HURRICANE HARVEY: Bait shop owner’s insurance payout thwarted by a typo
"The building was just an old metal building that had sat here since the 1980s," she said. "It was basically held together with nails and glue and love and duct tape." The real value of Offshore Adventures was the equipment inside, the tanks and freezers Heiman needed to hold the crabs, shrimp, mud minnows and mullet that anglers bought in their pursuit of the
A resident of the area on and off since her 1950s childhood there, Heiman knew the wild weather that occasionally swept in from the Gulf and the havoc it could leave behind. Last July she purchased a policy from the
Heiman's timing couldn't have been better. Hurricane Harvey barreled into
When Heiman was allowed back into the area a few days later, her bait shop had disappeared, the splintered debris of her livelihood hurled inland by the Category 4 winds. A group of wooden pylons roughly representing the outline of the shop poked out of the sand like a mouthful of broken teeth.
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It was only after the adjuster for the windstorm insurance association went to the site and agreed the record winds had destroyed her bait shop that it was discovered Heiman's insurance agent had accidentally transposed two of the numbers in Offshore Adventures' street address. In letters and phone calls, he asked the windstorm association to correct the typo so Heiman could collect her due and rebuild the business.
The association refused. Heiman's policy for
Agency rebuilt after Ike
The last time a major hurricane pounded
State legislators created the association, known as TWIA, in 1971 as a public-private partnership to provide wind and hail insurance for coastal communities whose residents were unable to purchase protection from private companies because of the costly weather-related risks. Most years TWIA gets a few thousand claims. But when major storms strike the association is thrust into the center of recovery efforts.
That last happened in 2008, when Hurricane Ike crashed into the
As ravaged coastal communities struggled to recover, the windstorm insurance association became the target of numerous complaints -- it was too slow to respond, inconsistent in its evaluations of policyholders' damage claims and criticized for low-balling its customers as they struggled to rebuild. Hundreds of policyholders sued. The association eventually paid out a half-billion dollars in legal claims.
In 2011, following additional allegations of fraud, the
Some of the biggest changes lawmakers made were designed to restrict lawsuits against the association, many of which had revolved around how much hurricane-related property damage was attributable to wind and so covered by TWIA, and how much was the result of water, an issue covered by flood insurance policies.
Legislators capped awards from TWIA lawsuits at two times damages, compared to three times for most other insurance lawsuits, according to TWIA attorney
They also installed a mandatory dispute-resolution system outside the courts. Under it, if a property owner disagrees with TWIA's assessment of how much damage his or her property sustained in a storm, each side hires an appraiser to review the numbers. If a dispute still remains, an umpire is asked to weigh in. The association and property owner split the costs.
'I've refused all TWIA cases'
In many ways, the reforms have worked as intended. TWIA was released from state supervision in 2016.
According to the association's latest figures, the number of complaints it has received as a percentage of Harvey claims is only a fifth of the percentage it fielded for Ike. Fewer than 1,500 policyholders have invoked the appraisal dispute-resolution process, and TWIA has been sued only 50 times over its Harvey-related coverage (300 others have filed a notice of their intent to sue).
TWIA has cited such figures as indicators of generally satisfied customers. But the feeling isn't universal.
Because of the upfront expense -- appraisers can cost upwards of
"The changes in the law make it almost impossible for attorneys to help clients," added
But Rep.
One of the biggest complaints he's heard, he added, has been the appraisal system. Homeowners have told him that, with their properties destroyed and their lives upended, they did not have the time or money to contest a claim.
"These people are going weeks and months without getting anything fixed," he said. "Theoretically, appraisal sounds great. Practically, it doesn't work."
Although Hunter said the new laws generally had improved TWIA after Ike, he added that based on the post-Harvey concerns he's heard, he intends to propose tweaks to the dispute system during the next legislative session, which will begin early next year.
"I've heard from enough people that the appraisal process absolutely needs to be looked at," he said. "It shouldn't be a process of low-balling. It shouldn't be a process of delay. It shouldn't be a process that's complicated."
'Some pretty good fish stories'
TWIA said it has received slightly over 75,000 Hurricane Harvey claims, which it expects to cost about
About 15,000 claims were closed without payment because the appraised value of the damage fell below the policy's deductible. Still, an additional 12,000, or 17 percent of all claims, have been denied, primarily because the association determined the property owner wasn't covered by a valid policy.
As
There was never any doubt that whatever work Heiman did, it would involve salt water and fish. A boat captain before she opened her first bait shop outside of
"I've cleaned fish, ran charters, sold bait," she said. "When the sun comes out in the morning, you see some of the most beautiful sunrises in the world." Not to mention, "You get to hear some pretty good fish stories."
Her insurance agent,
"I've had many, many, many claims," he said. "This is the only one we've had a problem with."
He said he first noticed that Heiman didn't have wind damage protection on her bait shop while reviewing her policy last summer. Documents show that TWIA received Fessenden's application for coverage of
The association's underwriter,
The program didn't recognize the street location Fessenden had provided, directing her instead to a nearby address. Despite the discrepancy, McHale said "Nothing seemed out of the ordinary ... so she approved the application and issued a policy," according to court documents.
Fessenden readily admits he wrote the Offshore Adventures address in error, transposing the middle two numbers. But he said the fact there was no recognizable property at that location should have been caught by TWIA and relayed to him so he could correct it.
"It isn't even on the water," he pointed out. "It's kind of hard to have a bait shop not on the water."
Heiman said she saw her bait shop for the last time the day before Harvey hit. She waited out the hurricane in the VFW hall in nearby
Records show TWIA send a field adjuster out to examine the remains of her business a week later. When the woman couldn't find the address listed on the policy she called Heiman, who rerouted her to the correct location.
"Suggest paying policy limits as there is no property left," the adjuster's
"A couple of days later they said, 'We'll write the check,'" Heiman said. "I thought, 'Wonderful! I can build back and be back up in time for spring break,'" a traditionally busy period.
Judge: TWIA as much to blame
Fessenden, meanwhile, contacted TWIA to tidy up what he considered a minor typo. "In error when we processed this policy," he wrote in a
A week later the association responded, saying it had confirmed the bait shop's true location in local appraisal records. But it added that it could not correct the address because that would amount to backdating Heiman's policy so she could collect payment.
Heiman received her official denial on
She appealed to the
"TWIA is as much to blame for insuring a property with an incorrect address as the insurance agency," the judge wrote. He added its underwriter could easily have caught the typo by looking up Offshore Adventures on tax records or even the company's website. He also noted that TWIA had corrected minor data entry errors in the past to approve claims.
The state insurance commissioner must approve the judge's recommendations before it becomes final, a process which could take at least two months, longer if TWIA appeals. In the meantime, Heiman said she has struggled to make ends meet.
She's had to come up with attorney fees to fight the windstorm agency. A federal Small Business Loan finally arrived two weeks ago, she said, but the original estimates to replace her property have nearly doubled since her last price check, in September, when she thought her insurance would pay for the damage.
Eight months after Harvey's landfall, she said she's ready to be back on the water: "I just want to have my bait shop back."
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