In the Beginning

by Mark Goldwich

Image provided by revivebismarck.org

I WON’T TELL you the name of the insurance company I used to work for – I’ll just tell you that it was a major player. Let’s call the company I used to work for BigCo. BigCo was really good at creating a sense of “welcoming culture” within the organization for its employees. When I started there in the late eighties, the company really seemed to offer a “family” atmosphere.

My landing a job at BigCo was quite a coup; BigCo was a prestigious company and competition to get in was fierce. They didn’t really have to advertise for new hires. You usually had to know someone or be related to someone who worked at BigCo to get a job offer there. It was a good company to work for. There were lots of benefits.

Getting promoted to supervisor in under five years was another big accomplishment. Generally, you had to work there at least seven years before you could expect something like that. So I was on the fast track. I felt as if I were on top of the world. I was a company guy. I was all about BigCo.

A big change happened for me in 1996, though. That was when I became part of BigCo’s newly developed national catastrophe program. I gave up my job as a local supervisor at BigCo. The new position required a lot of travel. Because I had taken the new job, I was now traveling around the country, staying at a seemingly endless series of hotels, and working very, very long hours. Twelve hour days were the minimum; six-day work weeks were the norm. I got a weekend off – as in two straight days at home – only every six weeks or so.

While working on the catastrophe team at BigCo, I began to see first-hand all the subtle ways the company manipulated the process to the disadvantage of policyholders. I began to notice how the words the company used pointed in one direction … but the actions we took tended to point in another, very different direction.

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Working at disaster sites, strolling through the ruins of people’s homes, was, for me, a sobering and humbling way to make a living. Supposedly, we were there to help. But often, I found us merely scurrying about trying to get just enough money into people’s hands to keep complaints at a minimum. I saw too many “high-fives” among BigCo team members when a policyholder’s claim was denied.

I also began to see that the “family culture” that BigCo took such pride in was more complex than I had imagined. It now had a darker side – you were part of the family as long as you did exactly what you were told, and as long as you accepted, without challenge, all the unspoken assumptions you were supposed to accept.

I now found myself face-to-face with those assumptions on a daily basis, and it was difficult for me to ignore their human costs. I realized that, to be “BigCo people,” we had to buy into those assumptions but never, ever say them out loud, either internally or externally. I could no longer escape the conclusion that these assumptions were uprooting the lives of a very large number of our policyholders.

Some of these unspoken “BigCo Family” assumptions were:

• Claims from consumers are likely to be inflated, if not fraudulent. Treat them that way.

• You can always find a reason to delay: request additional information; get better documentation; get clarification; say you have to investigate more fully; seek higher authority for whatever has to happen next.

• You can always find something to deny, reduce payment on, or limit.

• You can always find a way to deflect responsibility. Find someone or something else to blame for the situation the policyholder is facing.

• While you are doing these things, you must maintain, and endorse, the public position that BigCo is doing everything right, and is always out to give policyholders a fair shake. Regardless of how many policyholders complain to you about how they are treated, you must preserve the public image of BigCo as fair and responsible.

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These, I came to realize, were some of the dark secrets behind the “family culture” at BigCo. You were only part of the “family” if you agreed to conceal these basic working principles from the media, from the general public, and from policyholders.

It was time to get out. I began a career as a public adjuster. Shortly after leaving BigCo and starting work in my new field, I was working in the Florida Panhandle with a retired Air Force veteran whom I’ll call “Captain Charlie.” He and his wife had been hit hard by Hurricane Ivan.

Captain Charlie’s house had been devastated by Ivan’s winds, as well as by eight to ten inches of flood water. His roof had been turned into a sieve, and there was major interior and exterior damage. The contents of his home had been ruined. Captain Charlie’s insurer gave him a shockingly low building-loss offer, and denied his claim for the contents of his home entirely.

In a preview of the dodge the insurance industry was to become infamous for a few years later with Hurricane Katrina, Captain Charlie’s insurer told him that his entire claim

for the personal contents of the home had been rejected because the home wasn’t covered for flood damage. Guess what? Captain Charlie didn’t have a flood policy.  The fact was, though, that much of what they denied could not have possibly been damaged by flood, since the objects in question were ten inches or more off the ground and were directly underneath one of several gaping holes in a collapsed, storm-drenched ceiling.

It was an infuriating result -- one I knew I could improve for Captain Charlie. Knowing the internal workings of companies like his as well as I did, I took it as my personal mission to win Captain Charlie a better settlement. He paid me nothing up front. (None of my clients pay me anything up front.) He ended up getting over $39,000 that had originally been denied for contents of his home. I also secured additional payments on his home itself that totaled over $71,000; after you added everything up, it was over a hundred and ten thousand dollars.

I’ll never forget the look on Captain Charlie’s face when he got the news – over a hundred grand in additional payments from an insurer that had chosen to fight him tooth and nail, and had lost. I’ve never seen a man more grateful. That was my first major victory against one of many BigCos running roughshod over the very lives of the policyholders who kept them in business. There were lots more victories to come.

Mark Goldwich is president of Gold Star Adjusters, a group of public insurance adjusters dedicated to helping citizens get the maximum settlement for any insurance claim.

The Top 10 List You Won't Find on David Letterman

by Mark Goldwich

This week I will cover the top ten warning signs of problems on the horizon with your insurer,

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especially if you are dealing with a large natural disaster. If you spot even one of these warning signs, you should start thinking about hiring a professional to assist you immediately!

Warning Sign Number Ten: By phone or by form letter, the insurance company tells you something to the effect that “due to the large number of claims received,” the process of resolving your claim will be delayed. Here, remarkably, is something you can be absolutely sure your insurance company is telling the truth about. If they say your claim will be delayed, take it to the bank!  Again, this is what usually happens in catastrophe situations. You will need professional guidance in this situation. 

Warning Sign Number Nine: Someone from a call center tells you that say an adjuster “should be calling” within 24-48 hours. The tip-off here is the call center, not the adjuster, is the one actually calling you. I wouldn’t suggest taking off work to wait for that call. You are almost certainly in for a long wait. Use the time wisely. 

Warning Sign Number Eight: The adjuster does not call when the call center indicated. Surprise, surprise. This seems harmless enough at the time, but it’s definitely not a good sign. You have now officially begun the process of risking your sanity. It’s simply not worth it. Get someone else to take on the process of tracking this person down. 

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Warning Sign Number Seven: The adjuster schedules the inspection of your home more than one week in advance. Most policyholders don’t realize that this is a clear indicator that they are not at the top of the list. No matter what you write down in the calendar, a time lag of more than one week before the inspection often translates as “You do not yet exist in my world.” This is not where you want to be! 

Warning Sign Number Six: The adjuster cancels or misses the scheduled appointment. Alas, this is quite common. It may signal any number of problems: the adjuster’s lack of organization in the face of a surrealistically high workload, burnout, confusion, reassignment, firing, or even the adjuster’s decision to go AWOL for one or more personal reasons. Of all of these, reassignment is probably the most likely reason for the failure to appear.

In catastrophe situations, adjusters can be -- and are -- reassigned from area to area a number of times, creating high stress levels, epic burnout rates, and serious turnover. You very likely won’t get any advance notice ahead of time about this reassignment. You are now at the mercy of the system. 

Warning Sign Number Five: After inspecting your property, the adjuster advises you that the estimate will take more than ten to fourteen days to complete. Big problems ahead. For a number of reasons, including but not limited to the inevitable failings of the human memory, estimates that are not completed within this time frame tend to feature significant mistakes. (Would you care to guess in whose favor those mistakes will probably lean?)

This kind of “open time frame” also suggests that the adjuster is taking on more and more inspections … rather than completing work on the claims that have already been seen. This kind of delay may improve the adjuster’s financial situation, thanks to the additional fees collected, but it probably won’t do much for your own bank balance. 

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Warning Sign Number Four: There are long time lapses between calls, inspections, and your receipt of the adjuster’s estimate. Not what you had in mind. This is still more evidence that the adjuster is overworked, disorganized, improperly trained, improperly compensated, or a combination of all of the above. Don’t try to fix these problems yourself; don’t try to bulldoze your way through them. You can’t.

Warning Sign Number Three: The adjuster tells you your file is being transferred to another adjuster or another unit. Somehow, this file transfer rarely seems to work out well for the policyholder. In most situations, you won’t like the new adjuster any more than you liked what was happening (or not happening) with the first adjuster. 

Warning Sign Number Two: You receive voluminous requests for information. Attempting to fulfill these voluminous requests will take you quite a long time. Some of the requested information will be impossible for you to supply. Some of it will be a little easier for you to track down. Some of the information you do pass along will not satisfy the Powers That Be. (You get the idea.) This kind of request is an indicator that someone in the bureaucracy “smells something fishy.” You may not know what that something is, and, as a result, you almost certainly won’t know whether you are hurting or helping your cause as you track down all of this data. 

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And the Number One warning sign that your insurer is about to make your life miserable …

You get letters with ominous language that you’ve never seen before, like “non-waiver” or “reservation of rights.” Most policyholders are confused and disoriented by this turn of events, and may even put off dealing with it because they don’t know what to do. This is what the insurer is hoping you will do. In fact, when this happens, you should be thinking “denial,” and you should be reaching out to a qualified public adjuster and preparing for battle.

If you’re like ninety-seven out of one hundred of the policyholders I run into, you’re simply not going to win this battle if you attempt to fight it on your own. 

If even one of these things happens … contact someone immediately. Of course, you should also contact someone in the case of later “warning signs” that suggest a major collapse of the process, like the insurer denying all or part of your claim, the insurer suggesting fraud on your part, or the insurer demanding that you (or someone else) be examined under oath.

Again: You wouldn’t try to handle an important IRS, medical, or other significant issue without a professional, so you shouldn't try to handle a major insurance issue without a professional on your side!

Mark Goldwich is president of Gold Star Adjusters, a group of public insurance adjusters dedicated to helping citizens get the maximum settlement for any insurance claim.

Don't Let the Grinch Spoil Your Christmas!

by Mark Goldwich

People know this time of year for buying gifts, gifts, and more gifts. No matter the economy, or the weather, or the state of the Nation, gifts are purchased this time of year by the hundreds of millions. That’s a lot of gifts. And a lot of money. And a lot of LOOT!

Courtesy of fanpop.com

Yes, sorry to burst your gifts-galore daydream, but many a gift will be stolen again this year, some

right out from under the Christmas tree, just like in our favorite Dr. Seuss show. And more will be stolen from trunks, and backseats, from vans and from planes, from stores and from…well, you get the idea. This time of year is not only prime-time for retailers, it is prime-time for thieves as well.

Think about it. Brand new items, still in boxes. No wear, no tear, no scratches or scuffs, no personalization of any kind. Ready to sell, or pawn, or re-gift to a friend. It’s not difficult to see the allure of stealing Christmas presents – if you’re in the stealing state of mind.

Now that we have painted a rather nasty picture, let’s put an insurance claim bow on it, and see what we can DO about it. The way I see it, we have two main choices. We can try to avoid the theft, or we can transfer the risk (or the cost) of the theft, should it occur despite our best efforts to avoid it.

To avoid being a victim of holiday theft, there are countless websites that will give you endless tips, from email and credit card security, ATM safety, keeping gifts hidden, staying with your gifts, using alarms, carrying concealed weapons, etc.

Simply Google “Holiday Crime Prevention Tips” and you will quickly find a wealth of information that will greatly reduce your chances of falling victim to modern day Grinches.

But, should a holiday mishap happen to happen despite all your best laid plans to avoid it, there is always the transfer concept noted earlier. And by transfer, of course, I mean insurance. After all, that is what insurance is – transferring the risk of something bad (and expensive) happening, from someone (part of a large group of people) who can’t afford to have that something happen, to a group or company that can afford to pay for the loss, thanks to all the people in the group that did not have anything happen, but paid a premium just in case. Insurance companies call it “peace of mind”. Then, at the end of the year, they call it “profit” – with compounding interest.

From life965.fm

So, whether you use credit card insurance, or some type of property insurance, make sure you understand how your purchases will be covered until you give them, and how your gifts will be covered once you get them. Talk to your insurance agent, or review your homeowners or renters insurance policy. Typically, gifts you buy are covered under your policy until you give them to someone else, while they are “anywhere in the world” (even on Santa’s sleigh), but always subject to the “limitations and exclusions” of your particular policy.

Some policies say if you have an alarm, but don’t turn it on, and your property is stolen, you are not covered. And many policies place a maximum limit on certain types of property that is stolen, like money, jewelry, furs, business property, photography equipment, artwork, and other more “unique” items. Know your policy, and consider purchasing extra insurance for such property, typically called an “inland marine” or “floater” or “personal articles” policy, and which is often relatively inexpensive.

With over 27 years of experience as an insurance adjuster, I understand a simple truth: “People know enough to carry insurance, but don't know enough about the insurance they carry.” That’s why I always recommend people get to know their agents, or get reacquainted. They can be a great help in understanding the insurance you have, or getting a different policy that suits you better. If you don’t have an agent, then it is your responsibility to understand your insurance policy thoroughly – not an easy task.

Whether or not they have an agent, people all too often leave the claim handling to the insurance company, in hopes they will be treated fairly and be paid what they are entitled to under the policy. Many times, though, policyholders are paid only a fraction of what they are owed.
As I remind people over and over, the insurance company adjuster (or the independent adjuster they hire) represents the insurance company. They do not represent you. Only a public adjuster works exclusively for you, the policyholder, to ensure your best interests are served. If you are leaving the insurance claim handling up to the insurance company, you are basically allowing them to decide their own profits. This is rarely a good idea.        

What most people don’t know is that insurance is not an exact science and settlements are subject to interpretation and negotiation. How your claim is interpreted and negotiated can greatly affect the amount of money you receive, or how your property will be restored or replaced. Another little-known fact is that insurance claims can be submitted, or reopened, years after the event, or even after the claim was closed or denied.

To prevent delays, denials and deflections by insurance companies in handling your claim, my first and best advice is simple: consult a professional. But, if you decide to handle a claim yourself or reopen one you think deserves a second look, please consider the following ten “commandments”:

1)            Don’t try to pull one over on your insurance company – be thorough, but honest.

2)            Take note of everything that’s stolen or damaged, and keep a detailed log of all conversations with your insurance company.

3)            Take pictures – photograph and/or video it all, and be sure to keep copies separate from the item itself (credit card statements or cancelled checks can help).

4)            Show the adjuster all the receipts and damage, and be as thorough as possible.

5)            If your home was damaged in the process, remind the adjuster that not all homes are built with the same materials.

6)            Review the adjuster’s estimate in detail, until you understand it completely.

7)            Request a licensed contractor review the insurance company estimate and provide an independent quote.

8)            If the insurance company refuses to pay for anything, demand they explain why – in writing.

9)            Be persistent and don’t give up. Appeal up the chain of command.

10)        Seek professional assistance when needed.                        

When thinking about holiday Grinches, and how you can protect yourself, don’t restrict your material concerns. Be sure you are also mentally prepared. As I always say, the best time to prepare is…now! For everyone at Gold Star Adjusters, Happy Holidays!

Mark Goldwich is president of Gold Star Adjusters, a group of public insurance adjusters dedicated to helping citizens get the maximum settlement for any insurance claim.

Drowning in denial

By Mark Goldwich

Swim in denial long enough and you will soon feel like you are drowning!

Just like on TV cop shows, when it comes to an insurance claim, what you say can and will be used against you. Very often, in a hurricane, a home suffers significant wind damage, but the evidence of that damage is masked or obstructed by a later flood.

This leads to a very dangerous situation. I am not talking about the physical dangers now present within the property itself. I am talking, instead, about danger that’s built into the system, financial danger for policyholders who are unfamiliar with the way the claims systems operate. I am talking about the dangers that confront those who are unwise enough to describe damage to an adjuster.

Image courtesy of http://ed.ted.com/

I can’t count the number of times that insurance consumers made their position worse by describing to an adjuster, over the phone, the damage that was most vivid in their own minds. “The place is completely flooded!” “We’re up to our ankles in water!” “There’s extensive water damage!” It all seems relevant. It all seems accurate. It all seems important. The damage from water is what has taken over the policyholder’s world. All too often, though, talking about it means you lose!

Think about this hypothetical situation for a moment: A hurricane has ripped the roof off your house. You’re covered for that. You’re now talking to an adjuster on your cell phone. Your home’s primary coverage is for wind damage. But what have you just told the adjuster? That you’ve got flood damage! Game over!

• Yeah, but that’s a stressful situation. How can you expect policyholders to remember how important it is to watch what they say to an adjuster?

Let me answer that question by posing another: If you’re in a perilous legal situation, which is equally stressful, would you talk to the prosecuting attorney on your own, or would you demand that your attorney be present? Step one, which should be obvious to you by now, is simply not to talk to the adjuster, but to delegate the job of talking to the adjuster to someone like me. Remember, the adjuster works for the insurance company. It’s obviously easier for an adjuster to deny a claim than to do the work necessary to actually estimate one.

If you say the words, “We’re up to our ankles in water!” all the adjuster has to do is jot down the words “flood damage,” and – if you’re not covered for flood damage – voila! There’s one less item on the to-do list!

Here’s another example. Let’s say that, five years ago, when you bought your home, you were advised by someone you trusted that you “didn’t need” flood  insurance. And

let’s say that, last week, your plumbing was damaged during a natural disaster of some kind: the pipes burst, and water leaked into your basement. When you finally get the adjuster on the phone, it would be quite natural for you to describe your home as “flooded.” After all, there’s standing water in the basement. But when that overworked adjuster hears that “F” word, his ears perk up, and two words start running through his mind, over and over and over again: “Not covered … not covered … not covered …” No matter what else you think is happening in the conversation, that’s all the adjuster is going to be thinking: “Not covered.” And you know what else? Those two ominous words are likely be followed by two more silent words you wouldn’t like if you heard them: “Easy close … easy close … easy close …” That means the adjuster is going to get credit, and quite possibly payment, for “closing” a file – yours – without having to do any real work. This is just one example of dozens I could give you that would show how a single thoughtless word – like “flooded” – can make your life absolutely miserable when you say it out loud to an adjuster.

• What’s the bottom line here?

If you get nothing else from this book, get this: Just as you wouldn’t be well advised to talk directly to the IRS if you were being audited, and just as you wouldn’t be well advised to talk directly to the D.A. if you were falsely charged with a crime, you wouldn’t be well advised to talk directly to the adjuster or the insurance company when a disaster damages or destroys your home. Don’t risk it. Get help!

In the first case, I would suggest retaining a CPA or other qualified tax professional. In the second, I would suggest retaining a lawyer. In the third, I would suggest retaining a

public adjuster, and letting me, or someone like me, talk to the insurance company and their adjuster on your behalf.

Or think of it this way: Let’s say you know very little about cars, and let’s say that, after a routine tune-up, the mechanic down the street informs you that your auto “needs a lot of work.” Which of the following options would you rather choose?

Courtesy of http://www.norcalminis.com/

A) Tell the mechanic to go ahead and get started, do whatever is necessary, and mail you the bill, whatever it turns out to be?

Or B), arrange for a car expert to meet with the mechanic, evaluate the situation on your behalf, and make absolutely sure you don’t pay any more than you really need to?

Of course, you’d choose option B. We all would. It’s the same with insurance claims, especially those related to wind and water. You want an expert on your side.

• Where can I find out more about flood insurance?

Visit this web site right now: www.floodsmart.gov

• What else should I know about this?

Let me share one more true story with you before we move on. A woman I’ll call Mary had a condominium that was destroyed in a hurricane. Luckily for her -- she thought -- she had both flood insurance (via Company X, but ultimately from the federal government) and wind insurance (via Company Y). I know what you’re thinking, “With both policies in place, she must certainly have gotten paid something– at least by one of the carriers.”

Wrong! By “co-adjusting” the two separate losses, the adjusters (and their respective insurance companies) determined that her situation just happened to fall into the tiniest of cracks between the two policies.

By yet another remarkable coincidence (are you keeping track of all these coincidences?) that crevice where her unique situation landed prevented both carriers from making payment on either claim!

Again: Don’t risk it. Get the help you need to deal with complex insurance challenges!

Keep reading!

Next time we’ll learn about the dynamics of denial itself … and how the insurance industry has turned it into a force to be reckoned with, a force that no individual policyholder without significant training can realistically expect to overcome.

Mark Goldwich is president of Gold Star Adjusters, a group of public insurance adjusters dedicated to helping citizens get the maximum settlement for any insurance claim.

Swimming in Denial

By Mark Goldwich

Nile Crocodile courtesy of  simpsonstreetfreepress.org

There’s an old joke: “Denial is more than just the name of a river in Egypt.” For consumers of property insurance the joke has a cruel, updated variation: Denial is the name of a strategy insurance companies seem to use to avoid paying for the damage caused by rivers (among many other things).

In this blog, we’ll see how surprisingly indifferent the insurance industry is to a big problem – namely, that so many consumers believe, wrongly, either a) that their policies protect them against damage from floods, or b) that their property is not at a significant risk for flood damage. Before we go any further, please understand one very important  thing: Insurance companies don’t pay flood claims..

In case you just fell down from shock, and are now returning to consciousness with limited capacity, let me say it once again. Insurance companies do not pay for flood claims. Flood claims are ultimately paid by the Federal Government.

If you have flood insurance, that’s who you really bought it from: the government. The insurance companies simply adjust the losses. The handling standards are strict, and if the insurance companies mess up (i.e., overpay), they have to pay the money they overpaid policyholders back to Uncle Sam. (This leads us to an interesting side question: If the insurance company is going to err on a flood claim, can you guess which way they are going to lean?)

This situation is something that should concern you, since the reality of damage from flooding is looking like something more of us are going to have to prepare for in the coming

years. According to the web site World View of Global Warming, “Meteorologists already see an increase in severity of storms, rainfall, and floods …” They go on to observe that “These anomalies from what we think is ‘normal’ are expected to continue around the world.”

Regardless of your stance on global warming (and its potential causes), regardless of what you believe, or don’t believe, about natural weather cycles, the moral of the story is the same: Think. If you think you’re not likely to be affected by a flood … think again. If you think your homeowner’s policy covers you against flood damage … think again. I

have personally witnessed the tragedy of property owners being without flood insurance. You don’t want any part of it.

Q&A:

If I was told by someone I trust that I didn’t need flood insurance, doesn’t that pretty much end the discussion?

No. People are told all the time -- by insurance companies, attorneys, or occasionally by representatives of mortgage companies or other “experts” -- that they have no need for flood insurance. All too often, this advice is simply incorrect. Sometimes what they say (or mean to say) is, “You are not required to carry flood insurance.” That is not the same as you not needing it.

• How would that bad advice affect me?

Let’s say that your home is covered for wind damage, but not covered sufficiently for flood damage – because some “expert” told you that it wasn’t ‘required’, because you didn’t buy the right level of coverage, or because you thought, incorrectly, that flood damage was included in your homeowners’ policy.  And let’s say a hurricane tears through your neighborhood. Let’s say that the wind from the hurricane rips the roof off your house – followed, of course, by torrential rain, and then by a flood. (That’s the sequence of events we all remember from Hurricane Katrina in 2005.)

When your insurance company reviews the claim, it’s quite possible that it could deny all payment, on the argument that the damage to your house was caused, not by wind, but by flood.

• What if I’ve got an eyewitness who will swear that he saw the wind rip the roof off my house. Is it still possible that the insurance company could deny my claim

for wind damage?

Yes.

• Is that a hypothetical example, or is this something you actually know for sure that someone has experienced?

It’s not hypothetical. It actually happened to a neighbor of one of my clients. The existence of the eyewitness made no difference whatsoever to the insurance company’s decision. Again the best policy is to consider the insurance company your adversary.

Ponder that example for a minute. What are the odds against someone actually seeing your roof get torn off, before the floods come? Yet for some companies, that’s still not enough!

• What exactly do insurance companies expect to get as proof of wind damage? Well, my personal view is that they don’t really want to see evidence in this situation. It’s not like they launch a huge investigation to find out exactly what took place in your neighborhood: “Hmm … you appear to have a point here, Mr. Policyholder. Let’s get to the bottom of this. Was it wind, or was it water? XYZ Insurance has an obligation to set the record straight once and for all!” That’s not the kind of discussion you’re going to hear.

For the purposes of establishing their own responsibility (or lack of responsibility) for wind

 damages, the insurance companies appear to expect homeowners to have video cameras trained on their homes twenty-four hours a day, seven days a week, so as to record actual damage from windstorms as that damage occurs. As a practical matter, that’s about what you would have to be prepared to provide them. If you don’t have tangible proof of this kind – proof demonstrating beyond a shadow of a doubt the precise nature of the damage your property sustained – then it’s entirely possible that the insurance company could choose to deny your claim. In the aftermath of a hurricane, they’re likely to insist that water caused the damage in question, not wind … when they’re talking to people who don’t have flood insurance.

• Is that kind of nitpicking out of line?

The attorney general of the state of Mississippi seemed to think so. In the afterma

th of Hurricane Katrina, he took insurance companies to court. In Mississippi (and indeed in many other corners of our nation), it seems that a huge number of homeowners don’t have, or can’t get, adequate flood insurance on their homes, and are thus ill-equipped to respond to the denial games that insurance companies play after major natural disasters.

More denial next time…

Mark Goldwich is president of Gold Star Adjusters, a group of public insurance adjusters dedicated to helping citizens get the maximum settlement for any insurance claim.

The Malaise of Mid-Phase Delays - Part 2

By Mark Goldwich

Last time we started talking about mid-phase delays – let’s pick up the conversation from where the adjuster is finally assigned and is ready to see you…

English: (Photo credit: Wikipedia)

• Once the adjuster actually arrives in a given area, things do start to move forward briskly in that geographical area, don’t they?

Sometimes. Other times, things go mysteriously wrong in ways that cause substantial delays. The insurance companies – buffered as they are by the companies they are outsourcing an ever-increasing amount of their work to – benefit financially from delays that they (technically) have nothing to do with. Call it another in a long list of extraordinary coincidences that benefit their bottom line.

• It all sounds very fishy – but are there events that can “legitimately” delay an adjuster?

Sure. As we’ve seen, a claim can be reassigned. It’s also quite possible that the adjuster will have to deal with an honest-to-goodness family emergency; we all have those from time to time. Very often, this emergency is disaster-related; some of these people are picked because they’re local, and local people have local ties of their own to think of after a hurricane, tornado, earthquake, fire, or flood. 

Other adjusters come from out of state, which means that they may need to go home when things go wrong there. And, as we’ve already noted, the adjuster could get into an accident, get sick, get reassigned to another region, or “burn out” and quit the profession – not an uncommon outcome.

• When an adjuster is reassigned, what happens to all the claims that adjuster was responsible for, but now leaves behind?

All the files have to go to someone entirely new, and…The whole process starts again.

Damage in Pensacola after the 1906 hurricane. Retrieved from the Monthly Weather Review for September 1906. (Photo credit: Wikipedia)

• Is that a big deal?

Absolutely. Let’s say you’ve been called by Adjuster A, and Adjuster A has set up an inspection time for two weeks from today. The appointment comes and goes. No one shows up. You call the insurance company, get transferred to the call center, spend a whole lot of time on hold, and then, if you’re lucky, get the news that that adjuster is no longer handling that file. At that point, you may be given the name and phone number of Adjuster B … or you may simply be told that you will need to wait for the new adjuster to contact you.

• Okay, but that’s only likely to happen to me once, right?

In my experience, it’s not unheard-of for a claim to be reassigned in this way two, three, or more times in succession. Some people end up with a dozen or more adjusters by the time the claim is paid.

• Once the adjuster actually inspects my property, what happens then?

After the adjuster inspects the claim, he or she must write up an estimate, a process that sometimes takes quite a while to complete.

• Why?

First, understand that you are likely to be dealing with an (outsourced) independent adjuster. The independent adjusters are typically hoping to physically inspect a whole bunch of claims first … and then, having done that inspection write up all the estimates later. Why? Because they are afraid that if they don’t get out and at least inspect the claims, the claims will be taken away from them and given to somebody else, which means they will lose out on billing for that claim. The independent adjusting industry can be a bit cutthroat. After all, qualifications are minimal, prior experience is not required, and the financial potential is tremendous.

Some are paid $1,000 per day just to make themselves “available” (i.e., sit and wait) from the time the storm strikes to the day they begin working on the storm claims. Some independents can make over $200,000 per year. Just about everybody would like to be at that level. Out of fear of losing money and access to future claims, they want to keep as many claims as possible. So they may put off writing up your estimate so they can go out and inspect more claims.

Westend11NovUpyachtsK (Photo credit: Wikipedia)

This is unfortunate for two reasons: first, it delays your payment (there’s a surprise), and second, the quality of the estimate drops with the passage of time, because the estimator’s memory of your property fades. Even with inspection notes and photos, the passage of time means that there is a greater likelihood of ambiguity, error, and a resulting challenge from the insurance company.

• Who is ultimately accountable for customer complaints during this process?

Excellent question. If such a person exists, you have my heartiest wishes in locating him or her. As a practical matter, all you can do is call the message center. When you do, the person who answers the phone will tell you repeatedly that he or she can do nothing more than take a message for you. As I pointed out earlier: There are really two disasters to deal with: one that everybody knows about because they see it on the news, and one that you only know about if you yourself actually experience it. That second disaster has to do with actually getting money from your insurance policy.

• Do policyholders ever go crazy as a result of dealing with this stuff?

Not being a qualified mental health professional, I am in no position to say. But the question has certainly crossed my mind. Imagine the level of frustration that somebody will feel after having suffered damage from a hurricane, fire, flood or other calamity – then waiting for weeks to hear from an adjuster -- and then having new adjuster after new adjuster delay, then leave a message, and another, then set up a time to meet, and fail to materialize. I wouldn’t be surprised to learn that some people do in fact need counseling, therapy, and/or medication as a result of dealing with the claims process. I do know that, as a public adjuster, I deal with these kinds of problems constantly, and they are extremely frustrating -- even for me. And I’m already familiar with this process of ongoing, systemic delay. Dealing with it is what I choose to do for a living!

• Is that all I have to worry about when it comes to delays?

I wish it were. Stay tuned for next week’s blog where I’ll tell you all about late-phase delays.

Mark Goldwich is president of Gold Star Adjusters, a group of public insurance adjusters dedicated to helping citizens get the maximum settlement for any insurance claim.

Deflectors to Maximum

By Mark Goldwich

Rules of Engagement (Star Trek novel) (Photo credit: Wikipedia)

If you are a Star Trek fan then you will remember that any time the Starship Enterprise was being menaced by hostile aliens Captain Kirk would always tell Scotty to set “Deflectors to maximum.”  The ship’s deflectors would then be activated in order to give the Enterprise a way to defend itself against attack.  While both the ship and crew portrayed in the sci-fi series are works of fiction, believe it or not, there is at least one industry that has learned to use deflection as a means of avoiding payment to its customers.

In my book, UNCOVERED, I list three strategies that insurance companies routinely use to reduce or avoid claim payments. The three “Ds” as I call them are Delay, Deny, and Deflect. Deflection is what happens when the insurance company finds reasons to avoid paying money that you actually have coming to you on your claim. Although deflection is listed last on my list of three “Ds”, it can be encountered at any time during the claim.

What, exactly, does the “deflection game” involve? It involves the insurance company finding ways to avoid giving a direct, truthful answer to what would seem to be a fairly basic question: “Who has the moral and legal responsibility to make sure that my legitimate claim is paid in full, promptly and to my complete satisfaction?”

Isn’t that obvious? Doesn’t the insurance company itself have the obligation to pay the claim? The answer that seems obvious to the policyholder, sometimes becomes not all that obvious to an insurance company.  Especially once they involve a multitude of adjusters, engineers, restoration companies, attorneys, insurers, re-insurers, and third-party administrators that are all paid to do their bidding. There are so many cases of insurance companies dodging this issue that I can’t really do justice to the topic in a blog of this size. I can say, though, that it seems the legal system has finally begun to catch up with a few of the worst offenders.

Case in point: In Ohio, a jury held that a life insurance and disability management services company was guilty of breach of insurance contract; the jury awarded the plaintiffs $429,400 in compensatory damages for nonpayment of claims. But that wasn’t all. The jury also found the insurance company guilty of bad faith insurance practices, and mandated an award of $1,130,000 to the plaintiffs. They coupled this with a whopping punitive damages award of $3 million.

Documents from the case give some sense of the elaborate lengths to which some companies will go to avoid paying people the money they are owed. This particular insurance company used a third party administrator, and an affiliate re-insurer (which was also a 40% owner of the third party administrator) to combine their efforts in an illegal scheme to avoid paying completely legitimate claims.

The scheme involved a whole host of complex accounting maneuvers, as well as false information that was submitted to an insurance commission. Now, I realize that, at this point, you may be having some difficulty getting your head around all this. That’s because a) such cases are pretty complicated and b) you’re probably still thinking of insurance companies as responsible businesses with an obligation to take care of their customers. All too often, it seems they’re simply not very responsible and are not thinking about the interests of their customers. 

What in the World?

There are other cases like the Ohio case.  Many have a disturbing, and all-too-common, theme – the insurance company says that paying is actually someone else’s responsibility. But the “someone else” either never follows through or only partially follows through on its obligation to pay. Or they say that the other party’s report or advice “prevents” them from paying you (as if they can’t override the opinion of an outside party). I’ve personally seen this happen many, many times. 

In general, the usual deflection is as follows. After a supposedly licensed and professional insurance company adjuster inspects the property, he or she just can’t seem to figure out whether or not to pay the claim. So, they hire an engineer to help determine what the “cause of loss” was, in order to determine whether or not it is covered. Sounds reasonable, right? Keep in mind, we have done hundreds of these where the cause of loss was as simple as “wind” or “hail”. And the real kicker is, the engineer always tends to be the same one the insurance company uses over and over and over again.  Surprised?  Well you shouldn’t be, since this individual’s very livelihood may depend on maintaining a good relationship with the insurance company. You can probably see why we are not surprised when again and again, the engineer’s report suggests that it was not really wind that caused the shingles to fly off the roof or get beat up during a storm, but that it was just an “old roof” that was “improperly installed”, and had “manufacturing defects”. The adjuster might then say something like, “I’m sorry, but the engineer says it’s not covered, so there’s nothing I can do about it.” THAT’S deflection, and fortunately for our clients, there IS something that can be done about it!

Do all of these cases wind up in court? No. In my opinion, very few of the cases that could go to court ever get there and most policyholders in these situations do not get the impartial hearing they deserve.

Why not? Because many policyholders simply don’t have the time or perseverance to wander through a bureaucratic maze that has no clear resolution. (As we all know, going to court can be a long, expensive process.) After all the delays and denials, many people are simply sick of the process of trying to get the insurance company to pay up. They either take whatever crumbs they’ve already been tossed, settle prior to trial, or give up altogether.

It’s not really that surprising that most of these situations don’t land in a courtroom. By the time most people start thinking about lawsuits, they’ve already been battling the insurance company for a year or more. Then they are told the lawsuit will probably take another two to three years! Be honest. What would you do? Sometimes, when people find themselves caught in the “deflection game,” they’ll give just about anything to be done with the process.

Isn’t the legal system supposed to correct problems like this? In theory, yes. And there are some encouraging signs. A 2007 DecisionQuest poll of practicing attorneys found 75% of respondents would now expect jurors to agree with the sentiment that insurance companies “would do anything to avoid paying even legitimate claims.” That’s refreshing evidence of reality-based thinking within the halls of justice. But most of these cases, as we have seen, never reach a jury. For your own protection and economic well-being, it may be wisest to stop thinking of insurance companies in terms of your friendly neighborhood insurance agent, and start thinking of insurance companies as resembling the people who ran their firms into the ground by setting up a nearly-incomprehensible maze of wholly-owned, partially-owned, and “affiliated” companies … companies whose relationship with one another seems to require an advanced degree.

I realize that sounds like a harsh assessment. But the irresponsible use of deflection warrants it, in my view. Let me give you a brief example that may help you understand why I feel as I do about this.

Think of a big insurance company. Let’s call it Baseball, Mom, and Apple Pie Insurance – BMAPI for short. BMAPI’s motto is, “Faithful and friendly, during good times and bad.” It has an expensive ad campaign that features gorgeous sunsets, adorable puppy dogs, and happy policyholders who dearly love and respect their local BMAPI agent.

Now, if BMAPI handles, say, 1.5 million claims in a year, and then deflects an average of just $300 on each claim, that adds up to nearly five hundred million dollars more for BMAPI to keep for itself and invest as it sees fit.

Yes. Nearly half a billion dollars.

Follow me on this next part, because it’s extremely important.

The number I just used to get to roughly half a billion dollars of extra income for BMAPI was, you will recall, three hundred dollars of, shall we say, “savings.” Now, you might well ask: How realistic is that figure I just used? Is three hundred dollars a valid number - or a dubious number? Hear me, please, when I tell you that my typical additional recoveries – that is, the money I get the insurance company to agree to pay in valid claims over and above what it had already agreed to pay out – is NOT in the hundreds of dollars.

It’s in the THOUSANDS of dollars. That’s an average case.

star trek phaser model (Photo credit: Wikipedia)

Realizing that hundreds if not thousands of dollars are being withheld by the routine use of insurance company deflectors are not science fiction.  They are all too real.  Now if I could only find my phaser.

For more information on bad faith insurance issues, visit: www.badfaithinsurance.org.

Mark Goldwich is president of Gold Star Adjusters, a group of public insurance adjusters dedicated to helping citizens get the maximum settlement for any insurance claim.