Over 1,500 homeowners are claiming that engineering firms hired to inspect damage as a result of Hurricane Sandy issued false reports to make it easier for skeptical insurers to deny claims. Examples include broken foundations that were erroneously blamed on poor construction and warped walls written off as being due to old age. Little proof has been made available publicly, as engineers claim that many of the homeowners were simply unaware of the longstanding problems with their homes. Nevertheless, U.S. Magistrate Judge Gary Brown ordered insurers to produce additional records after a Long Island family discovered evidence that an engineer who inspected their property had been ordered by his supervisor to reverse his initial finding that flooding was the cause of irreparable structural damage.
A probe has been opened by New York’s attorney general and FEMA has asked its inspector general to investigate. However, it is unclear why these insurance companies would have a motive to cheat homeowners out of full coverage since the government pays insurers marginally more to approve a claim than deny one. Further, none of the insurer’s money was at stake because most were simply processing claims from FEMA. Nevertheless, many homeowners are convinced they are being shortchanged by their insurers, and so far, FEMA has spent over $12 million on litigation related to Sandy flood insurance.