Flood victims grow frustrated with insurers’ response

PHOTOGRAPHER: Sara Foss

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Three months after flooding filled her home with as much as 7 feet of water, Cindy Mitteager continues to wait.

Mitteager is still living with friends, unable to make a decision about what to do with her house until her flood insurance claim is processed and she learns how much money she’ll receive.

“We’ve gutted it, but we’re not rebuilding until we know what’s going to come through,” said Mitteager, a speech therapist who lives in Schoharie. “I never imagined that we’d be approaching Christmas wondering whether we’d still have a house or not.”

Mitteager’s story is a common one.

Flood victims throughout upstate New York are still waiting for their flood insurance claims to be processed. The lengthy wait time has come as a disappointment, and a bit of a shock, because many of them had expected to be back in their homes by the holidays. In some cases, repair work has begun, but in others, homes remain virtually untouched.

According to the Federal Emergency Management Agency, 17,666 flood claims have been filed in response to Tropical Storms Irene and Lee in New York state, and 11,248 of those claims have been closed. So far, payments total $245 million.

Chris McKniff, a spokesman for FEMA, attributed the slow pace of claims processing to “the tremendous backlog.”

Flood insurance is provided through the federal government’s National Flood Insurance Program, but it is administered privately by local insurance companies.

Last week, U.S. Sen. Charles Schumer, D-N.Y., called on insurance companies to speed up the processing of insurance claims and asked for a public report detailing the number of claims filed as a result of the storm, the number of claims processed and the average time that each claim took to process.

According to Schumer’s office, preliminary data suggests that nearly 40 percent of claims are still outstanding for Irene, more than 50 percent for Lee.

The senator said that in some instances, the slow process time has blocked the delivery of FEMA’s individual assistance, because FEMA will only award money to homeowners and businesses after their flood insurance claims have been processed and paid out.

Mixed response

Assemblyman Peter Lopez, R-Schoharie, said flood insurance claims have emerged as a major concern and that he’s been pleased with the response of Gov. Andrew Cuomo’s administration.

“My office has been getting calls daily,” he said. “We’ve probably gotten 200 calls on flood insurance.”

Constituents who complain to his office are referred to the New York State Department of Financial Services and are often assigned caseworkers to help them, he said.

Lopez said the response from insurance companies has been mixed.

“Some seem overwhelmed by the sheer volume of claims,” he said, “but with others, we’re not sure they’re making a good faith effort. Some companies are very responsive. … But even when things have flowed relatively smoothly, it’s been very time consuming. For homeowners and business owners, everything is moving so slowly, it’s adding insult to injury, especially with winter coming.”

The flood has affected Lopez personally.

“We’re living it,” said Lopez, “that’s helped strengthen me.” He represents all of Schoharie County, as well as portions of Chenango, Greene, Delaware, Columbia, Ulster and Otsego counties.

Lopez’s parents were left homeless after the flooding damaged his childhood home in Schoharie; they eventually decided to sell the property to a local resident for $10,000. The prospect of fixing up the house, Lopez said, was just too overwhelming for his mother and father, who are both in their 70s. His parents, he noted, are still waiting for information about their flood insurance claim.

Members of his staff also lost their homes.

Lopez said he drove by his parents’ house on Thursday morning.

“There’s a grieving process that goes with it,” he said. “That’s just part of the emotional piece.”

Late last month, state Department of Financial Services Superintendent Benjamin Lawsky sent a letter to insurance companies outlining what’s considered unfair claims settlement practices under state law. These practices, he wrote, include “failing to adopt and implement reasonable standards for the prompt investigation of claims” and “not attempting in good faith to effectuate prompt, fair and equitable settlements of claims submitted in which liability has become reasonably clear …”

Lawsky also explained that insurers cannot “use the federal aspects” of the flood insurance program “as a shield against discipline for violating New York law.”

Stall tactics

Schoharie County Treasurer William Cherry has been renting an apartment in Cobleskill and waiting to learn how much flood insurance money he’ll receive to rebuild his house, a Center Hall Colonial constructed in 1850. Last week, he said he had learned that his claim had been reassigned for a sixth time.

“Maybe that’s good news,” he said, saying that a manager at SEFCU had contacted Allstate on his behalf. “It can’t get any worse, but it could be more of the same.”

Cherry did not live in the floodplain, but purchased flood insurance after watching a documentary about Hurricane Katrina. His claim, which includes damage to the structure, as well as its contents, came to $484,000, but Allstate rejected that claim, and offered him a settlement of $53,000. Cherry said he assumed that was a mistake — “The cleanup costs alone were $90,000” — but instead of increasing the settlement, Allstate reduced it to $51,000.

“What’s $51,000 going to do to rebuild a 3,800-square-foot house?” Cherry said. “If we accepted it, they’d cut us the check, but they’re being completely unreasonable.”

Mitteager said it took three weeks for her claims adjuster to visit her home. “We were very pleased when he came out, but it took three weeks,” she said.

The process bogged down again, she said, when it took more than a month for the claims adjuster to write a report.

“We were getting antsy about how long it took,” she said. “When we called, we were told it takes time. Part of me understands, but part of me is impatient. … It’s absolutely absurd that it’s been three months and I still don’t know anything, but I understand that this is a big problem.”

Mitteager said she has hired an insurance lawyer, who has advised her to “be the squeaky wheel, call all the time.” She said she also remembers the advice given to her by a friend.

“She told me to keep my strength, because it’s only the beginning, and she was right.”

A better way

John Poorman, who chairs Schoharie Recovery, a new, nonprofit organization focused on rebuilding, said that his flood insurance experience went relatively smoothly. But it wasn’t without its frustrations. He said that it took a while for the claims adjuster to visit his home, which suffered major damage, and that although his flood insurance company cut a check within two days of receiving his proof of loss, that transaction didn’t happen until Nov. 2.

Under federal rules, a proof of loss form must be filed within 60 days of a flood, and Poorman believes that time frame is part of the problem.

“For 10 weeks, we were living in a motor home,” said Poorman, who heads the Capital District Transportation Committee in Albany. “If we’d totalled the camper, we would have had a response within 10 days. The 60-day clock is built into the system, and it slows everything down.”

He said a better system would entail an earlier assessment, and at least a partial payment, so homeowners could begin rebuilding while waiting to hear if they’ll receive more money.

“You might be quibbling over whether it’s $75,000 or $105,000 worth of damage, but at least give the homeowner $50,000,” he said. “To have to wait 12, 13, 14 weeks is totally illogical.”

Poorman received a check from his insurance money for $73,000 about a week ago, and he said this money will reimburse him for work he’s already done.

Unlike other homeowners, he decided not to wait for the insurance company’s final decision. This has allowed him to move forward — he’s already returned to his home, which was badly damaged in the storm — but admits that approach comes with risk. He made a 50 percent down payment on a pricey geothermal heating system, but said it was possible the insurance company would have “balked at covering such an unusual item.”

For Poorman, another issue involves his bank, which he said is treating the settlement money as a construction loan, placing the money in escrow and doling it out to him. This process, he said, has caused another delay.

Mitteager said her bank has the option to keep the money and use it to pay down the mortgage, if they determine Mitteager and her partner are likely to decide that the house isn’t worth repairing and walk away.

“The scary thought is that they could do a forced payoff, and we would get nothing,” she said.

The long wait for a settlement is a common experience for flood victims, said Rev. Sherri Meyer-Veen, co-pastor at Schoharie Reformed Church, where the volunteer efforts for the communities in the Schoharie Central School District are based.

“Very few people have gotten their money,” she said. “If they have, it’s been in the last few weeks. There’s so much ridiculousness with the flood insurance.”

Meyer-Veen’s home was heavily damaged by flooding, but she and her husband did not have flood insurance because they don’t live in the flood plain. They did receive the maximum grant available for homeowners from FEMA, $30,200, and have been approved for a loan by the Small Business Administration, which has enabled them to start rebuilding.

Meyer-Veen said she and her family expect to be back in their house by the end of the December and noted that her family has been able to move forward faster than people with flood insurance.

“People with flood insurance have been completely held up,” said Meyer-Veen, who is active with several citizen-led recovery groups, including Schoharie Recovery and the Schoharie Area Long-Term Recovery Group, or SALT. “FEMA was very, very quick. We were one of the first to apply, and within seven days we had a FEMA person call and someone come out to evaluate. We had money in our account within a week.”

One of Meyer-Veen’s cars was submerged by flood waters, and that claim was also processed very quickly.

“The car insurance took care of everything within four days,” she said.