The software used by the Hurricane Sandy adjusters to create theestimates contributed to claims being underpaid.

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"Xactimate is part of the problem," said Bach. "It is atool. The pricing system is only as good as the person who isinputting the information and the homeowners always end up on theshort end of the stick."

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The issue is not with the software, but with the numbers used tocreate the estimates. "The Xactimate price guide is a massiveproblem," says Major." Xactimate says if the price is different,you have to change it. CAT adjusters are instructed not to changethe pricing in Xactimate. You have to price it correctly, but mostadjusters don't know how to use it to price estimatescorrectly."

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Major says it is critical for the insurers to change the pricesin the estimating program so they will be accurate. "If you don'talter it, it doesn't change, and that is part of the Sandy problem.Everything written in Xactimate with repressed pricing keeps thenon-cat database down for the regular claims in the insuranceindustry. They have to put catastrophe pricing in because it's avery different set of circumstances."

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Supplemental claims approval

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Filing supplemental claims has also been a huge issue with theNFIP, says Charles, who has been involved in disaster relief andcatastrophe claims for almost 40 years. "Private carriers knowthere will be supplemental claims after a major disaster and willset up a clean-up operation. The government did not and it's beenimpossible to get a supplemental claim approved," he said. "Theestimates had to go through Xactimate or Simsol to have them lookat it." Charles says he has since gotten the NFIP to agree tochange that requirement.

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Luckman adds that the NFIP "insurance companies were asking forridiculous amounts of information for supplemental claims." Shedescribed one case where they submitted a contractor's invoice withline items spelled out, a letter of satisfaction, proof showing theinvoice was paid in full, and the insurer still asked for proof ofthe payments to the contractor and the withdrawals from theinsured's bank account. She says that under the review process,FEMA will accept more of this information at face value.

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While there is hope that the reviews by FEMA will result in moremoney for homeowners, many have opted not to pursue them becausethey don't feel it is worth the additional time and effort. Othersare concerned that they may have to return funds they've alreadyreceived because of duplicate payments.

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Homeowner must save receipts, trackexpenses

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Countless homeowners do not have formal estimates or tried torepair the damage themselves and failed to save receipts or trackexpenses. Homeowners who intend to appeal their payouts shouldensure they have very complete files of information. According toCharles they should include:

  • All of the estimates and reports that NFIP compiled to maketheir decision
  • Contractors' estimates
  • Photos of the damage
  • Any documentation — expert reports, what they paid, what theydenied
  • Any documentation that will contradict the reason why the claimdidn't get paid

The deadline for homeowners appealing estimate payments wasextended from September 15 to October 15, 2015.

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Related: Hurricane Sandy 3 years laters

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