It’s taken me a while to figure out how to talk about this. I didn’t want to distract from the impact of the actual event…but now that the storm is pretty much behind us, we all need to face a really big problem that it uncovered. There are as many stories as there are people on the island, but I’ve picked one to serve as metaphor for all of us. Once you hear it, I trust you’ll share your own here. If we put in a little effort, maybe we can make some changes for the next victims.
My friend Alex is a professional, hard-working, middle-class small business owner who estimates he has paid over $300,000 in various insurance premiums over the years, and has never made a single claim. He evacuated his downtown Galveston condo when he heard Hurricane Ike was coming. The storm left the building uninhabitable until Thanksgiving. His HOA’s insurance paid for the repairs (and created a “special assessment” to cover huge deductibles), but Alex was displaced for nearly three months. Because he wasn’t required to have personal windstorm insurance, he didn’t receive any housing assistance. Because he didn’t have rising water in his home, his flood insurance wouldn’t pay. Because he HAD insurance, despite the fact that it didn’t pay, FEMA wouldn’t help. In fact, to this day Alex hasn’t receive a dime from anyone. He called his mortgage company right away, and was told that his payments were expected as usual. He explained that his business was closed and he had no income. Eventually, he had to stop making his mortgage payments. He told his lender that he had every intention of making up the difference, but asked them to please consider tacking his past due amounts to the end of his loan so that he stood a chance. They declined. Not until he went into default did they agree to talk to him. By then, he was nearly $20,000 in arrears and they had added attorney’s fees. Oh, and by then, his HOA had hired an attorney to collect back HOA dues and the new assessment!
Meanwhile, Galvestonians who had little to no damage, but did have windstorm insurance, collected $100 a day for their hardship. Renters who had no insurance at all and didn’t even own their homes collected as much as $28,000 for their trouble. Homeowners who had minor water damage collected $150,000 to replace their “antiques” and build new kitchens. Adjustors paid by the claim made staggering bequests. Adjustors paid by the insurance companies denied everything. Who you got was the luck of the draw. While carpetbagging contractors skimmed and ran, insurance companies kept finding ways to avoid paying.
Subtle permutations aside, people who had insurance, but not enough or not the right kind — people like Alex — were just plain out of luck. Thoroughly screwed, in a constant, debilitating battle every day over every little detail, and now in danger of losing their homes on top of everything else. The power company cut off Alex’s power because he didn’t pay the bill for the three months when there was no power to the building and it was uninhabitable. “We estimated because we couldn’t find the meter.” No kidding. Could it be that it washed away and there was NO POWER TO THE BUILDING? They cut him off on Friday and didn’t turn it back on until Monday. They’re still sending threatening letters.
The satellite TV people kept auto-withdrawing from Alex’s checking account — even when their service was null. When he finally realized what they were doing, he called and was told they would credit him three free months. Then they hit his bank account for another three hundred dollars. Ever tried to get money BACK after they’ve taken it?
Ah, yes, and the mail wasn’t delivered at all during this time, so there was no way to know what these creditors were doing!
This is the sort of stuff that makes people go stark-raving mad. And it’s just the tip. Seriously. It is institutionalize torture. And the insurance industry is an economic shell game — not only legalized gambling, but mandatory gambling where the house always wins — and I for one feel like I’ve been taken from my home in the dead of night, driven to the desert, and raped for five months.
Alex says when he’s recovered, he’ll tell this story himself. Meanwhile, the final insult, he’s just too damned humiliated to talk about it… to say that he is moments from foreclosure and doesn’t know if he’s going to make it… to say that he can’t pay his everyday bills and must rely on the kindness of friends for nearly everything… to say that he has to endure questioning by five-cent-an-hour call center employees in Bangalore who say, “So if you don’t have any money, how do you buy food to eat?”
Finally, Alex, like most everyone on the island, now has a completely non-existent FICO score, so he will not be able to buy another home anytime soon if he loses this one.
The emotion of humiliation turns out to be the hardest of all.
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Copyright © 2009 Alice Melott
Galveston After Ike 
#1 by someone who cares on February 19, 2009 - 9:54 pm
Finally! Someome is saying what all of us feel. We were forgotten by the national media, ravaged by the insurance companies and then made to feel humiliated by the electric companies, home owners assocs., water department etc. not to mention mortage companies for not paying our bills during a time when we had no services, and oh by the way, no income!!!!! So when all of the stars where going to New Orleans to help during their time of need we where left here to survive on our own. The good news is that Galveston has risen from the ashes and will prevail with no help. The bad news is that we should have never been forgotten!
I am one of those folks who has a hard time asking for help or sounding like sour grapes, but this time I think things are out of whack!
#2 by Hal Gregory on February 19, 2009 - 10:24 pm
The insurance companies make the very late Al Capone look like he was a petty thief. The three “D” system in the industry is alive and well on the island. First, DENY all claims..Second, DELAYany payments as long as possible and third, DEFEND against anyone who has the audacity to try and fight back. There has got to be a better way. I was very recently told that ” 90 percent of the people that file claims get tired of fighting to get paid and walk away leaving hundreds of millions of dollars in the insurance companies pockets” Begs a question…Why do we have to fight for something we have allready paid for? Guess you know how i feel.
#3 by Alan Morlan on February 20, 2009 - 7:33 am
Amen and while we are at it…abolish the IRS. CLAM & flat tax rate, works for me!
I’ll be in Galveston this weekend for the first time since the storm and will leave as much money there as I can afford:)
#4 by Madonna Morris on February 20, 2009 - 10:12 am
Hal,
And the saga gets worse.
Lawyers are being hired to help people get their Insurance monies back (at 44% of the take), and when it’s all over, they still don’t have enough to pay off their loans, so Viola!!!, they are filing bankruptcy. Make sense to You?
The 3D’s you mentioned, are sad but true.
How many lives will be destroyed by those who did the right thing, and paid their Insurance.
And when will Insurance Companies be required to tell it’s customers in plain English, what ‘will not be paid’ for the dollars they are giving them.
The fine print and Legal Speak, leaves you wondering if Confusion and Deceit is their real business.
Madonna
#5 by Nicole on February 20, 2009 - 10:20 am
Are there other countries in the Occidental world that have these sorts of insurance problems? I don’t seem to recall anything like that from my years living overseas in Germany. Of course, I was a young 20-something that gave no thoughts to owning a home at the time. What was relevant, however, was health insurance. Working at a bar for peanuts still afforded me full coverage (not to mention paid vacations and boucoup holidays). It’s true that a very high percentage of my wages were taken for tax, but I had a fantastic quality of life.
Here, people seem to scream about the evils of socialism and higher taxes were the government to take a more active roll in tackling some of the woes you’re talking about. I guess my thought is, well, even if they take 50% of my income in taxes… if it’s paying for an infrastructure that makes sure I don’t fall through the cracks in life (wow, what if it even paid for my childrens’ education)… what am I even left to spend that other 50% on? Sigh. I can dream.
#6 by Suzanne on February 20, 2009 - 10:28 am
Good job of putting a face on an ugly problem. The insurance system in this country is SO broken.
#7 by Alex on February 20, 2009 - 10:44 am
Same stories from New Orleans. No consumer protection. It was severely wounded under a Reagan and died under two Bushes. The essential role of government is to protect the weak against the strong, but for most (70 percent to be exact) of the last 40 years of our government has been dominated with just the opposite agenda. So with rampant large corporations this is what you get. Too big to allow to fail yet small enough to screw any one person they wish.
This is what happens when one side or the other controls the process. The nature of the “free market” creates a competitive divisive structure. Without a controller/referee to enforce common sense rules, tyranny results. Our referees have sold out to “contributors”. This is the only country in the history of the world wherein one can “contribute” large sums of money to a political candidate and have people actually believe that it doesn’t influence behavior.
#8 by David on February 21, 2009 - 2:34 pm
I own a small business in Galveston. Our building was flooded and we lost everything. I haven’t received a penny of insurance money, though I carried flood and windstorm coverage. I don’t live on the island, and my home only had minimal damage that was covered by my homeowners insurance. Because of this combination (home largly undamaged, self employed, home and business fully insured) there was no aid or assistance available for my family. It’s a family business, and we have basically been out of work for the last six months. We are falling seriously behind, and nobody seems to understand our circumstances (or care). My personal savings is history, and it looks like I’m going to lose my home. Our office has been repaired, and I was required to start paying rent again, but I have no insurance proceeds to restart my business. I have an impossible (but clear) choice to make. I can use what little money I have left to get our business reopened (in a very rudimentary fashion – nothing like it was), and lose my home in the process, or I can try to avoid forclosure, but be unable to reopen. Obviously, I am going to reopen the business, but I’m angry that I have to make that choice in the first place. I thought I was doing everything right. I was insured against any circumstance (or so I thought). I paid my bills and insurance premiums on time. I pay my taxes willingly and on time. I saw many people be given money and other goods and services for their lack of preparedness. Folks with little or no insurance were handed checks and vouchers – they were rewarded for being unprepared. My government and my insurance company have decided it’s okay for my family to be left to rot. But I’m not bitter…
#9 by Dawn Anderson on February 28, 2009 - 8:44 am
We are in the same situation with our home on Bolivar. The mortgage company is even threatening to purchase insurance on an un-insurable structure.
If you are having problems with your mortgage company and it is considered a “national bank” like ours, contact the Office of the Comptroller of the Currency and file a formal complaint. They will take your information over the phone and provide you a case number. We haven’t gotten our issues resolved yet, but our mortgage company actually started sending helpful information and finally assisgned me someone with the ability to negotiate, but I had to get a bit nasty with them. Don’t know what the end result will be, but I know I at least got their attention with the OCC case number. The OCC’s website is…. http://www.occ.treas.gov/ they regulate the national banks. If you have a Texas bank, call the Texas Department of Insurance – they will also assign a complaint number and can give you a phone number to the state regulators. No one tells you that the worst part of the hurricane is the fight afterwards. Oh, and by the way – you have my vote for CLAM – 100%
#10 by amelott on February 28, 2009 - 8:52 am
Thanks, Dawn. That’s really good (and new to me) information!
#11 by Dawn on February 28, 2009 - 9:08 am
No problem. It took me almost 4 1/2 months to find out about the OCC, and they gave me a number to the Executive Office of my lender, not some 1-800 we don’t know what we’re doing number. Unfortunately 99% of the helpful information you can get comes from folks like you and your blog and the old tell a friend, tell a neighbor route.
We have discovered most of the information we CAN get about Bolivar comes through the old grapevine, and then you have to weed out the fact from fiction.
The latest “rumor” I heard was that Tillman Fertitta and Donald Trump bought up the old Crystal Palace hotel. Believe me, I would love for that to be true because then some REAL things would get done on the peninsula, but the rationale side of my brain just laughs at the thought of the Donald investing in that hotel, unless it were to tear it down and turn it into a mega casino.
#12 by Val on March 13, 2009 - 10:33 am
I agree. My family has received no help what so ever. We’re punished for working hard.
We jumped in head first after Ike and started fixing our homes and rental property thinking help would come later. Now we’ve maxed out every credit card, borrowed money, and plummeted our credit scores. We can’t get a loan, FEMA denied us help, and the property value dropped. This has been the greatest tragedy I’ve seen in Galveston. To add heartbreak to injury, our Catholic churches will be closed (financial decision).
We’re going to keep on trying to get back on our feet, but it’s hard to see the light at the end of the tunnel! well, maybe if you’re a contractor!
#13 by Kim Bachmeier on March 24, 2009 - 8:16 pm
Alice — this is a great story. And very unfortunate.
None of this makes sense! I have seen and heard of similar situations! There does not seem to be consistency. And, worse, our current systems seem to be negative reinforcement for many who did not take full responsibility for home ownership or rental.
#14 by Vincent Valadez on May 5, 2009 - 9:48 am
This whole situation is out of order because the insurance industry owns the Governor’s Mansion. It seems to me that if you are in the risk business, insurance companies ( we pay our premiueums to them to take this risk for us) then we ought to get our money’s worth out of them. As it is they own huge portions of our country but are not willing to shoulder their responsibility. I agree with an earlier blogger about a grassroot up rising to change their way of thinking and paying.
#15 by Holly Jahangiri on March 21, 2010 - 10:43 am
Amen. So, when are you running for office, Alice? 🙂
#16 by amelott on March 21, 2010 - 11:04 am
You’re hilarious, Holly.
#17 by Alice Melott on July 6, 2012 - 11:30 am
Update: Alex lost his home to foreclosure, and some 18 months later, it is listed by the bank for sale at 50% of what he owed on it. All he asked for was that they roll three months’ past due to the end of the loan. But no….
#18 by Alan on July 6, 2012 - 11:31 am
Alice, I forgot to breathe while reading your post. “Institutionized torture” was the term I’ve been looking for in my own “stuff”. Please let Alex know that I hope & expect that things work out for him and for all of us.
#19 by Mitzi Jean on July 6, 2012 - 11:31 am
Alice, the way Alex was treated along with many others in the same situation is just plain “WRONG:”, I belive a different type of insurance is needed, and with global warming and all the other “disasterous” weather everyone is having, why hasn’t someone thought of this before now. Look at the entire mess in Florida and other coastal areas. It’s a damn shame, our wonderful government want’s their fingers in everything, but only for control, how many banks have yet to pay back loans, they are all making alot of money and still haven’t paid the loans back. We have a messed up government and if the “AMERICAN PEOPLE” don’t start getting involved instead of hiding in their damn homes, we are going to lose this country. There are many issues at hand, but I feel it’s time for “EVERYONE” TO START GETTING INVOLVED and we need to put our anger and dissapprovement into ACTION~ How much more are we going to take!!!!!!!!!!!!!!! PLEASE POST THIS AND LET’S GET OUR COUNTRY BACK!!!!!!!!!!!! MITZI JEAN