State-run insurance company sued for undervaluing Hurricane Isaac claims

NEW ORLEANS – Several property owners filed suits against a state-run insurance company for breach of contract and bad faith claims adjusting after Hurricane Isaac.

The Louisiana Citizens Property Insurance Corporation is being sued by Ira and Gloria Bennett, Albert Berry and several other homeowners who claim the corporation undervalued and underestimated the damage to their houses.

LCPIC, which is close to settling a $106 million dollar class-action lawsuit after Hurricane Katrina and Rita, is currently trying to find a way to close its $70 million budget gap.

After Hurricane Isaac swept through the city, the Bennett’s filed a claim for roof damage and resulting water damage. The adjuster who came to their home claimed the damage was minimal and barely exceeded $10,000. However, the Bennett’s received an independent estimate which showed that LCPIC had underestimated their claim by roughly $70,000.

The lawsuit claimed that payment had not been made and that the adjuster did not spend the appropriate amount of time evaluating the property.

A separate suit filed by Albert Berry on June 19 accuses LCPIC of breach of contract, negligent claims handlings, and negligent misrepresentation of damages. The suit claims that upon surveying the property, LCPIC did not value damages to exceed $5,400. Through an independent estimate, Berry was told the real amount was closer to $46,000. Like the Bennett’s, Berry’s claim to Louisiana Citizens remained unpaid at the time of the suit.

Catherine Hilton of the New Orleans office of the Speights and Worrich law firm, is currently trying to work with LCPIC to settle the Bennett’s and Berry’s case. Hilton believes the problem of underestimated damages is insurance-industry wide and that there is a “concerted effort to undervalue claims.”

The Bennett’s and Berry eventually got LCPIC to survey their property again, but Hilton believes this only happened because of the suit.

“Why didn’t they notice it the first time?” said Hilton.

Without legal representation, getting a second inspection from an insurance company can be difficult.

After filing a claim, LCPIC gave a homeowner two checks, one on October 6, 2012 for $308 and another for $487 a couple of weeks later. The homeowner, who was not named in the suit, later got an estimate from an independent contractor who valued the damage at $61,800. The homeowner eventually sent LCPIC a formal proof of loss, the independent contractor’s estimate, and dozens of photos depicting the damage on the property. Days later, on November 1, LCPIC reject the claim and refused to make any additional payments. The homeowner, represented by Wesley G. Barr, filed suit against LCPIC on April 30. The case is currently in discovery.

Other homeowners suing LCPIC are seeking damages for diminution of value for properties, the hiring of engineering firms, mold damage, and 50 percent of the difference between the amount paid and the amount found to be due.

LCPIC could not be reached for comment.