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.

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.