The software used by the Hurricane Sandy adjusters to create the estimates contributed to claims being underpaid.
"Xactimate is part of the problem," said Bach. "It is a tool. The pricing system is only as good as the person who is inputting the information and the homeowners always end up on the short end of the stick."
The issue is not with the software, but with the numbers used to create the estimates. "The Xactimate price guide is a massive problem," says Major." Xactimate says if the price is different, you have to change it. CAT adjusters are instructed not to change the pricing in Xactimate. You have to price it correctly, but most adjusters don't know how to use it to price estimates correctly."
Major says it is critical for the insurers to change the prices in the estimating program so they will be accurate. "If you don't alter it, it doesn't change, and that is part of the Sandy problem. Everything written in Xactimate with repressed pricing keeps the non-cat database down for the regular claims in the insurance industry. They have to put catastrophe pricing in because it's a very different set of circumstances."
Supplemental claims approval
Filing supplemental claims has also been a huge issue with the NFIP, says Charles, who has been involved in disaster relief and catastrophe claims for almost 40 years. "Private carriers know there will be supplemental claims after a major disaster and will set up a clean-up operation. The government did not and it's been impossible to get a supplemental claim approved," he said. "The estimates had to go through Xactimate or Simsol to have them look at it." Charles says he has since gotten the NFIP to agree to change that requirement.
Luckman adds that the NFIP "insurance companies were asking for ridiculous amounts of information for supplemental claims." She described one case where they submitted a contractor's invoice with line items spelled out, a letter of satisfaction, proof showing the invoice was paid in full, and the insurer still asked for proof of the payments to the contractor and the withdrawals from the insured's bank account. She says that under the review process, FEMA will accept more of this information at face value.
While there is hope that the reviews by FEMA will result in more money for homeowners, many have opted not to pursue them because they don't feel it is worth the additional time and effort. Others are concerned that they may have to return funds they've already received because of duplicate payments.
Homeowner must save receipts, track expenses
Countless homeowners do not have formal estimates or tried to repair the damage themselves and failed to save receipts or track expenses. Homeowners who intend to appeal their payouts should ensure they have very complete files of information. According to Charles they should include:
- All of the estimates and reports that NFIP compiled to make their decision
- Contractors' estimates
- Photos of the damage
- Any documentation — expert reports, what they paid, what they denied
- Any documentation that will contradict the reason why the claim didn't get paid
The deadline for homeowners appealing estimate payments was extended from September 15 to October 15, 2015.
Related: Hurricane Sandy 3 years laters
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