Disasters, such as floods and hurricanes, can have truly massive impacts in the communities and areas they strike. So, all sorts of different issues can come up after a disaster. This includes insurance issues.
A lot of different types of insurance claims could end up being filed following a disaster, like auto insurance claims (for vehicle damage caused by a disaster) or homeowners’ insurance claims. So, following a disaster striking a given area, insurance companies that have policies out in that area could end up seeing an influx of claims.
When receiving a lot of claims, it is very important for insurance companies to give the investigation of each claim the energy and resources it needs. Falling short when it comes to claims investigations could create legal problems with policyholders. It also could leave an insurance company particularly vulnerable to fraud.
Sadly, there are individuals who try to use a disaster to unfairly and illegally enrich themselves through insurance fraud. Fraud attempts can be pretty prevalent following a flood or other significant disaster. So, it can be critical for insurance companies to take appropriate steps to protect themselves from disaster fraud. This can include keeping a close eye out for signs of possible fraud, such as the National Insurance Crime Bureau’s red flag indicators, when reviewing claims that have come in in connection to a disaster.
Also, insurance claims related to disasters can sometimes have some very complex issues connected to them, such as complicated issues regarding what the cause of the claimed damage actually was and whether that cause is covered under the involved policy’s terms. So, such claims can sometimes be fertile grounds for claims disputes to arise.
When an insurance company is facing a dispute or other potential issue in relation to insurance claims it received following a disaster, it may want a knowledgeable insurance law attorney’s guidance for this possibly high-impact matter.
Source: Claims Journal, “Disaster Fraud Rampant After Floods, Hurricanes,” Denise Johnson, May 19, 2016