Our clients, a married couple, owned a large, oceanfront, multi-million-dollar house on a barrier island in New Jersey. The couple stayed in Manhattan during Super Storm Sandy and, upon returning to New Jersey, they discovered their home had been completely washed into the sea. The barrier island, which lies between the Atlantic Ocean to the east and a bay to the west, had been breached by the storm surge, and their house and a few of the neighbors’ houses were completely gone, foundations and all.
The challenge surrounded determining the cause of the loss and proving that maximum amount of couple’s loss would be covered by their homeowners’ insurance policy. Because the policy covered damages caused by wind and wind-driven rain, but not damages caused by flood, proof of a covered loss would be more challenging than an ordinary, similar loss. The reason for this is that investigators and experts can ordinarily estimate a loss on a structure by checking the flood line on the home and assessing the damages above and below the flood line. Here, no structure existed to inspect.
The homeowners submitted their claim to the insurance company, who hired a structural engineer to conduct a site inspection and submit a report. The engineer opined that the wind speeds recorded during the storm were not strong enough to cause any structural damage to the house. The engineer concluded that while there may have been slight damage to the roofing and siding or shingles, the loss itself was caused by the storm surge that washed the house out to sea. The insurance company thus offered to pay the homeowners a pittance to compensate the couple for minor structural damage, and to pay no money for contents.
At this point, the clients retained Schwartz, Conroy & Hack, PC to determine if there was anything they could do to force the insurance company to cover the claim and pay for the loss.
Schwartz, Conroy & Hack, PC hired a forensic meteorologist and its own engineer to address the issues we believed were weak in the insurance company’s engineering report: to determine whether the wind speeds and wind-driven rain were sufficient to cause real damage, and to look at the other properties on the barrier island to determine if there was structural damage to similarly constructed properties.
One of the major flaws in the analysis performed by the insurance company engineer was relying exclusively on the meteorological data that had been provided by the state and federal government. That information showed maximum sustained wind speeds in the 40 to 50 mph range. Our weather expert went to the actual recording sites as well as our clients’ property, and determined that the instrumentation upon which the government relied in reporting information had not been calibrated properly for years, and that the wind speeds had been grossly underreported. Our expert also distinguished our clients’ location from the location where the wind speeds had been measured. He concluded that the maximum sustained wind speeds, over a four-hour period, were in excess of 70 mph and that there were gusts of over 100 mph prior to the storm surge that pummeled the house prior to the storm surge.
We provided this report to the structural engineer, who opined that the house would be substantially damaged and/or destroyed by winds at this speed, and the rain would have penetrated the home and damaged its contents. We then presented these reports and conclusions to the insurance company during the claims process, demanding that the company reevaluate its lowball offer, but the insurance company refused.
We then sued the insurance company for breach of contract and for engaging in bad faith claims practices.
The insurance company refused to offer a reasonable amount to compensate the couple for its losses until one week before we were to impanel a jury and try the case. At that point, the insurance company paid a multiple well more than 10 times its original offer.
This case demonstrates the benefit of engaging experienced and aggressive legal counsel who pursue insurance companies as part of their regular practice, and to do so as early in the process as possible. Obtaining and hiring the proper experts early in the claims process gave our clients the leverage of bad faith and the facts needed to maximize their recovery.
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