Seven insurers face Hurricane Isabel class action suit

A class action complaint has been filed in a Baltimore, Maryland court against seven insurers over their handling of homeowners’ claims stemming from last fall’s Hurricane Isabel.The suit, filed by law firm Cohen, Milstein, Hausfeld & Toll, names seven plaintiffs, but could encompass thousands of claimants if certified. Insurers facing the lawsuit include State Farm Insurance Cos., Omaha P&C, Travelers Property Casualty Corp., USAA General Indemnity Co., Selective Insurance Co. of the Southeast, Indemnity Insurance Co. of N.A., and Harleysville Mutual Insurance Co. Each is part of the federal “National Flood Insurance Program” (NFIP), which writes homeowners’ and business flood catastrophe coverage in high-risk “special flood hazard areas”(SFHAs).In a statement, the plaintiffs’ lawyers say: “After the massive storm, these insurers mishandled claims from thousands of Hurricane Isabel victims and ultimately failed to pay proceeds to which the policyholders were entitled. Delays and failures in the handling of these claims have left thousands of people living for months in trailers, temporary shelters and rental apartments while their homes sit uninhabitable.”Among the allegations is that insurance companies told claimants they must sign the adjuster’s proof of loss within 60 days, but that claimants did not believe these adjuster documents accurately assessed damages. As well, insurers are accused of using incorrect pricing and reconstruction data and therefore settling claims at a fraction of the actual cost to rebuild. The plaintiffs seek a review of rebuilding costs, full replacement costs up to policy limits for their homes, restitution of premiums paid and disgorgement of insurer profits and compensation for issuing and servicing the policies in force in September 2003.