Hurricane Insurance Loss Denied-Graphic

Michael and Carol Watson said Hurricane Irma littered their yard with roof shingles but they were “stunned and incredulous” when their insurer sent them a letter more than 70 days later. It said “no storm-related damages were found” and the company announced it had closed its file.

U.S. Army veteran Robert Rodriguez, 58, said he could not afford Christmas gifts after his mortgage company declined to release $30,000 his insurer paid to fix a hole in his roof. He has financed repairs himself and maxed out his credit cards, he said.

“I can’t buy my grandkids anything,” Rodriguez, a property manager, said. “I should not be in this predicament.”

Four months after Irma formed, fewer than half its nearly 866,000 claims in Florida worth an estimated $6.6 billion have been closed with payment, state records show.

Insurers say they are working hard to serve customers in a challenging year while guarding against fraud and abuse, but homeowners say frustrating denials or delays are piling up near the end of a 90-day window for companies to address claims filed soon after the storm hit.

More than 265,00 Irma claims have been closed without payment and more than 181,000 claims remained open as of Dec. 15, according to the Florida Office of Insurance Regulation.

In Palm Beach County, fewer than 43 percent of more than 37,000 claims have been closed with payment.

The updates come as insurance companies warn of a long-running struggle with third parties representing consumers, including public adjusters, contractors and attorneys. Some representatives abuse the process and inflate claims, particularly in southeast Florida, industry groups say.

They say trouble often starts when a consumer assigns control of insurance benefits to a someone else, who may eventually go to court in a bid to collect more money.

“The widespread storm damage and billions of dollars available from insurance settlements creates opportunities for unscrupulous contractors to prey on storm victims who unwittingly sign over their insurance benefits,” said Logan McFaddin, regional manager in Florida for the Property Casualty Insurers Association of America. “Assignment of benefits abuse is on the rise in Florida, especially around the time of a big named storm, making Floridians vulnerable to bad actors.”

The Watsons and Rodriquez are represented by a public adjuster who works for them and not their insurers, The People’s Choice Public Adjuster LLC of Greenacres.

Closing in on 120 days after Irma struck Florida in early September, some insurers are running close to the deadline or even breaching the state statute of 90 days to investigate each claim, said Eli Goins, claims manager for People’s Choice Public Adjuster.

“They simply weren’t prepared for such a large claim count all at once,” said Goins, who said he worked as an adjuster for insurance companies for more than a decade. “Homeowners are suffering because it’s taking them a long time to get through these claims.”

In some cases, companies are offering payments to patch up exterior damage, but not fixing full interior damage or covering the total expense to make sure repaired properties meet building codes, he maintains.

In Royal Palm Beach, the Watsons said struggles with insurer Southern Fidelity date back to an earlier roof claim in 2015, still unresolved. They maintain Irma’s winds caused new damage, including roof shingles in the yard, but the insurer rejected the claim.

Calls to the insurer were not returned.

“I take pride in my home,” said Carol Watson, who said she works as a Realtor. “We paid out of pocket to have it patched. I want my roof replaced and the damaged ceiling fixed.”

As for Rodriguez, he said he is living temporarily in Royal Palm Beach after the storm pounded his property in one of the state’s hardest-hit areas, Big Pine Key.

He figures the property sustained more than $100,000 in damage, including a hole in the roof. State-run Citizens Property Insurance Corp. agreed to pay $30,000 toward the roof, but his mortgage company USAA has not released that money, Rodriguez said.

He wanted to get the roof repaired and prevent further damage, he said, but it was extremely difficult to find contractors to work in the Keys. He said he paid them with convenience checks from credit cards, cash, a Small Business Administration loan and any other means he had.

“They’ve had my money for over two months and haven’t released it,” he said. “They’re giving me a hard time because they’re not accepting the receipts I provide them.”

After The Palm Beach Post inquired, USAA spokeswoman Tiffany Edmonds said, “We are in contact with our subservicer, Nationstar, who is working with Mr. Rodriguez to help him and resolve his concerns.”

Edmonds noted, “Mortgage servicers typically release insurance funds as they receive the required documentation to show the funds are being used to repair the home. Mortgage servicers do this to protect the various parties with an interest in the property, the property owner, the owner of the mortgage note, and the servicer, and to mitigate the risk of the repairs either not being completed at all or not being completed properly.”

In fairness to insurers, the industry was hit with Irma on the heels of Hurricane Harvey in Texas, the first one-two combination of Category 4 storms to strike the U.S. mainland in the same season. Then Hurricane Maria devastated Puerto Rico. All of it stretched resources from claims adjusters to contractors to clean up and fix damage.

For its part, Citizens stationed more than 100 adjusters in Key West to handle claims, company spokesman Michael Peltier said.

“Most have completed their work,” he said, adding there is “no financial incentive for us to delay.”

A major factor is availability – or often unavailability – of contractors to do the work, he said.

In some cases, initial checks may represent only partial payments, and Citizens expects to reopen many claims as repair costs reflect additional storm damage that comes to light and market conditions push costs higher because of demand, he said.

Citizens officials have said they expect to receive about 70,000 Irma claims, including more than 9,000 from Monroe County, with losses expected to pass $1.2 billion.

As of Dec. 19, Citizens said it had received more than 64,000 claims and paid about $480 million, with 52 percent of claims closed with payment.

The counties with the most Citizens claims are Miami-Dade, Broward, Monroe, Pinellas and Palm Beach.

About 48 percent of claims have been closed without payment, for a variety of reasons, Citizens officials said. Among these: The consumer did not meet a hurricane deductible; the damage was not covered in the policy; or it was payable under a flood policy, not homeowners insurance.

Hurricane deductibles are increasingly common in Florida, the state with the nation’s highest property insurance premiums. They are spelled out in the policy and represent what the homeowner pays for damage before insurance kicks in. They help keep premiums down in quiet years. But they can range up to 10 percent of a home’s value in Florida and leave homeowners stuck with a substantial bill if and when a storm does hit.

To consumers like Rodriguez, the year is ending but their Irma headache is not.

“I am not the only person,” he said. In Big Pine Key, he said, “There are some people on my block living underneath the house in a tent. It’s like a Third World country. It’s shameful.”

© 2017 The Palm Beach Post (West Palm Beach, Fla.), Charles Elmore. Distributed by Tribune Content Agency, LLC.