Freezing temperatures, snow, ice. That may be par for the course during winter in northern states, but it’s not something we see too often in the south. This year, however, the severe Winter Storm Leon brought inclement weather to much of the southern region of our country, including Alabama, Georgia, Louisiana, Mississippi, and Florida. That storm is part of the reason insured losses from severe weather are anticipated to be the costliest in decades, and part of the reason why insurance companies may be looking for reasons to delay or deny claims.
Insured losses from winter weather have totaled an estimated $1.5 billion so far this season, according to the Insurance Information Institute. Last year’s losses came to about $2 billion, but it’s important to note that this year’s estimate only covers two of the four major winter storms that have occurred in early 2014. With several more weeks of winter and filed claims that haven’t been evaluated yet, it seems as if we’re poised to pass that $2 billion mark pretty soon.
Many of the southern states simply weren’t prepared for severe winter weather—as evidenced by the deep freeze in Georgia that left some motorists stranded on the road overnight—and suffered insured losses as a result. Furthermore, states in the southern region experienced property damage as a result of downed power lines and tree limbs, burst pipes, and roof collapses, as well as motor vehicle accidents and business interruptions. And on January 29th, the Florida Panhandle got hit with a spate of snow and ice which shut down I-10, caused power outages, and closed schools.
Although it’s hard to find a silver lining in all this bad news, many of the people who suffered losses did at least have insurance to cover the damage. However, with more and more claims pouring into insurance company offices, some policyholders may have to wait to have their claim processed—or will have their claim denied, if the company can find an excuse.
Insurance Company Business Models Aren’t Sympathetic to Losses
Although insurance companies have a duty to act in good faith towards their policyholders, they’re also businesses that are looking to make a profit. In the mid-1990s, many leading insurance companies adopted a new computer-driven method to adjust claims. While this method may be more efficient for insurance companies, it notoriously produces low offers to claimants, and while it will pay those who take the low offer promptly, it delays the claims of those who aren’t willing to compromise. Using this method, insurance giant Allstate was able to double the annual profits they were previously making—at the cost of policyholders.
Major weather events threaten to cut into the profits of insurance companies, so it’s unsurprising that some policyholders are reporting delays or far-too-low offers for the claims they filed. Severe winter weather is the third-most costly natural disaster for insurance companies, behind only tropical storms and tornadoes, so insurers often scramble to protect their bottom line in the wake of extreme snow and ice.
Although it’s unfortunate if it has to come to this point, some policyholders may need to work with a bad faith insurance attorney just to get their insurance provider to pay their claims. If an insurance company is being unscrupulous in the way they process claims, policyholders need to hold them accountable.
About the Author:
Lawlor Winston White & Murphy. He has been recognized for excellence in the representation of injured clients by admission to the Million Dollar Advocates Forum, is AV Rated by the Martindale-Hubbell Law Directory, and was recently voted by his peers as a Florida “SuperLawyer”—an honor reserved for the top 5% of lawyers in the state—and to Florida Trend’s “Legal Elite.