Nebraska Contractors Sue Insurers Over Unpaid Storm Damage

Two Omaha, Neb., contractors are expanding a legal strategy they say forces insurance companies to pay for storm damage, but industry officials say the practice leads to exaggerated claims and may drive away insurers.

Home repair contractors Steve Shannon and James Eggers have sued insurance companies more than 100 times since 2013, seeking $13 million they say property insurance companies failed to pay for storm repairs, the Omaha World-Herald reported.

The legal strategy has brought a warning from state insurance regulators just as thousands of Omaha homeowners seek repairs for recent storms. Government and insurance officials say such lawsuits can drive up costs for everyone who buys home insurance.

The cases are based on “assignment contracts” where homeowners give contractors the right to make repairs and receive payments directly from insurance companies. They also give contractors the right to sue if bills aren’t paid.

But critics have said the approach can be abused if contractors unfairly inflate their bills and file lawsuits to try to collect from insurers.

Eggers said the contracts protect consumers when insurance companies deny claims, refuse to pay “fair and reasonable” charges or skimp on needed repairs.

“They shouldn’t be allowed to take advantage of people who don’t have the resources to hold the insurance companies accountable,” he said. “The only thing I can do is take them to court. I won’t give up on what’s right. I am truly advocating for homeowners.”

State Sens. Brett Lindstrom and Burke Harr introduced a bill after receiving complaints about assignment contracts. The bill, which may come up for a vote next year, would require that the contracts contain a clear description of what they mean. Lindstrom said the bill now “doesn’t change anything about how roofers conduct their business.”