Merlin Law Group filed a class action lawsuit in Federal Court today alleging that sales tax was not being paid to many Superstorm Sandy policyholders with flood insurance claims insured by Selective Insurance. Some must be wondering that if policyholders cannot trust insurance company engineering reports, why should they trust that the estimates of damage made by the insurance companies own estimators?

Merlin Law Group attorneys Robert Trautman and Chase Mathis were complaining that some of the Superstorm Sandy WYO flood estimates did not have sales tax included. I asked if the tax was included in line items of the estimates rather than being shown at the end of the estimate. I knew we were on to another Superstorm Sandy wrongful claims practice when Chase Mathis said that the adjuster told the policyholder they were included, but the line item prices were the same as other estimates in our office which added tax at the end of the estimate. Superstorm Sandy policyholders have been duped again through another ingenious method of claims corruption.

The only way somebody could determine that the sales tax was not included on a line item basis after being told they were included would be to have access to a price list from the software vendor listing the material and labor prices without the sales tax. Policyholders do not subscribe to computerized price lists that insurance companies use. There was no way for them to uncover the deception. Whenever an insurance company representative says “trust me” to anybody that has been through the Superstorm Sandy claims process, I guarantee you that they are grasping for their wallets to make certain the insurance company is not stealing from them again.

Xactimate is the insurance industry leading computerized estimating software. While the company that sells it, Xactware, claims that it "makes every effort to ensure" accurate pricing information, it was terribly wrong for many areas along Coastal New Jersey and New York immediately after Sandy struck. The software company even warns that "actual market prices can vary and change rapidly." Those factors changed immediately after Superstorm Sandy, but most adjusters were more interested in doing as many estimates as they could rather than doing fewer and making less money. It takes more time to estimate losses by being more accurate and taking time to obtain better local pricing. While Xactware "strongly recommended" that its "customers monitor their local markets for any such changes and adjust their estimate pricing," few did. The result has been to cause a second disaster which has led to all these lawsuits and complaints of underpayment. Avoiding sales tax through deception simply adds to the underpayments.

To me, it is heartless to steal money through a system of deceit that is nearly impossible to catch—especially after a disaster when people are most vulnerable. Many policyholders simply gave up and abandoned their homes because they could not rebuild with what the insurance company gave them. This lawsuit helps put an end to this practice and sheds more light on the extent of the wrongs committed on those counting on insurance for their peace of mind.

For more information on the Sandy Class Action please visit