According to the Federal Emergency Management Agency, $2.95 billion in National Flood Insurance Program payments have been made to policyholders in New York. But last month, the state’s Department of Financial Services found that banks were holding more than $200 million in insurance funds due Sandy victims.
If they became law, Denenberg’s bills would ensure that Nassau homeowners receive payouts on their insurance claims much more quickly. The first bill, which focuses on insurance companies, would penalize any insurer that “wrongfully denies a valid claim, fails to answer a claim within 30 days or delays payment without providing reason for doing so,” according to a press release. Insurers that violate its provisions could be subjected to fines of up to $5,000 per violation as well as civil lawsuits. The bill would make insurance companies liable for insurance payments plus interest, attorney’s fees, property damage caused by a policy-holder’s inability to repair a home and damages for emotional pain and suffering.
The second bill, which focuses on banks, would require mortgage lenders and servicers to immediately release to policy-holders any portion of insurance or relief funds designated for living expenses or the replacement of personal property, or that an insurance company has designated as “emergency funds” or “advance funds.” The bill would also require mortgage lenders and servicers to put any insurance proceeds they hold in an escrow account for the benefit of the homeowner, and notify the homeowner within five business days with instructions on any additional requirements needed to process payment. The measure would also prevent mortgage lenders and servicers from applying any portion of an insurance or relief check to overdue mortgage payments without a homeowner’s consent.
At a press conference last week at which Denenberg announced the filing of the bills, he hammered away at insurance companies and banks, calling their delays in paying out insurance claims to Sandy victims “outrageous” and “unconscionable.”