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.

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.

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.

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.

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?

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.

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.