AIG Busted for Unfair Practices After Hurricane Irma: Policyholders Awarded Millions, But Questions Remain

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  1. AIG must pay millions to a Florida resort owner after a jury found unfair practices in handling their Hurricane Irma damage claim.
  2. The jury awarded compensatory damages but not punitive damages, indicating AIG’s actions may not have been intentional.
  3. This case highlights the importance of policyholders understanding their rights and fighting for fair treatment from insurance companies.

By Samuel A. Lopez, Legal Analyst & Journalist, USA Herald 

AIG Busted for Unfair Practices After Hurricane Irma: Policyholders Awarded Millions, But Questions Remain

[MIAMI, FL] – In a verdict with mixed results for both sides, a Florida jury recently found insurance giant AIG engaged in unfair practices while handling a hurricane damage claim. While the decision provides some relief to policyholders Edith and Joel Newman, it also raises questions about the line between unfair practices and intentional bad faith.

The Newmans, who owned a $95 million oceanfront resort property in Golden Beach, Florida, filed a lawsuit against AIG subsidiary American Home Assurance after Hurricane Irma devastated the region in 2017. They accused AIG of intentionally delaying their claim, offering lowball estimates, and burying a report that entitled them to significant living expenses during repairs.

Unfair Practices Exposed

The jury ultimately sided with the Newmans on the issue of unfair practices.  They found that AIG violated Florida law by issuing settlement payments more than 15 days late. This violation could result in AIG facing additional penalties and covering the Newmans’ legal fees.

“The verdict highlights a common complaint against insurance companies: slow-walking claims to pressure policyholders into accepting lower settlements.  As a legal analyst with over 20 years of experience, I’ve seen numerous cases where delays and lowball offers become standard tactics employed by some insurers,” said Samuel Lopez.

Bad Faith Not Proven

While the jury found AIG’s actions unfair, they stopped short of ruling on bad faith.  This means the jury did not believe AIG intentionally acted with malice towards the Newmans.  The distinction here is crucial. Unfair practices, while harmful to policyholders, suggest an element of neglect or inefficiency. Bad faith, however, implies an intentional attempt to deceive or deny a legitimate claim.

The jury may have reached this conclusion due to AIG’s claim that the Newmans concealed details about the property’s condition before the hurricane. This argument, if true, could explain some of the discrepancies in damage estimates.

Millions Awarded but Questions Remain

Despite the lack of a bad faith finding, the Newmans are still slated to receive significant compensation. The appraisal process ultimately determined their losses to be around $17.3 million, with AIG initially offering only $287,000. They received nearly $16 million after appraisals, and the court will now calculate additional compensation based on the jury’s verdict.

However, this case serves as a cautionary tale for policyholders. While the Newmans ultimately received a substantial payout, the process was lengthy and undoubtedly stressful. It also raises questions about how many other policyholders face similar tactics from insurance companies without the resources or legal knowledge to fight back.

What Policyholders Can Do

Here are some takeaways for policyholders:

Know Your Rights: Familiarize yourself with your insurance policy and Florida’s insurance laws.

Document Everything: Keep meticulous records of all communication with your insurance company, including dates, times, and names of representatives you speak with.

Don’t Be Afraid to Fight Back: If you feel your insurance company is not acting fairly, don’t hesitate to seek legal counsel.

This case is a reminder that policyholders need to be vigilant in protecting their rights. By understanding the tactics employed by some insurance companies and being prepared to fight back, policyholders can ensure they receive fair treatment in the event of a disaster.

Related Stories by Samuel A. Lopez:

Court Rules AIG Unit Must Provide UIM Coverage to Injured Verizon Driver: What You Need to Know (https://news.bloomberglaw.com/insurance/aig-unit-to-pay-13-9-million-in-new-york-coverage-settlement)

Judge Overrules AIG Unit in $5M Covid Coverage Suit: Luxury Mall Prevails in Ambiguous Policy Language Case (https://www.aig.com/home/about/covid-19-updates)