Now come the insurance headaches for hurricane victims — a cautionary tale wherever you live

Millions of home and business owners affected by hurricanes Michael and Florence are about to learn whether they made the right decisions in picking their insurance companies.

In Florida alone, CoreLogic estimates, losses due to wind damage from Hurricane Michael — the damage that is typically covered by standard residential and commercial policies — will be between $2 billion and $3 billion. Damage from storm surge, covered under the National Flood Insurance Program, could add another $1 billion in losses.

Meanwhile, residents and businesses in the Carolinas and Virginia hit by Hurricane Florence are dealing with an estimated $1.5 billion in wind damage and as much as $28.5 billion in flood damage. But because many choose not to carry flood insurance, as much as $18.5 billion of that loss is uninsured.

Insurance companies are fanning out across the Southeast in the wake of the storms. The nation's largest property-casualty insurer, State Farm, said it has dispatched its "Weather and Catastrophe Team" — including a fleet of mobile claims offices — to the affected areas. Other carriers have mounted similar responses.

Policyholders will have to navigate a range of issues, including dealing with insurance adjusters to determine the amount of loss and how much of it is covered, as well as contending with the possibility of an extended time without their home or business, all while recovering from the trauma of living through a monster storm. Their insurance company can ease the burden or make it even worse.

"I don't think that companies will be unable to pay claims, but I do think that policyholders will need to be ready for the typical issues and problems that come up in any storm claim — documentation, maybe some delay, maybe some haggling over the amount of coverage you're going to get," said policyholders' attorney Nicholas Insua, a partner at McCarter and English in Newark, New Jersey, in an interview with CNBC's "American Greed."

Choose wisely

Not all insurance companies are equal, which is something clients of Maryland-based Indemnity Insurance Corporation RRG learned the hard way in 2014. That is when a Delaware Court of Chancery judge ordered the company liquidated, saying the Delaware Department of Insurance had uncovered multiple acts of fraud by Indemnity's founder, 43-year-old Jeffrey Cohen.

Cohen is serving a 37-year prison sentence after pleading guilty in federal court in 2015 to fraud, obstruction of justice, identity theft and making false statements to regulators. Prosecutors alleged Cohen ran a massive, $137 million fraud, hiding the true financial condition of his company. Hundreds of his clients — mostly nightclubs, concert promoters and the like — claimed to have suffered huge losses when the scheme collapsed.

Prior to Indemnity's downfall, a Washington, D.C., bar owner, Britt Swann, says he found himself high and dry when Cohen's company denied coverage in a liability case.

"Unexpectedly, we were notified by Jeff's companies that I was not on the policy, and as a result, I was not an additional insured, and he was pulling the legal defense team away from me," Swann told "American Greed."

Prosecutors alleged that one of the ways Cohen had attracted customers such as Swann was by manipulating some of the very information that experts urge consumers to check when choosing a carrier. According to a federal grand jury indictment, Cohen provided false information to the leading rating agency, A.M. Best. The agency declined to speak with "American Greed." Prosecutors also alleged that Cohen falsified filings with state insurance regulators. The indictment alleges that the fraud allowed Cohen's company to earn strong ratings and a clean record, which it would tout to prospective policyholders.

"Whatever he needed at the time either to get an A.M. Best rating, or to defeat an audit, or to pacify the regulators, he would create something fraudulent to get that done," FBI Special Agent Jason Bender told "American Greed."

Fool me once

If a determined insurance fraudster like Jeffrey Cohen can fool the watchdogs, what is a homeowner or business owner to do when picking an insurance company? Insua says to keep digging.

That includes looking at multiple rating agencies. While A.M. Best is considered by many to be the gold standard, other agencies include Fitch, Moody's, and Weiss. He says all — including A.M. Best — have implemented tougher criteria in recent years following disasters like Hurricane Katrina and Superstorm Sandy. Look for discrepancies across a company's ratings.

"If you have an A-type rating from one of the agencies and a lower rating from another agency, that can be a red flag that there may be some problem or discrepancy," Insua said.

He says a search with multiple agencies might have helped Cohen's victims spot a potential problem.

"If you had gotten multiple ratings, you may have seen that other rating agencies might have given him a different score," Insua said.

He also suggests checking the ratings often.

"They can change daily," Insua said. "So you always want to be checking, even after you've purchased the policy, to just make sure that the company remains viable."

And do not stop with the rating agencies. The National Association of Insurance Commissioners offers a handy online tool to look up complaints and other information about insurance carriers. Insurance companies are regulated by states, so you can also check with your state insurance commissioner for information and advisories.

In addition to making sure a carrier has the ability to pay claims, it is a good idea to check on their customer service. J.D. Power offers ratings on all types of insurance companies — from property-casualty to auto and life — based on consumers' buying experiences.

Last lines of defense

Rather than choosing a carrier on their own, many people work through an insurance broker, who will have access to multiple carriers and varying insurance options and can get them to compete for your business.

"Brokers deal with hundreds or thousands of policies every year," Insua said. "So they just have more information about carriers, more information about the policies, they may work with particular insurers, and so they have a sense of whether insurers are good insurers."

But do not forget to check out the broker as well. They, too, are licensed by the states.

The National Association of Insurance Commissioners says a broker may charge you a fee, since the broker is representing you or your business. Make sure you understand the costs in advance. Then, put the broker to work.

"Make sure that if the broker brings you a few carriers from the market that they're ones that they have worked with before," Insua said.

Once you have chosen an insurance carrier, keep thorough documentation about your property, including a video inventory of your home and business and your possessions. That can be a huge help in proving your losses in a claim.

"People document every part of their lives now. It's certainly easy enough to go around and videotape or take a bunch of pictures of your house before a storm hits," Insua said.

Unlike what was alleged about Jeffrey Cohen's firm, most insurance companies are honest. But make no mistake, they are businesses. They make their money by collecting premiums, not by paying out claims. Choosing an insurance company can be a complicated process. But in many ways, your work has only just begun.

See how Jeffrey Cohen pulled off what prosecutors called a $137 million insurance scam — and what they say he did when he got caught! It is part of an ALL NEW special night of " American Greed ," Monday, Oct. 22, beginning at 9 p.m. ET/PT, only on CNBC. And be sure to grab a little more Greed for yourself by subscribing to the EXCLUSIVE "American Greed" podcast.