Insurance Claims: No Insured Is An Island

I was speaking with a friend of mine today regarding a potential referral for business. A friend of his has an insurance claim and was apparently having difficulty with their insurer. In short they were out matched and out gunned at every angle. It didn’t help that the insurance company was one of those who hate paying out claims. Now you might say that all insurance companies hate to pay claims, but I am not sure that is correct. I think the vast majority of companies, while not liking to pay claims, see claims as a way to fulfill the promise made when they took the premium. Getting back to my potential referral story: this insurance company hates to pay claims. They are at war with their policyholder and the only one who doesn’t know it is the policyholder. 

This got me to thinking about Benefit Bill™. One of the points that I advocate on that site is team building. You would never consider playing football team without 10 other people on your side (we’re not talking about pickup games here), why do you consider going up against the insurance company without your team in place? Think about it a minute. Your insurance company has a readymade team at their disposal: claims managers, supervisors, adjusters, contractors, engineers, accountants, contents experts, attorneys and the list goes on and on. You do you have?

If you said me, myself and I, and you are going up against the insurance team, my monies on the insurance team. Maybe that’s why so many insured’s wind up settling for pennies on the dollar. If you’re not sure how to build your team, keep checking back with Benefit Bill™ from time to time. We are putting together lessons on team building, one team member at a time. When you begin putting your team together, the odds swing dramatically in your favor. Happy team building… and

Have a Great Day!

Bill

If you're reading this and haven't gone to my Facebook page, please go and "like" Benefit Bill™

Roof Damage

ABC News reported on September 7, 2012 that State Farm Insurance was under investigation in Texas for the way it handled thousands of hurricane Ike claims. Apparently winds from Ike cause shingles to become unsealed. State Farm Insurance’ opinion in this matter was that an unsealed shingle does not constitute damage.  The opinion is not isolated to State Farm Insurance however. Other carriers take the same position. That position however is unfair to policyholders making claims for damages to their roof.

I stated in a workbook I prepared several weeks ago that because the insurance company does not define what it considers damage, that the policyholder is entitled to the broadest interpretation of that phrase. I also indicated that something is damaged when there is a change in the condition of the property between that time immediately before the event and anytime following the event.

So let’s look at the unsealed shingle position as not constituting damages. The insurance companies (and presumably their engineers) opine that roofing shingles unsealed by wind will re-seal themselves after a period of time. What they fail to mention is how well the re-sealing occurs. If I pull a piece of tape off a plastic package and re-stick it back on that package the tape will re-seal, but it’s not the same. Once the seal on the tape is broken, it never seals back to the same degree and I believe the same holds true for shingles. As a former company insurance adjuster I’ve been up on roofs where the wind has broken the seal, the shingles easily lift up. I’ve also been on roofs weeks after wind has come through an area and lifted shingles. I’ve found the shingles on these roofs to have re-sealed, but the seals were weak and easily re-broken. I’ve paid for those roofs: why? Because the roofs were damaged by wind, that’s why.

A policyholder pays good money for insurance and should not be faced with a re-interpretation of policy language after the loss. A policy whose language is broad should afford coverage….period. Otherwise the policyholder should be informed beforehand that the company arbitrarily denies coverage for covered damages. That way they can make an informed decision whether to buy that insurance or go to a company that pays for damage when damage occurs. Of course the insurance industry can’t tell them that: they’d sell no insurance if they did.

Bill

p.s. I don’t know how long the link will stay active but here it is if you want to read the article for yourself http://abcnews.go.com/US/state-farm-faces-criminal-investigation-hurricane-claims/story?id=17167218#.UEytMVFSTW5

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.