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With Insurance Settlements Still In Limbo, Sandy Victims Turn to Legal Remedies

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Left with few other options, Gigi’s enlisted the help of Ellis, Ged and Bodden, one of several law firms traveling up and down the coast, signing up clients in the aftermath of Sandy. On a weekday evening a few months ago, she invited members of the firm to hold a public event at the restaurant to provide Union Beach residents with information about their legal options going forward. Dozens of people crowded into the main dining room as attorney Glen Ged presented a PowerPoint slide show detailing how the insurance appeals process works.

“We want to put you on an equal playing field with the insurance industry,” he explained. “When our firm is hired, we actually invest right away in your case, and we start writing checks: write checks to the estimator, write checks to the engineer, write checks to the meteorologist to make sure that we can document your damages. The insurance companies have their experts, and you need your expert to fight with their expert and see where the truth lies.”

The firm handles all sorts of Sandy-related insurance disputes, but the flood claims are without a doubt the most complicated. Attorneys interviewed for this story described the process of appealing a flood insurance settlement as a nearly impossible task for someone without a legal background. Even among professionals, it requires a special expertise that most attorneys in New Jersey simply don’t have. That’s why the vast majority of such cases in the state are now being handled by just two firms: Ellis, Ged and Bodden has experience dealing with the aftermath of hurricanes in Florida, while the other firm -- DeFrancesco Bateman -- has enlisted the support of a Houston attorney who dealt with flood insurance appeals after Hurricane Ike.

Ellis, Ged and Bodden charges between a quarter and a third of any money it recovers. And it’s picked up hundreds of clients, with the one-year deadline to file appeals or lawsuits quickly approaching.

Exact numbers on how many New Jersey residents are still appealing their insurance settlements are hard to come by. The state Department of Banking and Insurance doesn’t keep track of the number of lawsuits filed, but a spokesman says they’ve received over 1,700 complaints. They’ve also gotten nearly 600 requests for mediation on non-flood claims, and have been able to negotiate resolutions in about 70 percent of those cases. So far, the Department has taken enforcement action against seven, mostly out-of-state public adjusters -- including license revocations and fines up to $20,000 -- for improper handling of claims. Several more investigations are ongoing, though a spokesman declined to provide numbers or offer details about the types of violations, other than to say that the department is making sure that everyone followed the law and that consumers have been treated fairly.

Overall, the Department says 96 percent of all non-flood claims (including homeowners, commercial property, auto and business interruption insurance) have now been closed, and FEMA says 99 percent of all Sandy-related National Flood Insurance Program claims are closed. Those figures don’t tell the whole story, though. Insurance companies often consider a case “closed” after they’ve issued their payout, but in many instances, policyholders can and do continue to file appeals.

When it comes to flood claims, part of the reason some policyholders might be dissatisfied with their settlements is a result of the way the National Flood Insurance Program is set up. Although it’s a federal program, day-to-day operation of the NFIP is run by private insurance companies, who issue the policies and make the payout determinations, based upon strict government rules of what is and isn’t covered.

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