Hurricane Harvey delivered a devastating blow to Southeast Texas in August of 2017. Along the Texas Coastal Bend, from Rockport up to Port Arthur, many towns and cities were hit with the extreme rainfall and subsequent flooding. In just a few short days, the hurricane poured over nine trillion gallons on the affected areas.
Hurricane Harvey Flood Damage
Hurricanes are known to cause massive destruction requiring billions of dollars of federal and state assistance to fix, and Hurricane Harvey was no exception. The extreme flooding caused by Hurricane Harvey was the most expensive natural disaster of 2017 causing a staggering $125 billion of damage.
As affected communities struggle to rebuild, underpaid, delayed, or denied insurance claims can become a significant obstacle. Flood claims can be denied or underpaid for a variety of reasons, but regardless of the circumstances, homeowners without the necessary financial assistance will struggle to cope with damages.
It can be difficult for property owners to properly file a flood insurance claim. In the wake of a large natural disaster such as Harvey, property owners face longer wait periods for insurance inspectors to assess the damage and for a determination of their claims. Complicated insurance claim processes, excessive wait times, and underpaid claims all work together to slow down recovery efforts.
What Will FEMA Cover?
For the survivors of a natural disaster, the damages can add up—lost jobs, irreparable vehicles, broken appliances and electronics, flooded homes, damaged personal items, lost memorabilia and more. The financial and personal burdens for those affected can become overwhelming.
In most cases, homeowner’s insurance does not include flood damage. While private flood insurance is gaining in popularity (growing by over 50% last year alone), the primary flood insurance coverage for the majority of homeowners remains the National Flood Insurance Program (NFIP), which is administered by the Federal Emergency Management Agency (FEMA). To qualify for a NFIP insurance policy, the property must be located in a community that participates in NFIP.
While some plans offer more comprehensive coverage, NFIP flood insurance typically reimburses all property losses up to $250,000 for residential properties and $500,000 for businesses.
Unfortunately, most property owners affected by Hurricane Harvey did not have any type of flood insurance. Many homeowners thought that flood insurance was unnecessary because their homes were located outside of the 100-year floodplain. According to The Houston Chronicle, 11% of the entire housing stock in Harris County flooded during Hurricane Harvey, but over 65% of these homes were outside the 100-year floodplain.
If a property owner does not have flood insurance, he or she can still apply for disaster assistance through FEMA’s Individuals and Households Program. This program was built to help disaster survivors meet basic needs. This disaster assistance also can cover expenses like temporary housing, which are not included by most flood insurance policies. Most disaster assistance given through this program is in the form of a loan from the Small Business Administration (SBA).
The average flood insurance claim payout for homeowners during Hurricane Harvey was $120,000. Homeowners who lacked flood insurance and applied for disaster recovery assistance through FEMA received a mere $5,500 on average.
Underpaid Claims from Hurricane Harvey
That difference in assistance can be remarkable. On average, residents with flood insurance received $100,000 more to fix their damaged property than those residents who had to rely solely on FEMA disaster assistance.
In recent years, FEMA has been accused of delaying payments, underpaying claims by tens of thousands of dollars, and misappropriating federal relief funds.
It is an unfortunate fact that many homeowners affected by Harvey will struggle to navigate flood insurance programs for years to come.
The NFIP is expected to pay out over $11 billion in insurance claims from Hurricane Harvey alone, but these payouts will happen slowly over time and may not be enough.
Insurance companies deny or underpay insurance claims for different reasons. They may insist that the property damage was caused by a pre-existing problem and not the flooding. For example, if a homeowner lives in an older building with previous water or structural damage.
During a natural disaster, FEMA hires inspectors on contract to assess property damage and personal property losses. These findings are used to determine eligibility for insurance claims and to decide whether damage was caused by the hurricane or homeowner neglect.
Hastily conducted property inspections may result in a failure to properly assess the cause of loss and the damage amount, which often results in an underpaid or denied claim. In these cases, the household receives inadequate or no assistance for its property damage.
While property owners can appeal FEMA’s determination and fight for other federal aid, this process can take years.
Recent reporting from The Houston Chronicle found that only 41% of Texans who applied for disaster assistance from Harvey have been approved. FEMA decided that 31% of applicants were ineligible for disaster assistance, and the other 28% were still pending a determination or had been referred to the SBA for a loan.
Know Your Rights When Navigating FEMA Claims
FEMA claims are a complicated process.
Given how few Texans have received payment from flood insurance claims and how few applicants have been approved for FEMA disaster assistance, it is likely that some property owners have been unfairly underpaid by insurance claims or unfairly rejected from receiving assistance.
Even after an insurance determination is made, property owners need understand their legal and financial options moving forward.
The Texas Insurance Code lays out the requirements for insurers when handling insurance claims. Individuals are granted certain rights when dealing with insurance claims including:
- The right to a thorough investigation of your property damage
- The right to the prompt handling and payout of any insurance claims
- The right to know why a claim was denied
- The right to hold insurers accountable when they fail to pay a valid claim, misrepresent the terms of the insurance policy, or deal in bad faith
When FEMA does not provide enough assistance or properly pay out an insurance claim, property owners may need to secure legal representation to receive the right compensation from flood losses.
Assessing Your Options
If you filed a flood insurance claim but were denied coverage or did not receive a payout that sufficiently covered your damage, you can write an appeal letter to FEMA. When necessary, an experienced federal attorney can dispute NFIP claims through litigation.
If you find additional damage outside your original claim, you can file a Supplemental Claim to FEMA.
If you do not have flood insurance, you can still apply for disaster assistance including the SBA loan program. Though this loan assistance will need to be repaid, the maximum interest rate on these loans is only 4% making them a much better option for homeowners with damage than private loans with a higher interest rate.
You also may be able to make an inverse condemnation claim. These types of claims are lawsuits against the local authorities who intentionally flooded homes to protect the greater area from flooding. If your property was not flooded by heavy rains but instead from one of these “controlled releases,” you may have a claim. Consult with an attorney if you think you may qualify.
Regardless of your next steps, be sure to document the entire process. It is crucial to have clear documentation and records of any interactions with the FEMA, your insurance company, the claims adjuster, inspectors, and any relevant contractors who worked on damage after the flood.
Undervalued or denied flood insurance claims can leave property owners feeling cheated or defenseless. The devastation left in Harvey’s wake can make the rebuilding process daunting for even the most financially-secure property owners.
Make sure you understand your options and reach out to an experienced attorney if you need guidance in the aftermath of a natural disaster. Our trial attorneys are experienced in flood insurance claims and other FEMA assistance and we have the knowledge to ensure you are receiving everything that you are rightfully owed.