Insurance Carrier’s Handling of Hurricane Damage Can Cause Mental Health Problems

J.P. Gonzalez-Sirgo
Founder of J.P. Gonzalez-Sirgo, P.A.

Homeowners can suffer ruinous financial damage when their home or businesses undergoes massive property damage during a hurricane.  However, a recent study reveals that the harm often extends beyond property damage.  The “Sandy Child and Family Health Study,” which was released in late July, 2015 examined mental health consequences suffered by homeowners struggling with insurance claims following Superstorm Sandy.  The authors of the study reveal that property owners with pending disputed claims, recurrent mold problems, and uncompleted repairs exhibit post-traumatic stress disorder PTSD), depression, and other forms of mental health distress at higher than typical rates.

The researchers analyzed data involving New Jersey homeowners whose primary residences were badly damaged during Superstorm Sandy.  The report indicates that 27 percent of the storm survivors suffer from moderate to severe mental health issues even though over 2.5 years have passed.  Similarly, approximately 14 percent of policyholders in the study continue to experience telltale symptoms of PTSD.

The study reported in a recent edition of the Insurance Journal constitutes a collaboration among researchers from four universities: Colorado University, Columbia University, New York University, and Rutgers University.  The research team deployed dozens of interviewers to conduct surveys.  The representative population of the study involved a million New Jersey homeowners in the heart of the devastating storm.  The results were obtained by conducting surveys of 1,000 random homeowners who have unresolved claims or pending work to be performed.  Policyholders selected for participation were taken from the nine counties within the “disaster footprint” that were hardest hit by Sandy.

The long-term impact of these claims on the financial status, mental health, and physical well-being of survey participants includes the following:

  • Many families with homes that were decimated lacked sufficient funds to cover basic necessities, including rent or mortgage, utility payments, food, and transportation.
  • Public officials urged homeowners to evacuate prior to Sandy, but only one in three residents heeded the warning.
  • Kids in homes damaged by Sandy exhibited a higher risk for mental health disorders than children living in homes unaffected by the storm.
  • The study found a high correlation between lingering mold damage and asthma accompanied by “mental health distress.”
  • Children living in mildly damaged homes suffered more severe mental health consequences than those unaffected by the storm, including the following: (1) eight times greater risk of insomnia; (2) five times greater risk of suffering from depression or chronic sadness; and five times as likely to experience nervousness.

It might be tempting to assume the impact of Sandy on policyholders’ psychological wellness is entirely linked to stress about the storm rather than the lack of progress in resolving insurance claims.  However, a particular finding related to children involved in the survey suggests that the lack of progress is responsible for the mental health consequences on study participants.  The relevant counter-intuitive finding was that children in homes, which suffered only minor damage, were much more likely to suffer negative mental health conditions than those in homes that experienced major damage.  The researchers posit that the explanation for this anomaly is that homes that are destroyed or badly damaged are more likely to have repairs performed promptly than those with homes that only have cosmetic or other minor damage.

The objective of the study was to assess the relationship between property damage in mass disasters and related unresolved insurance claims as a trigger for mental health disorders or conditions.  The assumption is that a better understanding of such a relationship will permit government entities to more effectively plan and meet the needs of disaster victims.  As a result of the study, the New Jersey Department of Health recently extended programs for behavioral health assistance.

The Sandy study reinforces findings about the mental health needs of individuals and families from a similar five year study involving policyholders impacted by Hurricane Katrina.  The leading researcher involved in the Sandy study explained, “The similarities between Hurricanes Katrina and Sandy are quite disturbing.  Many adults and children are still experiencing emotional and psychological effects long after the storms have passed.  In a significant number of instances, housing damage is at the heart of the problem, and it’s concerning to hear that so many of the federally-financed programs have ended even through the needs still clearly persist.”

Many policyholders whose homes are badly damaged by catastrophes never consider the impact on their emotional health or their need for mental health services as a legitimate form of loss.  However, this is a genuine type of loss that accompanies damage to a policyholder’s home.  If insurance companies drag their feet during the process of investigating and paying claims, the mental health impact of dealing with an unresolved claim and unrepaired damage can be intensified.  While this form of damage might be recoverable in a breach of contract claim involving non-performance under an insurance contract, policyholders might have a more viable claim for such compensation when pursuing a claim based on bad faith tactics by insurers. 

Our Miami bad faith insurance law firm invites you to contact us if you are having difficulties with your insurance company.  Florida insurance claims lawyer J.P. Gonzalez-Sirgo handles bad faith claims against insurance companies in Miami and throughout Florida. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations.  No Recovery, No Lawyer Fees.  Call 305-461-1095 or Toll Free 1-866-71-CLAIM.

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