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Cohen Milstein Hausfeld & Toll
Files Lawsuit on Behalf of Hurricane Isabel Victims
WASHINGTON, D.C. (May 11, 2004) Today a class action
lawsuit against various insurance companies was filed in
United States District Court, Baltimore, Maryland alleging
that the insurance companies failed to deliver the promised
benefits to thousands of persons who held flood insurance
policies and suffered damage to their houses in September 2003
from Hurricane Isabel.
Thousands of homeowners in Maryland, North Carolina,
Virginia, West Virginia, Delaware, New Jersey and the District
of Columbia experienced devastating damages from flooding
during Hurricane Isabel. Each was insured against flood losses
by insurance companies participating in the National Flood
Insurance Program, a federal program designed to protect
homeowners from losses associated with a flood catastrophe.
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.
“The treatment of Hurricane Isabel victims by the companies
that provided flood insurance is shameful,” said Andrew N.
Friedman, who heads the consumer practice at Cohen, Milstein,
Hausfeld & Toll, P.L.L.C. in Washington, D.C. and
represents the plaintiffs in this case. “What makes the
insurance companies’ conduct so offensive is that their
egregious treatment of the flood victims was not merely
limited to isolated events, but rather represented a uniform
and systemic attempt to improperly deny or significantly
reduce the size of the payout of flood claims,” said Friedman.
Today’s lawsuit alleges wrongful conduct, including:
· Flood victims were uniformly told that they would not be
paid if they did not sign the insurance company’s adjuster’s
proof of loss within 60 days. As a result, many policyholders
signed proofs of loss prepared by insurance company adjusters,
even though they strongly believed that the adjusters had
underestimated both the scope of damage and the associated
costs of repair on their properties.
· The insurers settled claims using price data and
construction estimating software that did not reflect the
actual cost of repair and renovation work following a natural
disaster. As a result, many Hurricane Isabel victims have been
forced to settle their claims at a fraction of the actual cost
of repair.
Victoria Nugent, also of Cohen, Milstein, Hausfeld &
Toll, explained the essence of the dispute: “If a homeowner
paid for $200,000 in flood insurance and has been told by a
local contractor that it will cost $200,000 to repair his
house, we think that the insurer should pay the replacement
cost up to policy limits. But that hasn’t been happening.”
The Complaint seeks injunctive relief requiring defendants
to review and recalculate all claims using material and labor
pricing data that accurately reflect the cost of repairing and
replacing flood-damaged housing in the affected communities;
restitution of all flood insurance premiums paid by the flood
victims for policies in force during September 2003 and
disgorgement by defendants of all profits and compensation
paid to defendants for issuing and servicing the insurance
policies.
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