy case.
“I will first look at whether a client has done everything correctly up to that point and has attempted to exhaust all avenues to work through the problem before attempting to hire me,” said Goldberg. “That means I’m looking for a client who is organized, has evidence to prove they have followed the process correctly, submitted proof of loss accurately and by the deadline.
“I want to see a client who has documented reasons to disagree with the adjuster, the carrier or FEMA.
“I, and any other attorney, will not take on a client who has messed up during the process by not abiding by the regulations, by not submitting proof of loss properly, by not following up properly. I know how scary that can be because there is so much to do correctly. But, from an attorney’s perspective, if we take on this kind of case, we need to be paid. And, I don’t want to take money out of someone’s recovery, unless they have no other alternative.”
Goldberg attended the July 7 information and resource workshops for flood victims held at the Evelyn Rubenstein JCC.
“I was filled with tremendous pride in our local community,” he said. “It should not be taken for granted that we have organizations like the Jewish Federation of Greater Houston, synagogues and individuals who rise to the occasion to help support those in need. This is not the norm elsewhere.
“I was also impressed that some of the panelists acknowledged that losing one’s house is traumatizing. It’s a trauma that can lead to so many other issues.”