For storm victims, rebuilding becomes the disaster after the disaster
By Sophie Kasakove
Almost six months after Hurricane Ida lifted the roof off Brett Gabriel’s house, filling it with rainwater, rebuilding feels nearly as out of reach as it did the day of the storm.
Between gutting the mold-covered walls and replacing the waterlogged floors in his home about 45 miles southwest of New Orleans, it will cost more than $150,000 to make the house livable for Gabriel and his wife, according to an adjuster he hired. But after his insurance company sent its own adjuster to inspect the damage, the company offered just $21,000 — enough to replace the roof, with $6,000 left over.
The insurance policy “was supposed to be a safety net,” said Gabriel, who slept in the house for months after the storm, even as he developed a cough and headaches that he blamed on the black mold climbing up the walls. Although the state in January provided them with a travel trailer, they said it is barely large enough for them to sleep comfortably, and they still spend their days in their damaged home.
At the small church a few minutes away where Gabriel is a pastor, almost everyone in the congregation with homeowners insurance had the same experience, he said.
“We could finish each other’s story,” he said.
He tries to encourage patience, but his own is wearing thin. How do you get rest? How do you get some kind of peace? “It’s like we’re stuck in purgatory,” said Gabriel.
As storms, floods and fires batter homes across the country with heightened intensity, homeowners are increasingly confronting the disaster after the disaster: the fight with insurance companies lasting months or even years for the funds to rebuild.
There is little definitive data on whether an increase in extreme weather and natural disasters is leading insurers to find more ways to say no.
But residents, legislators and advocates say the delays and underpayments are becoming more widespread, with insurance companies often sending in inexperienced adjusters and company-appointed engineering firms whose damage estimates are far below the costs needed to make repairs — especially as labor and supply costs have surged.
Mike Fesi, a Republican state senator representing the Louisiana district hardest hit by Ida, estimates that roughly half of his insured constituents have experienced delays or underpayment.
“I don’t know what the deal is — whether they do that on purpose,” said Fesi, who himself experienced delays with his insurance claim. “I wouldn’t want to think that that’s the case.”
But as insurance companies face nearly record-breaking losses from back-to-back hurricane seasons as well as disasters such as wildfires in the West, some see more than random issues.
“What we see there, I see all over the country,” said Doug Quinn, executive director of the American Policyholder Association, a watchdog organization that he said receives regular complaints from policyholders and industry employees.
The organization filed a criminal complaint for two homeowners in Florida whose homes were damaged by Hurricane Irma in 2017, alleging denial and underpayment by the United Property & Casualty Insurance Co. The policyholder association said the complaint may represent the experience of thousands of storm victims. The company said it had not yet been served with the complaint and declined to comment.
Insurance industry representatives said companies have paid out enormous sums after disasters in recent years. Insurers are projected to issue more than $20 billion in property loss claims to Louisiana residents affected by hurricanes in 2020 and 2021. With so many payments and such extensive damage, delays are to be expected, said Mark Friedlander, a communications officer with the Insurance Information Institute.
“When there is a catastrophic loss of this magnitude, you’re going to have homeowners that certainly are not happy with the way their claims are being resolved,” he said.
The vast majority of claims are being handled expeditiously, Friedlander said, citing industry data showing that 83% of Hurricane Ida claims had been “closed” by the end of the year.
But that data paints an incomplete picture, according to Jim Donelon, Louisiana’s insurance commissioner, whose office collected and released the data.
“That’s the company’s opinion; that’s not necessarily the policyholder’s opinion,” he said of the term “closed.”
Across south Louisiana, the delays have not only drawn out the rebuilding process — with many storm victims still living in hotels or in trailers — but have also led some people to leave for good.
“That’s what they’re hoping: that you just throw your hands up,” said Lynn Lewis, who has finally begun to rebuild her home in LaPlace, a suburb of New Orleans, after receiving disappointing damage estimates from a string of insurance adjusters. “A lot of people have just walked away from these homes. It’s going to be a ghost town,” she said.
Friedlander said most of the issues are with smaller, regional insurers, which he said “do not have the same bandwidth as a major national or super-regional insurer to effectively handle a disaster like Ida.” Three smaller regional carriers have become insolvent in recent months, entering into state receivership.
But advocates said they hear about the same issues from policyholders with companies large and small. More than 450 complaints were made by victims of Hurricane Ida to the Louisiana Department of Insurance against State Farm, the state’s largest insurer.
Roszell Gadson, a spokesperson for State Farm, said the majority of claims for recent Louisiana storms were resolved. “We are committed to handling each claim with care and concern, while also honoring the coverage outlined in the insurance policy,” he wrote in an email. For hurricanes in 2020 and 2021, “State Farm has paid over $2.5 billion dollars on over 140,000 claims received from our Louisiana customers,” he added.
Although Donelon, the state insurance commissioner, said Louisiana can be more aggressive in regulating the industry, he also said the state should be cautious to avoid driving insurers out of the market entirely.
“We are charged — every state is charged — with making insurance affordable and available,” said Donelon, a Republican. “And we can kill the goose that lays the golden eggs in the process of overregulating.”
But others say that the concern about pushing insurers out is misplaced.
“What they’ve put people through — they shouldn’t have their policy if they can’t make them whole in a timely fashion,” said Dustin Granger, who made an unsuccessful run for a state Senate seat in southwest Louisiana last year with insurance reform as one of his main campaign issues. “If you can’t do business right, it’s not really insurance.”