Something’s been gnawing at me lately and this past Tuesday, I was able to see it in action first hand. I attended the Citizens Property Insurance Forum held at the Dadeland Marriott in Miami Florida. It was sparsely attended, which gave me the opportunity to have some one on one time with a senior Citizens claim management person. I had originally intended to got there and express my clients frustration with the Citizens claims process, but considering the paucity of participants it seemed more productive to discuss these concerns privately.
What I can tell you from this private meeting is that the claims handling procedures in place at Citizens are profoundly dysfunctional. I have mixed feelings about this dysfunctional condition. On the one hand, I want to fix it so that the policyholder benefits. On the other hand, Citizens Property Insurance Corporation has become my Best Salesman. The policyholder who runs into the Citizens brick wall is forced to seek the assistance of a Public Adjuster or Attorney to help them resolve their issue. The Public Adjuster resolves the matter through appraisal and the Attorney files suit. The claim gets settled and the policyholder while not particularly happy is paid.
Now here’s the irony: Citizens is not happy with the outcome of the appraisals and they are not happy with the outcome of litigation. Profoundly unhappy might be a more apt description. And yet, as profoundly unhappy as Citizens is with both of these dispute resolution venues, they are not receptive to change. It is the classic Einsteinian definition of insanity: Doing the same thing over and over expecting a different outcome.
Here’s the Citizens claims adjusting process in a nut shell. We investigate the loss. We come up with a position. We proffer our opinion to the policyholder. The policyholder unquestionable accepts our position. Claim is closed. What happens if the policyholder disagrees? Simply put they are cordially invited to piss off!
Missing from this scenario is a key and fundamental aspect of adjusting: communication. Citizens’ believes it is the only party in the equation that is entitled to have any input into the claims adjustment process. This is little more than hubris.
And here we are, resolving claims through appraisal and litigation because Citizens is unwilling to listen, unwilling to talk out differences, unwilling to be flexible, unwilling to negotiate, unwilling to provide anything that even approximates customer service.
Now understand, they take this stance ostensibly because of governmental oversight to which they are supposedly subjected. I don’t buy that, because it ultimately implies that policyholder’s would have to got to their state representative to get claims paid and the representative has better things to do that mediate insurance disputes. A more likely explanation is that the majority of the time their position is simply unsupportable. Appraisal awards and litigation outcomes are evidence overwhelmingly supportive of this observation.
Thursday, September 25, 2008
Wednesday, August 13, 2008
You Will Not Pass!
I was speaking with one of the guys I work with the other day about a claim he’s handling. The loss involves black water, otherwise known as sewage. Anyway, he’s frustrated with the claims process. He’s done a lot of work and now the insurance company is pulling the rug out from beneath him.
He signed the client up and then we reported the loss to the insurance company. They claim to have not received the first report, but don’t seem to have any problems reading from the initial letter sent to them. Perhaps this is because we have the fax confirmation form showing exactly when they received the first notice.
My adjuster finally gets hold of the company adjuster and they meet out at the loss. They review the damages and agree on a scope of loss. First speed bump. The company adjuster calls and informs my guy that the company wants to send out an engineer to inspect the damage. An appointment is made, the day arrives and the engineer shows up. The engineer is puzzled about why he’s there. After a brief inspection, he confirms what everyone has known all along, The loss arises from a drain lines failure to accept the waste water discharge. It was obvious: obvious to the plumber, obvious to the insured, obvious to my guy, obvious to the engineer and that’s as far as commonsense goes.
The insurance company and the adjuster could not see the obvious. But things are clearer now. Their engineer has relayed the obvious. Second speed bump. My guy talks to the adjuster and is told that he would be ready on Friday to discuss the claims settlement. Friday comes… Friday goes. No settlement discussion.
Third speed bump. The insurance company is going to take the client’s Examination Under Oath. This is a serious development and necessitates the client retaining an attorney. It’s also little more than intimidation on the part of the insurance company trying to short cut their way out of paying the claim. There’s one minor wrinkle here: my client isn’t gong to be intimidated.
You see people buy insurance to protect them from the terrible things that never happen so that when they do, there is a financial safety net that staves off ruin. That’s the promise that’s sold. That’s the promise that’s bought. That’s the promise that reneged on after loss. In this case my client has small children. These children have been exposed to sewage and their health has been endangered. My client already works overtime to make ends meet and is really depending upon the insurance company to help in this time of need. ‘Oops, sorry about that, did we say we would pay your claim? Well yes, but that was before you were so inconsiderate as to actually have a claim. Now just run along and bother someone else.’
The insurance company’s mantra: Delay, Deny and Defend and just maybe they’ll go away. Well Mr. Insurance Company Not This Time. You see you’ve endangered the mother bears cubs with your callous disregard for the needs of your policyholder. My money’s on the mother bear.
If this were atypical I would not have much to write about. In Florida it seems that insurance companies have declared war on their policyholders and the policyholder is the only one who doesn’t know it. That is until after the loss, when the insurance company begins a process intended to limit their financial exposure. Unfortunately this process is directed towards those who are in desperate need of help, usually in times of crises.
All of us, you, me… anyone who has an insurance policy and is in need of help should remember the refrain of Gandalf the wizard when he was fighting the Balroc in Lord of the Rings. Standing on a narrow passage above the abyss, Gandalf plants his staff on the passage and declares to the Balroc “You Will Not Pass!”.
My colleague and our client have said to the insurance company just those words. They are in the fight for the long haul.
He signed the client up and then we reported the loss to the insurance company. They claim to have not received the first report, but don’t seem to have any problems reading from the initial letter sent to them. Perhaps this is because we have the fax confirmation form showing exactly when they received the first notice.
My adjuster finally gets hold of the company adjuster and they meet out at the loss. They review the damages and agree on a scope of loss. First speed bump. The company adjuster calls and informs my guy that the company wants to send out an engineer to inspect the damage. An appointment is made, the day arrives and the engineer shows up. The engineer is puzzled about why he’s there. After a brief inspection, he confirms what everyone has known all along, The loss arises from a drain lines failure to accept the waste water discharge. It was obvious: obvious to the plumber, obvious to the insured, obvious to my guy, obvious to the engineer and that’s as far as commonsense goes.
The insurance company and the adjuster could not see the obvious. But things are clearer now. Their engineer has relayed the obvious. Second speed bump. My guy talks to the adjuster and is told that he would be ready on Friday to discuss the claims settlement. Friday comes… Friday goes. No settlement discussion.
Third speed bump. The insurance company is going to take the client’s Examination Under Oath. This is a serious development and necessitates the client retaining an attorney. It’s also little more than intimidation on the part of the insurance company trying to short cut their way out of paying the claim. There’s one minor wrinkle here: my client isn’t gong to be intimidated.
You see people buy insurance to protect them from the terrible things that never happen so that when they do, there is a financial safety net that staves off ruin. That’s the promise that’s sold. That’s the promise that’s bought. That’s the promise that reneged on after loss. In this case my client has small children. These children have been exposed to sewage and their health has been endangered. My client already works overtime to make ends meet and is really depending upon the insurance company to help in this time of need. ‘Oops, sorry about that, did we say we would pay your claim? Well yes, but that was before you were so inconsiderate as to actually have a claim. Now just run along and bother someone else.’
The insurance company’s mantra: Delay, Deny and Defend and just maybe they’ll go away. Well Mr. Insurance Company Not This Time. You see you’ve endangered the mother bears cubs with your callous disregard for the needs of your policyholder. My money’s on the mother bear.
If this were atypical I would not have much to write about. In Florida it seems that insurance companies have declared war on their policyholders and the policyholder is the only one who doesn’t know it. That is until after the loss, when the insurance company begins a process intended to limit their financial exposure. Unfortunately this process is directed towards those who are in desperate need of help, usually in times of crises.
All of us, you, me… anyone who has an insurance policy and is in need of help should remember the refrain of Gandalf the wizard when he was fighting the Balroc in Lord of the Rings. Standing on a narrow passage above the abyss, Gandalf plants his staff on the passage and declares to the Balroc “You Will Not Pass!”.
My colleague and our client have said to the insurance company just those words. They are in the fight for the long haul.
Monday, August 11, 2008
More On Money
In my last entry, I touched upon the importance of reserves in getting your claim paid fairly. This can not be overstressed: if your claim is under reserved, the chances of it being under paid increase dramatically. Now you might be asking yourself why: why doesn’t the insurance company simply increase the reserves?
Typically, the reserves are readjusted early in the claims process. When the loss is first called into the company a claim is created and a provisional reserve is set aside. After the adjuster has initially inspected the loss the reserves will be readjusted to reflect the adjusters opinion of the damage and its’ value. At this point, reserves begin to solidify: like concrete it’s very hard to make changes. The reason for this is simple. The insurance company begins to believe that it has accurately assessed its’ financial exposure. The adjuster believes they have accurately relayed the extent and value of damages. And with the passage of time, both are reluctant to admit to making a mistake.
So what happens if the reserves are mismatched to the loss? If they are less than what is needed, the insurance company will begin the process of attempting to pound the proverbial square peg into the round hole. That is they try and make the loss fit the reserves. This action is different from the normal disagreements that accompany losses. This is tantamount to a constructive denial of what is to the policyholder a covered loss.
When you find yourself in this situation, it is imperative that you remain emotionally detached from the process of the adjustment. Don’t let on that you are frustrated or upset. This only encourages the adjuster to continue down the path of confrontation. Also, don’t speak to the insurance adjuster or anyone from the company, rather, put everything in writing. That way you have a complete record of what is going on.
When you write to the company, explain how their refusal to pay your claim is placing you in financial jeopardy. How you are depending upon their fair and prompt payment to ease your financial burden and how they are letting you down. Ask them to “please help you”. If they insist upon your using their contractor, ask them why they won’t pay enough to enable you to choose a market priced contractor. Ask them why they have to restrict your ability to trade with whomever you wish. So on and so forth… you get the idea.
Write often. A weekly letter imploring the insurance company to help you in your time of need is golden, if you ultimately have to litigate to get your claim paid. The weekly letter is doubly golden if they don’t respond.
It’s a lot of work to get your claim fairly paid, but it’s not impossible.
Typically, the reserves are readjusted early in the claims process. When the loss is first called into the company a claim is created and a provisional reserve is set aside. After the adjuster has initially inspected the loss the reserves will be readjusted to reflect the adjusters opinion of the damage and its’ value. At this point, reserves begin to solidify: like concrete it’s very hard to make changes. The reason for this is simple. The insurance company begins to believe that it has accurately assessed its’ financial exposure. The adjuster believes they have accurately relayed the extent and value of damages. And with the passage of time, both are reluctant to admit to making a mistake.
So what happens if the reserves are mismatched to the loss? If they are less than what is needed, the insurance company will begin the process of attempting to pound the proverbial square peg into the round hole. That is they try and make the loss fit the reserves. This action is different from the normal disagreements that accompany losses. This is tantamount to a constructive denial of what is to the policyholder a covered loss.
When you find yourself in this situation, it is imperative that you remain emotionally detached from the process of the adjustment. Don’t let on that you are frustrated or upset. This only encourages the adjuster to continue down the path of confrontation. Also, don’t speak to the insurance adjuster or anyone from the company, rather, put everything in writing. That way you have a complete record of what is going on.
When you write to the company, explain how their refusal to pay your claim is placing you in financial jeopardy. How you are depending upon their fair and prompt payment to ease your financial burden and how they are letting you down. Ask them to “please help you”. If they insist upon your using their contractor, ask them why they won’t pay enough to enable you to choose a market priced contractor. Ask them why they have to restrict your ability to trade with whomever you wish. So on and so forth… you get the idea.
Write often. A weekly letter imploring the insurance company to help you in your time of need is golden, if you ultimately have to litigate to get your claim paid. The weekly letter is doubly golden if they don’t respond.
It’s a lot of work to get your claim fairly paid, but it’s not impossible.
Saturday, July 26, 2008
It's All About Money
Insurance companies keep two sets of accounting records. No the second set is not the set that details all the money flowing into their accounts from policyholders, rather it’s the set that tells regulators how solvent the company is. While insurance companies use Generally Accepted Accounting Principals (GAAP) accounting to track money, they also use Statutory (Stat) accounting as a litmus test of their solvency. What’s the difference? Broadly speaking the two accounting methods address what can be called an asset and how the company handles liabilities. The following caveat applies for all you accountants reading this. This is a broad simplification and is not meant to be a treatise on insurance accounting.
With GAAP Accounting almost anything of value is called an asset. However when statutorily accounting for assets only those assets of high quality are counted. Liabilities in GAAP Accounting can be amortized over the expected lifetime of the liability. However with statutory accounting liabilities must be fully funded upon their recognition. This is where your claim begins to go astray.
You see insurance companies set aside money to pay claims. This money is collectively referred to as reserves and reserves are accounted for on a file by file basis, so reserves allocated to one file can not be transferred or reallocated to another file. Now you may be saying to yourself … blah, blah, blah… what does this have to do with me?
If the insurance adjuster assigned to your claim does not recognize the severity of your loss and as a consequence does not accurately report that severity back to the insurance company, not enough money gets set aside to fully reimburse you for that loss. Or to put it another way, if the insurance company under reserves your claim, chances are they are also going to under pay your loss.
Think about this. The insurance adjuster is the eyes and ears of the company. What that adjuster sees is what the company sees. What that adjuster hears is what the company hears. Now add to that a propensity towards minimizing the claim payments so as to maximize shareholder profits and you have the makings of a perfect storm. Unfortunately, you’re the one being tossed about in your time of greatest need. If you have the financial resources to repair your home and fight it out with the company great, but if you’re like most of us and need the insurance money to make repairs, this can be very intimidating.
Nothing is so difficult as to get someone the see damage when their job depends upon their not seeing damage. There are some things you can do. First and foremost, like the scouts, Be Prepared! Do your pre-loss homework: take pictures of your property, collect and save receipts for major purchases, make a home inventory. When a casualty loss occurs photo document the post loss condition of your property. As you are taking photographs try to take pictures from the same angles as your pre-loss photographs. This gives you the ability to compare and contrast the two sets of photographs. Take close ups as well to document the nature of the damage. Put together a list of everything damaged by the event and then make a copy of that list to give to the adjuster. Get the adjuster to review the list with you and document any disagreements. Get repair estimates that respond to the list you developed rather than the damages the adjuster develops. If you feel you are being ignored, don’t take it personally, get professional help. Call a Public Insurance Adjuster to assist you in the claims process. You can find on by going to your states public adjuster association. In Florida it’s the Florida Association of Public Insurance Adjusters www.fapia.net . If your state doesn’t have a public adjuster’s association go to the National Association of Public Insurance Adjusters www.napia.com
The object is to get the company to set aside sufficient money to pay your claim fully. If they don’t, chances are you’re going to need help. If you make the decision to seek assistance seek it sooner rather than later.
With GAAP Accounting almost anything of value is called an asset. However when statutorily accounting for assets only those assets of high quality are counted. Liabilities in GAAP Accounting can be amortized over the expected lifetime of the liability. However with statutory accounting liabilities must be fully funded upon their recognition. This is where your claim begins to go astray.
You see insurance companies set aside money to pay claims. This money is collectively referred to as reserves and reserves are accounted for on a file by file basis, so reserves allocated to one file can not be transferred or reallocated to another file. Now you may be saying to yourself … blah, blah, blah… what does this have to do with me?
If the insurance adjuster assigned to your claim does not recognize the severity of your loss and as a consequence does not accurately report that severity back to the insurance company, not enough money gets set aside to fully reimburse you for that loss. Or to put it another way, if the insurance company under reserves your claim, chances are they are also going to under pay your loss.
Think about this. The insurance adjuster is the eyes and ears of the company. What that adjuster sees is what the company sees. What that adjuster hears is what the company hears. Now add to that a propensity towards minimizing the claim payments so as to maximize shareholder profits and you have the makings of a perfect storm. Unfortunately, you’re the one being tossed about in your time of greatest need. If you have the financial resources to repair your home and fight it out with the company great, but if you’re like most of us and need the insurance money to make repairs, this can be very intimidating.
Nothing is so difficult as to get someone the see damage when their job depends upon their not seeing damage. There are some things you can do. First and foremost, like the scouts, Be Prepared! Do your pre-loss homework: take pictures of your property, collect and save receipts for major purchases, make a home inventory. When a casualty loss occurs photo document the post loss condition of your property. As you are taking photographs try to take pictures from the same angles as your pre-loss photographs. This gives you the ability to compare and contrast the two sets of photographs. Take close ups as well to document the nature of the damage. Put together a list of everything damaged by the event and then make a copy of that list to give to the adjuster. Get the adjuster to review the list with you and document any disagreements. Get repair estimates that respond to the list you developed rather than the damages the adjuster develops. If you feel you are being ignored, don’t take it personally, get professional help. Call a Public Insurance Adjuster to assist you in the claims process. You can find on by going to your states public adjuster association. In Florida it’s the Florida Association of Public Insurance Adjusters www.fapia.net . If your state doesn’t have a public adjuster’s association go to the National Association of Public Insurance Adjusters www.napia.com
The object is to get the company to set aside sufficient money to pay your claim fully. If they don’t, chances are you’re going to need help. If you make the decision to seek assistance seek it sooner rather than later.
Wednesday, July 23, 2008
Hurricane Dolly
Every hurricane as a similar issue: wind vs. wave. How this issue plays is determined by how much money is at stake and successful the industry believes it will be in transferring exposure from the casualty policy to the flood policy. Hurricane Katrina is the classic example. Immediately following Katrina, the industry began floating positions about the large extent of flooding associated with this storm. The mantra was flood, Flood, FLOOD and FLOOD. No amount of evidence to the contrary dissuaded them from their position. The industry hired a cadre of experts to support their position and began denying (rather successfully I might add) claims that might otherwise have been paid. Why do I say this?
Most people mistakenly believe that property insurance policies insure property. Truth is they don’t. They insure people. The property is simply the subject of that insurance. This affords the insurance company the freedom to decide which risks it wants to indemnify the policyholder against and which it does not. Guess what? Flood or should I say FLOOD is one of those risks it does not wish to insure against.
In Katrina a lot of properties were damaged by flood. A lot of those same properties were also damaged by wind. This of course raises yet another issue: chicken and egg. If flooding preceded the wind the insurance company has a very strong argument to limit the loss other wise payable. If wind is first on the scene if becomes increasingly difficult to attribute damage to flood.
The weather channel tonight stated there was a significant number of damaged roofs and broken windows. They also mentioned flooding. No comparisons were made with Katrina.
Now consider this: lets say hypothetically that Hurricane Dolly damages a roof and breaks a window or two or three. Water enters the house through the damaged roof and broken windows: a lot of water. Imagine a fire hose pointing at your house in a hundred mile per hour wind. How much water to you think would enter a broken window.
That water is going to saturate the property in short order. Much if not all of the interior finishes, fixtures and personal property are going to be significantly damaged if not considered a total loss. Now flooding occurs. My question is this: how has the flooding caused any more damage?
It hasn’t. The proximate cause of the damage is wind and the insurance company not Federal Flood should be paying the loss.
If your home was damaged by Dolly, take good photographs. Pay particular attention to broken windows and damaged roofs. Inside your home document any damage that appears to originate above the water line. Be sure to document the water line as well. Use a tape measure to capture the exact height of the water. Remember the burden is on the policyholder to prove their loss. If you have questions email be at bill@sasclaim.com I’ll do my best to help you out. Good luck!
Most people mistakenly believe that property insurance policies insure property. Truth is they don’t. They insure people. The property is simply the subject of that insurance. This affords the insurance company the freedom to decide which risks it wants to indemnify the policyholder against and which it does not. Guess what? Flood or should I say FLOOD is one of those risks it does not wish to insure against.
In Katrina a lot of properties were damaged by flood. A lot of those same properties were also damaged by wind. This of course raises yet another issue: chicken and egg. If flooding preceded the wind the insurance company has a very strong argument to limit the loss other wise payable. If wind is first on the scene if becomes increasingly difficult to attribute damage to flood.
The weather channel tonight stated there was a significant number of damaged roofs and broken windows. They also mentioned flooding. No comparisons were made with Katrina.
Now consider this: lets say hypothetically that Hurricane Dolly damages a roof and breaks a window or two or three. Water enters the house through the damaged roof and broken windows: a lot of water. Imagine a fire hose pointing at your house in a hundred mile per hour wind. How much water to you think would enter a broken window.
That water is going to saturate the property in short order. Much if not all of the interior finishes, fixtures and personal property are going to be significantly damaged if not considered a total loss. Now flooding occurs. My question is this: how has the flooding caused any more damage?
It hasn’t. The proximate cause of the damage is wind and the insurance company not Federal Flood should be paying the loss.
If your home was damaged by Dolly, take good photographs. Pay particular attention to broken windows and damaged roofs. Inside your home document any damage that appears to originate above the water line. Be sure to document the water line as well. Use a tape measure to capture the exact height of the water. Remember the burden is on the policyholder to prove their loss. If you have questions email be at bill@sasclaim.com I’ll do my best to help you out. Good luck!
Tuesday, July 22, 2008
So Good
The other day I met with an adjuster out at a loss. I had heard of this adjusters reputation through the grapevine and the grapevine did not have much good to say about him. Anyway this adjuster shows up with the usual insurance adjuster repertoire of tools: tape measure and camera. This guy was so good that it only took one “o” to spell it and you started with a capital G.
My point in telling this story is not to rant and rail at every adjuster with whom hubris is a personality trait, but rather to point out as I’ve done before that some times losses are not open and obvious. Yet adjusters routinely show up without the tools necessary to do their job beyond what is obvious. The village idiot can see damage that is open and obvious; it takes a professional to see damage that is not.
Here’s the rub: the policyholder depends upon the insurance company to send out a professional adjuster. Those sent out however by and large are not professionals. I know it, you know and the insurance company knows it.
I say the insurance company knows it because they don’t trust these people with authority to agree on scope or price. They don’t trust them! Now here’s my question: if the insurance company doesn’t trust the adjuster they send out to adjuster your loss, why should you?
My point in telling this story is not to rant and rail at every adjuster with whom hubris is a personality trait, but rather to point out as I’ve done before that some times losses are not open and obvious. Yet adjusters routinely show up without the tools necessary to do their job beyond what is obvious. The village idiot can see damage that is open and obvious; it takes a professional to see damage that is not.
Here’s the rub: the policyholder depends upon the insurance company to send out a professional adjuster. Those sent out however by and large are not professionals. I know it, you know and the insurance company knows it.
I say the insurance company knows it because they don’t trust these people with authority to agree on scope or price. They don’t trust them! Now here’s my question: if the insurance company doesn’t trust the adjuster they send out to adjuster your loss, why should you?
Wednesday, July 16, 2008
Causation Disputes
Lately it seems that insurance companies have been taking issue with losses by asserting a difference of opinion as to causation. For example, take an insured who reports wind damage to their home. The insurance company hires an “expert” to examine the home. This “expert” (I put “expert” in quotation marks because I find that many of them have a predetermined opinion as to causation) comes out and following a casual inspection of the property opines that the home suffers from a variety of ills relating to deferred maintenance or some such argument that is similar in nature.
The insurance company in turn takes exception to the claim citing the wear and tear, deterioration, inherent vice and latent defect exclusions or the improper maintenance language under the concurrent causation section of the policy. The insured is left blinking like the proverbial deer in the headlights.
Understand this is little more than a tactic. Most houses suffer from maintenance related damages. Whether it’s a broken roof tile from someone walking on the roof or a pipe under the sink that leaked for a few days before anyone noticed it, every house has some blemish, some flaw. The question here is whether the maintenance is responsible for the loss or some casualty is responsible such as the wind in our example.
Insurance policies are unilateral contracts between the policyholder and the insurance company. The policyholder is given the option of accepting the policy as written or going somewhere else. Because it is a unilateral contract any ambiguity is automatically decided in favor of the policyholder. Unfortunately, many insurance companies are using “experts” to try and remove ambiguity from the claim adjustment process.
Now in our example, even though the house may suffer from wear and tear or deterioration or latent defects etc… when those conditions serve to weaken the structure and make it more susceptible to wind, the proximate cause of the loss becomes wind not wear and tear and the loss should be covered. In reaching this conclusion I ask myself a simple question: did the loss occur absent the casualty. If the answer yes, then wear and tear may be responsible. If the answer is no, then the casualty (in our example wind) is responsible and the merits of the claim should be considered in the context of the cause of loss.
A repositioning of the loss as wear and tear is improper and you should take a stand against the company when they attempt to do this.
The insurance company in turn takes exception to the claim citing the wear and tear, deterioration, inherent vice and latent defect exclusions or the improper maintenance language under the concurrent causation section of the policy. The insured is left blinking like the proverbial deer in the headlights.
Understand this is little more than a tactic. Most houses suffer from maintenance related damages. Whether it’s a broken roof tile from someone walking on the roof or a pipe under the sink that leaked for a few days before anyone noticed it, every house has some blemish, some flaw. The question here is whether the maintenance is responsible for the loss or some casualty is responsible such as the wind in our example.
Insurance policies are unilateral contracts between the policyholder and the insurance company. The policyholder is given the option of accepting the policy as written or going somewhere else. Because it is a unilateral contract any ambiguity is automatically decided in favor of the policyholder. Unfortunately, many insurance companies are using “experts” to try and remove ambiguity from the claim adjustment process.
Now in our example, even though the house may suffer from wear and tear or deterioration or latent defects etc… when those conditions serve to weaken the structure and make it more susceptible to wind, the proximate cause of the loss becomes wind not wear and tear and the loss should be covered. In reaching this conclusion I ask myself a simple question: did the loss occur absent the casualty. If the answer yes, then wear and tear may be responsible. If the answer is no, then the casualty (in our example wind) is responsible and the merits of the claim should be considered in the context of the cause of loss.
A repositioning of the loss as wear and tear is improper and you should take a stand against the company when they attempt to do this.
Sunday, July 6, 2008
Pre-Storm Preparation
While TS Bertha (7/6/08) has prompted me to expound upon storm preparation, this advice is good for any storm, hurricane, flood, winter storm, earthquake etc… Following a major catastrophe, reports of losses are made in staggering numbers prompting insurance companies to begin hiring contract adjusters to handle the increased claim volume. Most of this staffing increase takes the form of contracts with independent adjusting firms who begin the mad and sometimes frantic search for bodies. I use the term bodies intentionally in that every company has their “A” list adjusters and their “D” adjusters as well as all categories in between. As you can imagine, “A” list adjusters are the best and the independent adjusting firms try and keep them busy all year long so as not to loose them to the competition. “D” list adjusters are called upon only as a last resort, but on major events they are going to be called in to adjust claims. As the policyholder, you have no idea whether the adjuster assigned to your claim is top notch or an also ran. You won’t get this information even if you ask for it. Let’s face it, who would be willing to admit they were marginal. Don’t waste your time asking it’s not material.
What is material is your ability to demonstrate your loss: be able to prove the extent of damage and document that damage.
Before and after pictures are great for this type of proof. The difficulty arises with the before component of this equation. Most people never think about loss before it happens and are caught unawares and unprepared for loss after the fact. This lack of planning is compounded because the policyholder calls the insurance company to report the loss and for all intents and purposes abandons the determination of their loss to the insurance company adjuster: who may be an “A” adjuster but more likely is something else.
This company adjuster arrives on scene with their camera and tape measure to determine the loss. You show the adjuster the damage and the adjuster only includes a fraction of what is shown in their report to the insurance company. In the interim, you begin the clean up and repair process. Then the much anticipated check arrives in the mail and bingo you’re not satisfied. What happened?
In a nutshell, lack of preparation and naivety combine with incomplete reporting to create the perfect post loss financial storm.
Now consider this scenario. Pre-loss photographs are taken and post loss photographs are taken utilizing the identical views. Additionally, post loss photographs are taken of close ups of the property damaged by the storm. Before shots are contrasted with after shots and the differences labeled. The whole package is then given to the adjuster with a letter requesting these photographs be forwarded to the insurance company. You have a much better chance at getting a reasonable recovery than simple hoping for one. Obviously the better the photograph the greater the ability to distinguish and document the differences between the pre and post storm conditions.
This action will not substitute for having the right tools to prove loss, but will greatly aid you in obtaining a recovery as compared to abandoning your claim to the insurance company adjuster.
What is material is your ability to demonstrate your loss: be able to prove the extent of damage and document that damage.
Before and after pictures are great for this type of proof. The difficulty arises with the before component of this equation. Most people never think about loss before it happens and are caught unawares and unprepared for loss after the fact. This lack of planning is compounded because the policyholder calls the insurance company to report the loss and for all intents and purposes abandons the determination of their loss to the insurance company adjuster: who may be an “A” adjuster but more likely is something else.
This company adjuster arrives on scene with their camera and tape measure to determine the loss. You show the adjuster the damage and the adjuster only includes a fraction of what is shown in their report to the insurance company. In the interim, you begin the clean up and repair process. Then the much anticipated check arrives in the mail and bingo you’re not satisfied. What happened?
In a nutshell, lack of preparation and naivety combine with incomplete reporting to create the perfect post loss financial storm.
Now consider this scenario. Pre-loss photographs are taken and post loss photographs are taken utilizing the identical views. Additionally, post loss photographs are taken of close ups of the property damaged by the storm. Before shots are contrasted with after shots and the differences labeled. The whole package is then given to the adjuster with a letter requesting these photographs be forwarded to the insurance company. You have a much better chance at getting a reasonable recovery than simple hoping for one. Obviously the better the photograph the greater the ability to distinguish and document the differences between the pre and post storm conditions.
This action will not substitute for having the right tools to prove loss, but will greatly aid you in obtaining a recovery as compared to abandoning your claim to the insurance company adjuster.
Monday, June 30, 2008
A Different View
In April, I attend the Infrared Training Institute’s building diagnostics training in Orlando, Florida. This was in preparation for the purchase of an infrared camera to assist me in damage assessment. These cameras are a significant investment in both training time and camera expense. The model I ultimately decided upon was the FLIR B-360. This model has good resolution and the ability to take both visible light pictures as well as infrared pictures. Since that training I’ve been using the camera at every opportunity. What a difference the camera makes!
I have a client whose roof was damaged in Hurricane Wilma. There is water penetration through the moisture barrier. Evidence of water is no open and obvious throughout the structure. However, the ability or inability of the adjuster to see the water does not have any bearing upon the damage the water is causing. In the evaluation process, I have been using high resolution cameras, moisture meters and hygrometers. The affect has been a series of photographs documenting the extent of moisture, which compelling as they are, pall in comparison to the infrared photographs. Take a look at the following two pictures. The first is what the adjuster would see with a point and shoot camera. The second is the infrared image of the same area. The guy in the picture is Mitchell Gottlieb who works with me.
In the infrared image the yellows and oranges are evidence of moisture penetrating through the roof and running down the wall. I had previously documented the extent of moisture damage to the wall with a moisture meter, so I know this is water damage.
I now have a visual representation of water behind the wall. This will get the claim paid and paid richly.
I have a client whose roof was damaged in Hurricane Wilma. There is water penetration through the moisture barrier. Evidence of water is no open and obvious throughout the structure. However, the ability or inability of the adjuster to see the water does not have any bearing upon the damage the water is causing. In the evaluation process, I have been using high resolution cameras, moisture meters and hygrometers. The affect has been a series of photographs documenting the extent of moisture, which compelling as they are, pall in comparison to the infrared photographs. Take a look at the following two pictures. The first is what the adjuster would see with a point and shoot camera. The second is the infrared image of the same area. The guy in the picture is Mitchell Gottlieb who works with me.
In the infrared image the yellows and oranges are evidence of moisture penetrating through the roof and running down the wall. I had previously documented the extent of moisture damage to the wall with a moisture meter, so I know this is water damage.
I now have a visual representation of water behind the wall. This will get the claim paid and paid richly.
Thursday, April 17, 2008
My Antenna Is Up
I was speaking to a client the other day when something hit me. She was telling me that since the insurer she had in 2005 had cancelled her; the “new and improved” insurer has inspected her home with each renewal. Several other people have expressed the same observation. It seems that insurance companies are inspecting houses on a regular basis here in South Florida.
Now my curiosity is piqued. I am inherently suspicious of insurance company motives. Rarely if ever, to they operate in an altruistic manner, so the question arises, why inspect the risk yearly?
Here is one possible explanation. Many times in the claims environment insurance companies will inspect a loss and assert a position that this damage or that damage is caused by wear and tear or long term water leakage or some other gradual cause of loss. In effect the insurance adjuster examines the damage and pronounces a pre-loss condition to a post-loss inspection. A counter argument to these pronouncements can be made: that the company is engaged in post loss underwriting in order to limit claims otherwise payable. Proving this argument may involve obtaining a copy of the underwriting file, prior claims files and the hiring of expensive experts to establish the condition of the property pre-loss. It certainly adds a level of complexity not contemplated by an insured who simply wants to get their house repaired.
The question that arises is this: Are pre-loss inspections an attempt by the insurance company to limit claim payments in the next hurricane or catastrophe? Consider this: by conducting pre-loss inspections and uncovering loose or missing tiles, an insurance company may try to assert that wind damage to a roof is wear and tear or demand that an insured affirmatively state which tiles were missing or loose before the storm. A failure to correctly answer might then result in a denial based upon insurance fraud.
Only time will tell.
Now my curiosity is piqued. I am inherently suspicious of insurance company motives. Rarely if ever, to they operate in an altruistic manner, so the question arises, why inspect the risk yearly?
Here is one possible explanation. Many times in the claims environment insurance companies will inspect a loss and assert a position that this damage or that damage is caused by wear and tear or long term water leakage or some other gradual cause of loss. In effect the insurance adjuster examines the damage and pronounces a pre-loss condition to a post-loss inspection. A counter argument to these pronouncements can be made: that the company is engaged in post loss underwriting in order to limit claims otherwise payable. Proving this argument may involve obtaining a copy of the underwriting file, prior claims files and the hiring of expensive experts to establish the condition of the property pre-loss. It certainly adds a level of complexity not contemplated by an insured who simply wants to get their house repaired.
The question that arises is this: Are pre-loss inspections an attempt by the insurance company to limit claim payments in the next hurricane or catastrophe? Consider this: by conducting pre-loss inspections and uncovering loose or missing tiles, an insurance company may try to assert that wind damage to a roof is wear and tear or demand that an insured affirmatively state which tiles were missing or loose before the storm. A failure to correctly answer might then result in a denial based upon insurance fraud.
Only time will tell.
Tuesday, April 15, 2008
The Crux of Adjusting
Disputes in insurance claims fall broadly into several categories: coverage disputes, damage disputes and causation disputes. This message addresses damage disputes.
The insurance adjuster’s job is to ascertain what the insurance company’s minimum contract responsibility is under the terms and conditions of the insurance policy. In so doing they look for the open and obvious damage and damages that can be documented using a camera and a tape measure. Sometimes these open and obvious damages actually reflect the full extent of the loss, however many times they do not. The crux of adjusting then becomes how you resolve that difference.
You’ve heard the old adage “The Right Tool For The Right Job”. This applies to insurance adjusting as well. Sometimes the right tool might be an ice pick to show charring in wood framing and at other times a golf ball to demonstrate hollow spots in tile flooring. When choosing a tool, ask yourself two simple questions: what am I trying to demonstrate? And how is this best demonstrated?
Let me give you an example. I had a client whose sliding glass door was damaged in a hurricane. Following the hurricane the wind whistled through the door whereas prior to the storm it did not. Taking a picture of the door was ineffective. The loss was proven two ways. First, I set up audio equipment to capture the whistle as it was actually occurring. Second, I videoed the door capturing the rattle of the door as it was shaken back and forth using only my pinky finger and thumb as leverage. The insurance company agreed to replace the door. Had they not agreed to pay for the door, additional more expensive proof would have been required: proof the insurance company would have been on the hook for.
The insurance adjuster’s job is to ascertain what the insurance company’s minimum contract responsibility is under the terms and conditions of the insurance policy. In so doing they look for the open and obvious damage and damages that can be documented using a camera and a tape measure. Sometimes these open and obvious damages actually reflect the full extent of the loss, however many times they do not. The crux of adjusting then becomes how you resolve that difference.
You’ve heard the old adage “The Right Tool For The Right Job”. This applies to insurance adjusting as well. Sometimes the right tool might be an ice pick to show charring in wood framing and at other times a golf ball to demonstrate hollow spots in tile flooring. When choosing a tool, ask yourself two simple questions: what am I trying to demonstrate? And how is this best demonstrated?
Let me give you an example. I had a client whose sliding glass door was damaged in a hurricane. Following the hurricane the wind whistled through the door whereas prior to the storm it did not. Taking a picture of the door was ineffective. The loss was proven two ways. First, I set up audio equipment to capture the whistle as it was actually occurring. Second, I videoed the door capturing the rattle of the door as it was shaken back and forth using only my pinky finger and thumb as leverage. The insurance company agreed to replace the door. Had they not agreed to pay for the door, additional more expensive proof would have been required: proof the insurance company would have been on the hook for.
Thursday, April 3, 2008
Tools of The Insurrance Company Adjuster
The next time your home or business is damaged by catastrophe give this your consideration: watch what the insurance company adjuster brings with them to the scene. I’ll bet you will be able to put the tools into a couple of buckets, camera and tape measure. The camera is used to document the open and obvious damage and the tape measure is used to quantify the areas damaged. Ok, I forgot something, a flashlight. They need to be able to see what they are looking at.
My question to you is this: What happens if your damage is not open and obvious? Take a look at the photo below. This is a photo of a wall taken to a hurricane damaged house. What’s wrong with the wall?
You can’t tell. The damage is not open and obvious. A camera and tape measure is not going to help you recover money from the insurance company. You can have all the opinions you want as to whether the wall is damaged, but unless you can prove it, you’re SOL. “Sorry about that the adjuster says. I just don’t see what your talking about.” Remember they can always tell you what isn’t covered by the policy and damage which can not be proven is not covered.
Having the right tool on the other hand can mean the difference between a recovery and no recovery. Here is that very same photograph where I am taking a moisture reading. The moisture meter is pegged. It doesn’t take a genius to figure out the wall is wet. The result? The insurance company paid for the water damaged wall.
There is no substitute for having the right tool for the right job. If the insurance company adjuster doesn't have the right tools at their disposal what makes you think they are equipped to adjust your loss?
My question to you is this: What happens if your damage is not open and obvious? Take a look at the photo below. This is a photo of a wall taken to a hurricane damaged house. What’s wrong with the wall?
You can’t tell. The damage is not open and obvious. A camera and tape measure is not going to help you recover money from the insurance company. You can have all the opinions you want as to whether the wall is damaged, but unless you can prove it, you’re SOL. “Sorry about that the adjuster says. I just don’t see what your talking about.” Remember they can always tell you what isn’t covered by the policy and damage which can not be proven is not covered.
Having the right tool on the other hand can mean the difference between a recovery and no recovery. Here is that very same photograph where I am taking a moisture reading. The moisture meter is pegged. It doesn’t take a genius to figure out the wall is wet. The result? The insurance company paid for the water damaged wall.
There is no substitute for having the right tool for the right job. If the insurance company adjuster doesn't have the right tools at their disposal what makes you think they are equipped to adjust your loss?
Wednesday, April 2, 2008
A Difference of Opinion
The Miami Herald reported today that Florida is suiting Poe Financial to recover more than $100 million. The Insurance Journal yesterday reported the same story. What’s interesting is the difference between those two stories. The title of The Herald article: Suit alleges huge fraud in Poe Financial case. The Journal title: Officials File Civil Lawsuit against 3 Former Florida Insurance Companies. With the exception of a quote from the CFO you'd never know you were reading two articles about the same story. The word fraud never appeared in the entire Journal article. In fact to read this version, you’d never know that the suit alleged that an “elaborate scheme of potential mismanagement and fraud among the officers and directors of the Poe Financial Group insurance companies that drained millions of dollars that could have been used to pay claims after the insurers failed.”
You'd never know but for The Herald that William S. Poe, Sr. collected nearly $20 million between 2004 and 2005. That two of Poe’s sons who were company executives collected $11.9 million. The family investment company was paid close to $10 million and the family foundation received nearly $1 million.
The contrast between these two reports is startling: one for its reservation the other for its point blank recitation of the allegations. Now compare that response to an issue the insurance company adamantly dislikes and watch the shrill machine come to life. Don’t believe me? Check out Anderson Cooper 360 on you tube and listen to the message put out by insurance companies in Washington State. Go to
www.youtube.com/watch?v=IvPW087RiJ8
The educated consumer is the insurance company’s worst nightmare.
You'd never know but for The Herald that William S. Poe, Sr. collected nearly $20 million between 2004 and 2005. That two of Poe’s sons who were company executives collected $11.9 million. The family investment company was paid close to $10 million and the family foundation received nearly $1 million.
The contrast between these two reports is startling: one for its reservation the other for its point blank recitation of the allegations. Now compare that response to an issue the insurance company adamantly dislikes and watch the shrill machine come to life. Don’t believe me? Check out Anderson Cooper 360 on you tube and listen to the message put out by insurance companies in Washington State. Go to
www.youtube.com/watch?v=IvPW087RiJ8
The educated consumer is the insurance company’s worst nightmare.
Monday, March 31, 2008
Damage Appraiser Schammage Appraiser
You’ve got an insurance claim and the “adjuster” sent out by the insurance company is perfectly willing to tell you what isn’t covered but can’t tell you what is covered. Or tells you they can’t commit the insurance company to coverage or payment. What do you do?
This situation is more common than you might expect. Much of the time when we inspect losses with the insurance company adjuster, the adjuster begins the inspection with a preamble something like this: I’m here to inspect the loss and I don’t have any authority to act on behalf of the company. Now I know this statement is B.S., my guys know this statement is B.S., but the adjuster thinks this relieves them of any responsibility for their actions. Having pontificated thusly, the adjuster then begins to go through the loss, taking exception to this damage or that price. They are always willing to tell you what isn’t covered, what they believe to be over priced and what they believe to not be related to the cause of loss. They may even want to take a recorded statement or pick up receipts for repairs and expenses.
All of this is the activity of an adjuster as opposed to a damage appraiser. Their actions negate their words. I hold the adjuster to their actions. I also never trust that adjuster to be straight with me from that point forward.
Now as a policyholder, you may not appreciate this distinction until it’s to late. So what I recommend is that you watch what the adjuster does. If they go through your loss telling your “this is not covered” or that is the result of “long term leakage”, make a note of these statements in your journal. Note as closely as possible the exact wording of their remarks. On the other hand, if the adjuster tells you the roof is going to be replaced or you’re going to get a new kitchen, make a note of this as well. Then write a letter to the adjuster acknowledging the commitments made by that adjuster. Don’t acknowledge a no coverage position, only those things which the adjuster agreed to pay for. On anything that the adjuster takes exception to during the inspection, insist they write you a letter citing the appropriate policy language supporting their position.
The idea here is to document and or confirm everything that was said. If you fail to document it now, while it’s fresh in your mind, you’re at a disadvantage when trying to remember what was said later. If after confirming what was said to the adjuster in writing they try and backtrack, you can then put them on the spot by insisting that they explain their statements.
This situation is more common than you might expect. Much of the time when we inspect losses with the insurance company adjuster, the adjuster begins the inspection with a preamble something like this: I’m here to inspect the loss and I don’t have any authority to act on behalf of the company. Now I know this statement is B.S., my guys know this statement is B.S., but the adjuster thinks this relieves them of any responsibility for their actions. Having pontificated thusly, the adjuster then begins to go through the loss, taking exception to this damage or that price. They are always willing to tell you what isn’t covered, what they believe to be over priced and what they believe to not be related to the cause of loss. They may even want to take a recorded statement or pick up receipts for repairs and expenses.
All of this is the activity of an adjuster as opposed to a damage appraiser. Their actions negate their words. I hold the adjuster to their actions. I also never trust that adjuster to be straight with me from that point forward.
Now as a policyholder, you may not appreciate this distinction until it’s to late. So what I recommend is that you watch what the adjuster does. If they go through your loss telling your “this is not covered” or that is the result of “long term leakage”, make a note of these statements in your journal. Note as closely as possible the exact wording of their remarks. On the other hand, if the adjuster tells you the roof is going to be replaced or you’re going to get a new kitchen, make a note of this as well. Then write a letter to the adjuster acknowledging the commitments made by that adjuster. Don’t acknowledge a no coverage position, only those things which the adjuster agreed to pay for. On anything that the adjuster takes exception to during the inspection, insist they write you a letter citing the appropriate policy language supporting their position.
The idea here is to document and or confirm everything that was said. If you fail to document it now, while it’s fresh in your mind, you’re at a disadvantage when trying to remember what was said later. If after confirming what was said to the adjuster in writing they try and backtrack, you can then put them on the spot by insisting that they explain their statements.
Wednesday, February 13, 2008
Adjuster or Damage Appraiser
We have a new adjuster onboard. Mitchell recently got his public adjusters license and was looking for a place to learn the craft. He’s sharp, has good street smarts and had one minor flaw: be believed that an adjuster sent out by an insurance company was a professional. He’s been disabused of that notion.
A client, I’ll call him Hy, had a hurricane loss. Hy called his insurance company, like he’s supposed to do and reported the loss. The company sent out an adjuster who evaluated the loss as below the deductible. Understand, Hy has a rather large deductible, so maybe it’s understandable that the company representative would evaluate the loss as not breeching the deductible. Maybe. A year passes and Hy learns that Mitchell has recently been issued his license, so he calls him.
Mitchell and I inspected the loss and wrote an estimate. The value was well in excess of the deductible. Now if you’re an insurance adjuster reading this you are probably thinking to yourself ‘no surprise here’. Mitchell requests a re-inspection and I tag along. The new and improved adjuster is given a copy of our estimate and begins the process of reviewing it in context of the loss. He agrees that the roof is in need of replacement. He agrees with the estimates’ interior damages. He doesn’t say one word about changes. Mitchell’s thinking ‘all right, I’ve got my first settlement’. I’m watching and waiting. We go over the agreements with our client and then sit back and wait: Mitchell with anticipation, me with reservation.
The check comes. There is no resemblance to the agreements reached with the adjuster. Mitchell’s pissed, Hy’s pissed, I’m pissed. It’s time for a reality check. I know you can’t reach an agreement with the adjuster, but this is news to Mitchell and Hy. The reason for this is quite simple. While the adjuster may have an adjuster’s license issued by the State of Florida, they are not actually adjusters. They are damage appraisers. They look at you with a blank bovine stare knowing full well and aware that the insurance company is going to re-adjust the estimate, unless of course is comes to an embarrassingly small amount. You see the adjuster does not have the authority needed to do their job. Mitchell understands this now. Hy understands this. You should understand this too. Today’s insurance adjuster has no authority, so don’t put much stock into what they say.
We are going to resolve this via appraisal. Appraisal it seems is the only way to reach agreement these days. The tragedy is that most policyholders still believe their adjuster. That’s changing though, one claim at a time. Then what?
A client, I’ll call him Hy, had a hurricane loss. Hy called his insurance company, like he’s supposed to do and reported the loss. The company sent out an adjuster who evaluated the loss as below the deductible. Understand, Hy has a rather large deductible, so maybe it’s understandable that the company representative would evaluate the loss as not breeching the deductible. Maybe. A year passes and Hy learns that Mitchell has recently been issued his license, so he calls him.
Mitchell and I inspected the loss and wrote an estimate. The value was well in excess of the deductible. Now if you’re an insurance adjuster reading this you are probably thinking to yourself ‘no surprise here’. Mitchell requests a re-inspection and I tag along. The new and improved adjuster is given a copy of our estimate and begins the process of reviewing it in context of the loss. He agrees that the roof is in need of replacement. He agrees with the estimates’ interior damages. He doesn’t say one word about changes. Mitchell’s thinking ‘all right, I’ve got my first settlement’. I’m watching and waiting. We go over the agreements with our client and then sit back and wait: Mitchell with anticipation, me with reservation.
The check comes. There is no resemblance to the agreements reached with the adjuster. Mitchell’s pissed, Hy’s pissed, I’m pissed. It’s time for a reality check. I know you can’t reach an agreement with the adjuster, but this is news to Mitchell and Hy. The reason for this is quite simple. While the adjuster may have an adjuster’s license issued by the State of Florida, they are not actually adjusters. They are damage appraisers. They look at you with a blank bovine stare knowing full well and aware that the insurance company is going to re-adjust the estimate, unless of course is comes to an embarrassingly small amount. You see the adjuster does not have the authority needed to do their job. Mitchell understands this now. Hy understands this. You should understand this too. Today’s insurance adjuster has no authority, so don’t put much stock into what they say.
We are going to resolve this via appraisal. Appraisal it seems is the only way to reach agreement these days. The tragedy is that most policyholders still believe their adjuster. That’s changing though, one claim at a time. Then what?
Friday, February 8, 2008
Super Tuesday Tornadoes
To everyone whose home or business was damaged by the tornadoes on super Tuesday, you have my heartfelt condolences. These types of events cannot be emotionally prepared for and when they happen you are often times left to the whims of the insurance company for recovery. I have some advice: first don’t be victimized by the storm. While you have been a victim, you do not have to internalize the event and become a victim. Becoming a victim takes away all your power.
You job now is to take the necessary steps to begin to recover. You will have to prove your damages to the insurance adjuster assigned to your claim. You do this with photographs, the opinions of experts, contractor’s estimates and personal property inventories. Begin by taking photographs. I utilize the 4-corner method of photographing losses. This method enables you to visually show a 360 degree view of your property on a room by room basis. After taking overview shots take closer view shots where you can just begin to see the damage while still placing it in the context of the overview shots. Finally take close up shots. Take photographs even if you believe the insurance company will fully pay you for your loss. You won’t know for weeks whether you’re going to be in a dispute and photographs preserve our evidence.
Begin making an inventory of your property now. Buy a few spiral notebooks and give one to each family member with instructions to write down everything they remember and which was blown away. Take photographs of everything you throw away. If possible don’t discard property until after the adjuster has seen it. Take you photographs and notebooks and compile them into a single spreadsheet on a room by room basis. Price every item being claimed and give the spreadsheet to the adjuster.
Solicit bids from contractors to get your home repaired and give a copy of those bids to the adjuster.
If your home is not livable and you’re staying in a hotel, be sure to get a receipt for everything you spend. Organize those receipts on a daily basis. Submit those receipt to the adjuster for reimbursement. Do this at least once a week.
Lastly, ask for an advance. If your company is interested in working with you they’ll provide you with advance money. If not, you’ll know soon enough how difficult a time you’re in for.
For more information on making a claim go to http://www.benefitbill.com/
You job now is to take the necessary steps to begin to recover. You will have to prove your damages to the insurance adjuster assigned to your claim. You do this with photographs, the opinions of experts, contractor’s estimates and personal property inventories. Begin by taking photographs. I utilize the 4-corner method of photographing losses. This method enables you to visually show a 360 degree view of your property on a room by room basis. After taking overview shots take closer view shots where you can just begin to see the damage while still placing it in the context of the overview shots. Finally take close up shots. Take photographs even if you believe the insurance company will fully pay you for your loss. You won’t know for weeks whether you’re going to be in a dispute and photographs preserve our evidence.
Begin making an inventory of your property now. Buy a few spiral notebooks and give one to each family member with instructions to write down everything they remember and which was blown away. Take photographs of everything you throw away. If possible don’t discard property until after the adjuster has seen it. Take you photographs and notebooks and compile them into a single spreadsheet on a room by room basis. Price every item being claimed and give the spreadsheet to the adjuster.
Solicit bids from contractors to get your home repaired and give a copy of those bids to the adjuster.
If your home is not livable and you’re staying in a hotel, be sure to get a receipt for everything you spend. Organize those receipts on a daily basis. Submit those receipt to the adjuster for reimbursement. Do this at least once a week.
Lastly, ask for an advance. If your company is interested in working with you they’ll provide you with advance money. If not, you’ll know soon enough how difficult a time you’re in for.
For more information on making a claim go to http://www.benefitbill.com/
Wednesday, February 6, 2008
A Pie Divided Looses Money
Insurer testimony before Senate Select Committee on Property Insurance Accountability in Tallahassee, Florida on Monday revealed an industry crying poor while laughing all the way to the bank. It revealed the inherent vulnerability with the legislature’s ability to regulate an industry that is allowed to divide itself into smaller and smaller pieces. Allstate is the case in point. Allstate is earning more money than ever before, but Allstate Floridian, according to its Chief Executive Officer, Joseph Richardson, Jr. is on the brink of insolvency. (This from an article in Insurance Journal)
Over the years insurance companies have gotten increasingly smaller while the parent operations have gotten increasingly larger. This paradox allows the industry to claim losses as a basis for rate increases without exposing the parent company to scrutiny or litigation. This business model effectively divides the pie and places the risk upon the residents of the state to “bail out” the smaller company in times of disaster when those residents are most in need of protection. What happens to the parent company: they get to declare themselves the victims of the same catastrophe while not being exposed to excess loss.
The solution is simple. Pierce the veil of the subsidiary and look at the entire company rather than being content with a small slice. Doing this with Allstate would reveal a company that is far healthier that testimony would lead you to believe.
Over the years insurance companies have gotten increasingly smaller while the parent operations have gotten increasingly larger. This paradox allows the industry to claim losses as a basis for rate increases without exposing the parent company to scrutiny or litigation. This business model effectively divides the pie and places the risk upon the residents of the state to “bail out” the smaller company in times of disaster when those residents are most in need of protection. What happens to the parent company: they get to declare themselves the victims of the same catastrophe while not being exposed to excess loss.
The solution is simple. Pierce the veil of the subsidiary and look at the entire company rather than being content with a small slice. Doing this with Allstate would reveal a company that is far healthier that testimony would lead you to believe.
Monday, February 4, 2008
The Collins Center
Florida is embarking upon a new journey: The Collins Center as a means for resolving disputes via the appraisal mechanism in the insurance policy. Advertisement aside, I have elected to participate in this project. After two days of training, I can say it’s promising.
Appraisal in Florida is symptomatic of a system broken. More claims are resolved today via litigation and appraisal than ever before save in the aftermath of Hurricane Andrew. The question that must be asked is why? Why does the public (insured’s, adjusters and attorneys) see appraisal as a necessary evil to resolve disputes with their insurers? Quite simply there is no one on the insurance company side to negotiate with. No one who has authority to agree on loss and value. No one who is authorized to commit to coverage. No one who is able to share information at that vital early stage in the adjustment process. That lack of field adjuster authority creates an attitude of mistrust amongst all involved.
The truth is that the insurance company does not trust the decision making capacity of those it hires for the adjustment of the claim to make the right decision. That lack of trust is then veiled behind secrecy and obfuscation with the intended result: delay of payment and frustration on the part of those who are in dire need of the bargain of the contract.
From the ashes of destruction rises the Phoenix. The Collins Center is a non partisan organization with its hands in many projects. It has undertaken to provide a bit of sanity in the appraisal process by taking out of the loop a key component: selection of the umpire. Parties agreeing to utilize the Collins Center will have an umpire appointed by the center on a rotational basis. This rotational appointment hopefully will result in a perceived absence of bias with the umpire. Time will tell how well this system will work. In the interim, I am willing to give the process a chance.
Not all public adjusters support this program, but lets face it the system is broken and anyone bringing sanity into the process is welcome in my opinion.
Appraisal in Florida is symptomatic of a system broken. More claims are resolved today via litigation and appraisal than ever before save in the aftermath of Hurricane Andrew. The question that must be asked is why? Why does the public (insured’s, adjusters and attorneys) see appraisal as a necessary evil to resolve disputes with their insurers? Quite simply there is no one on the insurance company side to negotiate with. No one who has authority to agree on loss and value. No one who is authorized to commit to coverage. No one who is able to share information at that vital early stage in the adjustment process. That lack of field adjuster authority creates an attitude of mistrust amongst all involved.
The truth is that the insurance company does not trust the decision making capacity of those it hires for the adjustment of the claim to make the right decision. That lack of trust is then veiled behind secrecy and obfuscation with the intended result: delay of payment and frustration on the part of those who are in dire need of the bargain of the contract.
From the ashes of destruction rises the Phoenix. The Collins Center is a non partisan organization with its hands in many projects. It has undertaken to provide a bit of sanity in the appraisal process by taking out of the loop a key component: selection of the umpire. Parties agreeing to utilize the Collins Center will have an umpire appointed by the center on a rotational basis. This rotational appointment hopefully will result in a perceived absence of bias with the umpire. Time will tell how well this system will work. In the interim, I am willing to give the process a chance.
Not all public adjusters support this program, but lets face it the system is broken and anyone bringing sanity into the process is welcome in my opinion.
Wednesday, January 2, 2008
Cause and Effect
I was visiting a client last week. The insurance company wanted to conduct yet another inspection of the property to further evaluate the loss. This despite having already had approximately one year to conduct their investigation. One year mind you with no payment, no evaluation of coverage, no evaluation of damage. My client is frustrated. He wants to confront the insurance company adjuster:
Client: Are you here to represent me?
Adjuster: I’m here to represent the insurance company.
Client: Doesn’t my insurance company represent me?
Adjuster: Your public adjuster represents you.
Client: Yes, I know that but doesn’t my insurance company also represent me?
Adjuster: Your insurance company represents the shareholders.
Client But doesn’t the insurance company have my interests at heart?
Adjuster: You insurance company is not required to have your interests at heart. They are required to pay the claim if it’s a covered loss.
Client: Is this a covered loss?
Adjuster: We’re still investigating
Client: When will you be finished with your investigation?
Adjuster: When we’re finished.
At that point I took my client aside and told him to stop wasting his time. However what he learned was instructive to say the least. He learned that following a loss he has effectively given the insurance company an interest free loan, until the claim is paid. If you could have money for free, how much of a hurry would you be in to pay it out? Not much.
He also learned that contrary to popular belief, you’re not in good hands, no insurance company is on your side, their’s no umbrella to keep the rain off and insurance companies are anything but good neighbors. He’s had a loss, a significant loss that may run $1 million dollars or more. So far he’s been jerked around, not responded to and effectively told to shut up.
Yet, he’s had a loss and looked to his insurance company for assistance.
If this story were an isolated case, I would not be writing about it here. Unfortunately, it’s far from isolated. Many of my clients contact me after they’ve been told to shut up and go away. We’ll they don’t and you shouldn’t either. Stand up and fight for what you’re entitled to and don’t allow the insurance company to intimidate you.
This claim is going to suit and to appraisal. I’ll let you know how it turns out.
Client: Are you here to represent me?
Adjuster: I’m here to represent the insurance company.
Client: Doesn’t my insurance company represent me?
Adjuster: Your public adjuster represents you.
Client: Yes, I know that but doesn’t my insurance company also represent me?
Adjuster: Your insurance company represents the shareholders.
Client But doesn’t the insurance company have my interests at heart?
Adjuster: You insurance company is not required to have your interests at heart. They are required to pay the claim if it’s a covered loss.
Client: Is this a covered loss?
Adjuster: We’re still investigating
Client: When will you be finished with your investigation?
Adjuster: When we’re finished.
At that point I took my client aside and told him to stop wasting his time. However what he learned was instructive to say the least. He learned that following a loss he has effectively given the insurance company an interest free loan, until the claim is paid. If you could have money for free, how much of a hurry would you be in to pay it out? Not much.
He also learned that contrary to popular belief, you’re not in good hands, no insurance company is on your side, their’s no umbrella to keep the rain off and insurance companies are anything but good neighbors. He’s had a loss, a significant loss that may run $1 million dollars or more. So far he’s been jerked around, not responded to and effectively told to shut up.
Yet, he’s had a loss and looked to his insurance company for assistance.
If this story were an isolated case, I would not be writing about it here. Unfortunately, it’s far from isolated. Many of my clients contact me after they’ve been told to shut up and go away. We’ll they don’t and you shouldn’t either. Stand up and fight for what you’re entitled to and don’t allow the insurance company to intimidate you.
This claim is going to suit and to appraisal. I’ll let you know how it turns out.
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