Record Losses For All

by Mark Goldwich

Image by commons.wikimedia.org

The Weather Channel’s website, weather.com, recently published an article, “Eight Billion-Dollar Weather Disasters Have Hit the U.S. So Far in 2016”. The article noted this was only for the first 6 months of 2016, and that just one of the storms alone accounted for over 3.5 billion dollars of that damage. Also of note were the facts that 5 of the 8 weather disasters occurred in Texas, including 2 flooding events, and the damage totals did not even include late June flooding events in West Virginia. All told, at over 12 billion dollars, this could end up being the costliest January to June weather disaster period in recent history (it is already ranked #2, behind 2011’s tornado superoutbreak in April).

Now let’s try to break down who has to pay for all these damaging weather events, and how this could translate into insurance terms. First, remember that not all such losses are covered by insurance. Some properties are uninsurable, some properties are insurable but the owner chooses not to insure, can’t afford to insure, or decides to self-insure, and still others are insured, but not all the damages are covered by insurance. For example, if a 50-foot tall, 100 year old oak tree comes down in a storm, and does not land on covered property, there is no coverage for cutting up the tree and hauling it off of the property – and the bill for that could be thousands of dollars. Now, consider how many trees come down in all of these storms without landing on anything. As another example, flood insurance only covers certain types of buildings, and only up to certain limits (it is not like other types of property insurance where you purchase the amount of insurance you need).

So, out of the 12 billion dollars in damages, let’s say only 7 billion dollars are covered by insurance – that is still a great deal of money. Fortunately, the insurance companies have that money sitting in reserves, collecting more interest than you or I can get. And, let’s not forget that just because the damages are covered by insurance, and the policies are in place, and the premiums are paid, that doesn’t mean the insurance companies are going to willfully pay that money to their insureds, who have now crossed the line from (pre-loss) “customers”, to (post-loss) “legal and financial adversaries”.

Small change image courtesy of flickr.com

Care to guess how much I would predict insurance companies would offer premium paying customers with covered losses, if the covered damages were actually 7 billion dollars? Don’t read ahead. Just think about it for a minute before scrolling down. Don’t peek! If they owe 7 billion, how much would they pay without question? Should be 7 billion, right? OK, maybe they try to hold back a little – after all, some people probably try to inflate their claims, and mistakes happen, but they would probably pay at least 5 billion, don’t you think?

Well, I don’t. My experience tells me they would try to pay a mere 1.75 billion dollars of the 7 billion dollars owed. Good thing we’re a litigious society, with tons of lawyers at our disposal, and we won’t let anyone take advantage of us like that, huh? Don’t count on it. Accounting for the small percentage of policyholders that would fight their claims – either on their own, or with the help of a professional public adjuster or attorney – I would doubt the figure would rise above 2 billion dollars. That makes for a nice additional profit of about 5 billion dollars on covered losses owed, but not paid.

Why do I think the insurance companies would offer so little? That would be based on my own experience, supported by a governmental agency, the Florida Office of Program Policy Analysis and Government Accountability that published a report in January 2010, which showed insurance payments were up to 747% higher when policyholders were represented by public adjusters for claims related to hurricanes (catastrophes). This report supports my own experience when dealing with insurance claims, and especially when dealing with catastrophe claims.

Exhibit 6

Public Adjuster Representation Typically Resulted in Larger Payments to Policyholders

Source: OPPAGA analysis. Data refers to the median (50th percentile or typical) payment.

Consider these two examples of actual claims I handled recently:

In one case, an insured was paid just over $2,600 for damage to his roof from a storm. The insurance company acknowledged that about 50% of the insured’s roof needed to be replaced due to a covered wind event, but decided not to pay to replace the entire roof as was required by building code (and the insured had the proper endorsement to address this). I thought it would be a simple matter of letting the insurance company know of their mistake. Instead of quickly paying the correct amount, an adjuster blustered about the amount I had estimated, misrepresenting a number of facts about the size of the roof and the cost of the repairs. It took a few months to get someone else involved that agreed the prior adjuster did not respond properly, and an additional $7,750 was paid, on top of the $2,600 initially paid.

In another case, a woman had a pipe leak inside a wall between her bathroom and laundry room, damaging some drywall, a vanity, floor tiles, and some of her daughter’s shoes. The insurance company adjuster was very difficult with her, suggesting the leak must have been occurring for an extended period of time, and questioning the insured about some items that were completely unrelated to the claim. She said she could tell there was going to be a problem within just a few minutes of him entering her home. Sure enough, she soon received a letter denying the claim altogether. She then hired me, and I recently met with another adjuster, who agreed to pay for the damages, totaling over $6,000.

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Keep in mind these are small losses, not resulting from major weather catastrophes, yet the amounts the insurance companies were attempting to avoid paying were relatively significant for such small claims. If you consider the hundreds of thousands of claims that would have been filed for the weather related catastrophes in the first 6 months of 2016, and have confidence as I do in the amounts that could be recovered with professional representation, you can begin to see why I believe the insurance companies could be avoiding as much as 5 billion dollars or more in covered claim payments.

Yes, the insurance industry might be making record payments on record numbers of weather disasters, but their insureds are also suffering record losses as well. The difference is, the insureds paid their full premiums with their hard-earned money, and don’t have the 5 billion dollars I believe is being shorted, and the insurance companies do have the money. The insureds who refuse to settle for less than everything they are owed are fully compensated – I hope that includes you.

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.

What Are They Up to Now?

by Mark Goldwich

With a title like, “What are they up to now?”, you might think I’m writing about my kids, the presidential candidates, politicians in general, or some other high-profile group. What I’m talking about in today's blog are Insurance Companies. You see, earlier this week I attended a two-day conference presented by the Florida Association of Public Insurance Adjusters. The conference is billed as an educational and networking event designed to improve our skill sets, become better at what we do, and network with other industry professionals.

Image courtesy of Pixabay.com

One of the main takeaways from the conference was learning about significant trends in insurance industry tactics and strategies. These strategies are usually marketed as “consumer protections”, which also just happen to help insurance companies stuff billions more into their collective coffers. A happy coincidence, I’m sure (that’s sarcasm, for those of you who are unfamiliar with my writing style). Those of us whose job it is to protect the insured from their own insurance companies, see these tactics and strategies for what they really are, profit boosters.

Rather than bore everyone with all of the topics discussed, I’m going to focus on one key strategy, “Repair Cost Control”, which I will separate into two popular methods, “Managed Repair” and “Our Option”.

The idea behind “Repair Cost Control” is fairly straightforward – if the insurance companies can exert greater control over the repair process, repair costs will decrease, and profits will increase. They will naturally argue that reduced costs and increased profits translate into lower premiums, but just ask yourself when was the last time your insurance premiums were significantly reduced, despite the fact that your coverages were significantly reduced? Answer: You’re kidding me, right?

To gain even greater control over repair costs, as if having professional adjusters, estimating programs created with insurance industry input, and a host of repair professionals and attorneys at their disposal was not enough, the insurance companies have come up with “Managed Repair” (sometimes referred to as “Managed Care” to make it sound more benevolent), and “Our Option” (which could more accurately be renamed as, “Butt out, this claim is none of your business!”).

Under the “Managed Repair” process, the insurance company “guides” insurance victims to hire contractors who are “preferred vendors” that have special relationships with the insurance company,

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rather than contractors of the property owner’s choosing. You can imagine how lucrative it could be for a contractor to enjoy such favored status. A large insurance company could provide so much work that the contractor could all but eliminate their marketing budget, which previously could have been tens of thousands of dollars each and every month. Gone! That doesn’t sound so bad, especially for the contractor and the insurance company. But think about it – the contractor gets the claim job “gifted” to them from the insurance company, and gets direction from the insurance company's adjuster.  This includes coverages, limits, and exclusions, which are all outside the scope of the contractor’s job, both realistically and legally, and the contractor gets included on claim payments, rather than getting paid by the insured property owner. Is it any wonder these contractors tend to forget they are working for the property owner, and tend to feel they are really working for the insurance company?

And what happens when the work done by a “Managed Repair” contractor is good enough for the insurance company, but not satisfactory to the property owner? “No problem,” the insurance company says, “you signed a contract with the contractor, so it is your responsibility to deal with them.” Nice!

And what of this “Our Option” mentioned as an alternative to “Managed Repair”. In my opinion, it’s even worse. Most property insurance policies have an “Our Option” clause that basically says, “we may elect to repair or replace the damaged property with a contractor of our choice.” Most insurance companies interpret that to mean that they can buy contractors, or enter agreements with contractors, so that if the insurance company agrees a loss is covered, they pay the contractor directly for the repairs, and the insured has no voice in the repair of their own property (usually, their home).

Think about that. The insurance company can literally own the construction company, or employ the contractors, and if the insurance company agrees to pay the claim, they pay themselves, instead of paying you. Talk about keeping it in the family! If someone can explain how that is not a clear conflict of interest, well, you’d be the first person to explain that. But, so far as we can tell, no state agency has even thought to ask that question, let alone demand an answer to it.

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So, what’s a property owner to do in light of these trending strategies that remove you from the process while growing insurance company profits? First, you need to know that these strategies exist, and how they work. Done! Next, you need to decide whether you want to believe the insurance company is doing this in your best interests and go along with the plan, or if you want to maintain control over who repairs your property, how they repair it, and with what workers and materials. If the latter, you need to know your rights, and be willing to fight for your rights (otherwise, you will probably lose those rights).

I hope I was able to bring to light, in an easily understandable way, a couple strategies trending with insurance companies that we as insurance consumer advocates recognize are detrimental to property owners, and primarily serve to benefit insurance companies. Feel free to research the topics on your own, and learn how to protect yourself.

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.

When Things Go right

by Mark Goldwich

My blogs typically expose the tendency of insurance companies to either reduce claim payments, or avoid claim payments altogether. And today will be no different. But today I want to focus on what happens when claims are handled well by an insurance company. It does happen, even if far too seldom (in my opinion … based on decades of experience).

Image courtesy of commons.wikipedia.org

Recently, I was referred to an insured by a contractor who felt the insured’s roof was damaged by wind, and who also felt some of the screens on the pool enclosure were damaged as well. But before suggesting the insured submit a claim, the contractor recommended I take a look at the roof and screens, and confirm the contractor’s opinion.

I believe the first thing to go right for this insured was to have a contractor who was truly looking out for the insured’s best interest, rather than simply the contractor’s own best interest. The contractor knew if the insurance company did not agree to pay the claim, it would still count on the insured’s claim history, and could even result in the insured losing his insurance with this company, and he would be forced to find insurance elsewhere – and in Florida, that is not always easy.

Once I determined this particular claim should be valid, the insured signed an agreement with me to handle his claim, and the claim was submitted. We provided his insurance company with our contract, a letter of representation, and within just a few days we also submitted our estimate.

Less than a week later, we were meeting with a representative of the insurance company at the insured’s home. This was another thing that went right. Typically, we are lucky to hear from an insurance company within a week of submitting a claim, let alone meeting with them. Often, we don’t hear anything back from insurance companies, especially if the claim was previously submitted and closed with little or no payment prior to our involvement. And when we follow-up with the insurance companies, we often get the impression that if we never called them, they would never have called us, even though we send written correspondence requesting they contact us to schedule an inspection.

Image courtesy of commons.wikimedia.org

When we met with the adjuster, she noted that she was not told the insured was represented by a public adjuster, so she was not aware of my contract, letter of representation, or estimate. She then apologized for speaking to the insured prior to my arrival, explaining again that she was not aware of my involvement at the time. This was probably the only thing that did not go “right”, but for me, it was not a big deal. I can understand the insurance company did not get her the information quick enough, especially since it had only been a few days since submitting the claim. I showed her the original contract that I had in my file with me, allowed her to take a photo of it, and I gave her a copy of my estimate.

With that, we proceeded with the inspection. She quickly agreed the roof was sufficiently damaged to warrant a full replacement. Whether or not she would have made that same determination if I was not involved, we will never know for sure. But my experience tells me, probably not. When we discussed the screens, she stated that she did not agree with me on my scope of the extent of the damage to the screens, and she told me why. She also asked me to clarify my position, which I did.

She then did something few adjusters do on a regular basis in this area. She got in her car, and instead of leaving in a huff, she told me she would write her estimate on the spot, taking my estimate into consideration, and see if we could settle the claim right there and then. This is something I did hundreds of times as an adjuster for State Farm, but that was a long, long time ago, and except in storm situations (which this was not), we rarely see this happen today. In fact, most adjusters we meet are independent adjusters, who are third party administrators for the insurance companies (not employees), and they often tell us they are simply acting as the eyes and ears of a “claim examiner” or “claim processor” who will be settling the claim, and that they don’t have the authority to settle the claim or even say what they think is covered (even most of the employed staff adjusters we meet do not settle claims on the spot, and don’t always have the authority to detail what the carrier will and won’t pay for). So this was not only another something that went right, it was quite a refreshing change of pace.

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In the end, she prepared an estimate that while less than mine (they almost always are), the contractor agreed was quite adequate, so the insured accepted it, and we were all able to shake on the agreement. The check arrived about a week later - this was the final thing to go right! It’s great when things go right, but especially when it comes to insurance claims, you can’t expect things to go right, or hope things will go right, you have to intentionally plan for things to go right.

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.

Not Ready for Prime Time (viewer discretion advised)

by Marc Goldwich

I was reviewing the headlines this morning which were chock full of mayhem.  Everything from the aftermath of catastrophic flooding which resulted in numerous drowning deaths in the South Carolina, to more school shootings, along with a smattering of auto-related fatalities vied for my attention. This combined with Halloween being just around the corner was enough to cause my mind to entertain the dark side of life. So I began thinking about the job of cleaning up after a catastrophe.

Image from commons.wikimedia.org

In case you're not aware, there is an entire industry set up for handling these kinds of events. Typically called “Biohazard Clean-up” or “Crime Scene Clean-up”, these companies are e an offshoot of emergency restoration companies. Whether the hazard you need gone consists of  toxic waste, deadly mold, body fluids or most any other kind of nasty stuff that crop up after an emergency, there are trained professionals who are only too happy to roll up their sleeves and dive right in. 

The hit Discovery TV show “Dirty Jobs” is a favorite of mine, but I doubt you will ever see Mike Rowe tackling this type of job. While certainly “dirty” enough, my guess is it would simply be too disrespectful to find any humor in this line of work, and for his show, humor plays a major role.

There are other shows which depict and deal with death, usually CSI or homicide, but I have never seen one address the clean-up aspect that invariably needs to take place after the police finish their investigation. Since you can now watch shows on just about any occupation imaginable, I would not be surprised to find a show following biohazard clean-up teams around.

So what would that entail? First let’s think about the types of situations these companies and their crews might deal with. Things like:

-          Sewage backups

From commons.wikimedia.org

-          Crime scene residue

-          Suicide

-          Homicide cleanup

-          Blood cleanup

-          Accidental death cleanup

-          MRSA and H1N1 decontamination

-          Hoarding scenes

-          Animal waste/remains

-          Chemical spills

-          Tear gas cleanup

-          Meth lab cleanup

-       Radiological hazards

    

None of these events should be taken lightly, or undertaken by anyone except certified biohazard professionals. Not that most people would want to deal with any of these problems

.

These companies need to be well versed in applicable state and federal regulations, they need to be licensed and certified (where required), they need to use appropriate transportation and/or disposal protocols, and they may need to be registered with the states’ Department of Health. These companies can also expect to be regulated by governing and advisory bodies such as OSHA (Occupational Safety and Health Administration), NIOSH (National Institute for Occupational Safety and Health), DOT (Department of Transportation), and EPA (Environmental Protection Agency).

Image courtesy of townhall.com

The dirty work of these professionals usually begins when the coroner’s office, or other governmental entity officially releases the scene to the property owner or other responsible party. Depending on the type and severity of the “event”, the clean-up teams are required to wear protective clothing, may seal off rooms to prevent or minimize the spread of airborne or physical elements of the bio-hazard scene, and follow specified methods and practices to decontaminate such scenes.

The scenes must be meticulously cleaned of all harmful material, which typically includes the removal of any porous materials (whether personal belongings like clothing and sheets, or building materials such as carpeting, wood subfloor, or drywall) – which must all be properly disposed of, and then sanitized. You can only imagine the mess that will be left, even after the mess that was the biohazard is removed.

And many people are so distraught after dealing with such a loss, that they overlook the fact that insurance may cover the expense of the clean-up efforts. Just remember this rule of thumb, if property is damaged as a result, it is probably covered by insurance (either yours, or someone else’s).

ServPro.com provided the following bio-hazard and sewage emergency tips:

After any biohazard or sewage contamination in your home or business, your primary focus should be safety:

-          Is it safe to stay in the house?

-          Exposure to biological and chemical contaminants can pose serious health consequences.

-          Flood water can contain sewage, pesticides, and other contaminants.

-          Only do activities that are safe for you to perform.

Image courtesy of aftermath.com

What to Do After a Contamination

-          Stay out of affected areas.

-          Call emergency service personnel if the situation is life-threatening.

-          Treat all bodily fluids as if they are contaminated.

-          Turn off the HVAC system if there is sewage damage.

What Not to Do After a Contamination

-          Don’t leave wet fabrics in place. Hang furs and leather goods.

-          Don’t leave books, magazines, or other colored items on wet carpet or floors.

-          Don’t use your household vacuum to remove water.

-          Don’t use television or other household appliances.

-          Don’t turn on ceiling fixtures if ceiling is wet, and keep out of rooms where ceilings are sagging.

Let’s all hope we never need these tips, but as we can plainly see from watching the news, the fact is, biohazard clean-up is a grim reality for many families. As with anything else, the more you know in advance of an emergency, the better equipped you will be in handling that situation.

In this article I discussed the subject of biohazard clean-up, and the professionals that are trained to perform what just might be the dirtiest job of all. I mentioned some of the types of events this might involve, and included tips for dealing with such an event.

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.   

Who'll Stop the Rain?

by Mark Goldwich

Hurricane Joaquin image courtesy of Flickr.com

The latest news has the fairly sizable hurricane Joaquin threatening the East Coast of the United still recovering from 2012’s “Superstorm” Sandy. You may recall New Jersey experienced especially devastating flooding when Sandy drenched that region.

States, even though the most current predictions are it will never make U.S. landfall.  However, a storm as big as this doesn't have to hit to produce coastal flooding by the time Joaquin exits the area. In fact, the Carolinas are already experiencing flooding completely unrelated to this hurricane, so any additional rains as a result of Joaquin will make things dramatically worse. I also noted that emergency preparations are already underway in New Jersey, which is

I will first start with this – if you don’t already have flood insurance, you should seriously consider getting it as soon as possible. It may be too late for you to be covered in the event Hurricane Joaquin does strike, but there will always be another event that causes flooding, which very few of us are immune. I have been saying for years that “we are all in a flood zone, it just may not have happened yet.” Even if the place you live is not recognized as a flood zone by FEMA or a mortgage company that doesn't mean that flooding can't occur. If you are in a “low-risk” flood zone (as determined by FEMA), your mortgage company may not require you purchase flood insurance, yet your property may still be at risk. Countless people make that mistake each and every year, with dire financial consequences. And that may never change, at least not for everyone, but if you are reading this, I hope you will act now, and not become a statistic. Another of my flood-related sayings is, “if you place too much trust in FEMA flood maps today, you may be waiting in FEMA assistance lines tomorrow!”

Here are some interesting flood facts from www.FloodSmart.gov:

• In the past 5 years, all 50 states have experienced floods or flash floods.
• Homeowners' insurance does not cover flood damage.
• Just a few inches of water from a flood can cause tens of thousands of dollars in damage.
• A car can easily be carried away by just two feet of rushing water.
• New land development can increase flood risk, especially if the construction changes natural runoff paths.
• Federal disaster assistance is usually a loan that must be paid back with interest. For a $50,000 loan at 4% interest, your monthly payment would be around $240 a month ($2,880 a year) for 30 years. Compare that to a $100,000 flood insurance premium, which is about $400 a year ($33 a month).
• A Preferred Risk Policy provides both building and contents coverage for properties in moderate- to low-risk areas for one low-price.
• You are eligible to purchase flood insurance as long as your community participates in the National Flood Insurance Program. Check the Community Status Book to see if your community is already an NFIP partner.
• In most cases, it takes 30 days after purchase for a policy to take effect, so it's important to buy insurance before the storm approaches and the floodwaters start to rise.
• In a high-risk area, your home is more likely to be damaged by flood than by fire.
• Even though flood insurance isn't federally required, anyone can be financially vulnerable to floods. In fact, people outside of mapped high-risk flood areas file over 20-percent of all National Flood Insurance Program flood insurance claims and receive one-third of Federal Disaster Assistance for flooding.
• From 2005 to 2014, total flood insurance claims averaged more than $3.5 billion per year.
• Since 1978, The NFIP has paid nearly $50 billion for flood insurance claims and related costs.
• There are currently more than 5.3 million flood policies in force across more than 22,000 communities in the U.S.

Image courtesy of commons.wikimedia.org

These are sobering statistics, which should make all non-insured homeowners pause to consider. It would be great if more people did know more about how flood insurance works, and who it can protect. Too many individuals and families are impacted each year simply because they got bad information about flood insurance, didn’t understand the information they were given, or didn’t have the resources to obtain the correct information. My goal would be to reach at least one person, and make a difference.

Along these lines, there was another section at FloodSmart which detailed common misconceptions about flood insurance. It was there I learned that floods are the #1 natural disaster in the country, and that many people (wrongfully) believe they are somehow not eligible for flood insurance, either because of where they live, or their mortgage status. I can’t tell you how many people have told me after the fact that they didn’t think they needed flood insurance because “the mortgage company said it wasn’t necessary.” The mortgage company probably said it wasn’t “required”, or maybe that is what they meant to say, but either way, the message was lost in translation.

The fact is, according to NFIP (National Flood Insurance Program):

• You CAN get flood insurance nationwide.
• You CAN get flood insurance if you live in a floodplain or high-flood-risk area.
• You CAN get flood insurance if you live outside a floodplain, or a low-to-moderate flood-risk area, and at lower cost.
• You CAN get flood insurance if your property has been flooded before.
• You CAN get flood insurance from insurance agents in your area.
• You CAN buy flood insurance even if your mortgage broker doesn't require it.

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Were you already aware of all this? If so, wonderful – you are a flood maven! If not, it might be time to do a little more research. People with accurate information about flood risks and protection options can make better decisions and plan for disasters. Sometimes the key is knowing who to ask, or where to look before the storm clouds gather and you begin to wonder, "Who'll stop the rain?"

In this article I used current weather conditions to again remind people of the need to prepare for potential disasters like flooding, and the cost of failing to do so. I also provided information from a valuable resource on the subject of flooding, www.FloodSmart.gov, and presented statistics and misconceptions to help people gauge their own levels of understanding on this topic. I hope you scored well!

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.   

Unimaginative Denial, Creative Solution

by Mark Goldwich

This week I wanted to write about a claim my firm agreed to take on in the past few days. To me, this claim exemplifies why it is so important to have access to professional claim representation when it comes to property insurance claims, and why you can’t trust your insurance company to answer the question “is it covered?”

In this case, the homeowners live in a planned development, in what’s called a “zero-lot-line” home. This basically means that at least on one side of their property, the exterior wall of their home marks the boundary line of their property, so they have no yard at all on that side. The property is also unusual in that they have an atrium on one side of their home, with no roof above it. This atrium is literally a room inside their home’s footprint – it just has no roof covering it. Inside they have smooth pea-rock, and a few larger decorative rocks, statues and crystals, making it a tranquil space to relax.

What happens when it rains, you might ask. The floor of this atrium room (under the pea-rock) is poured concrete, and the concrete slopes towards the exterior wall of the home. Water then passes through a pair of “scupper” holes, about 4 inches squared (leading to a drain on the other side of the wall), and there is also a drain in the outside corner of the room that connects to an underground pipe leading to the side of the front driveway, where it is supposed to flow harmlessly into the street, towards a larger drain. It sounds like a mess, but for years, this system of holes and drains worked fine.

Image courtesy of wikimedia.org

You can almost guess what’s coming next, can’t you? We had some particularly heavy rains recently, and the drain system did not work fast enough. Rain water falling into the atrium could not escape faster than it was falling, and the atrium room soon filled with enough water that it entered the adjoining rooms of the home on all three sides. Water went everywhere.

The owners quickly called their insurance company, who told them to call a water extraction company and get the home dried out. Shortly after that, an “independent” adjuster working for a firm owned by the insurance company itself, came out to the property, spent 20 minutes taking a recorded “interview” of the homeowner, and another 10 minutes looking around and taking photos.

Now you may really be able to guess what happened next. The homeowner got a letter from the insurance company saying the loss was being denied. The letter noted that according to their “investigation” (if it can be called that), “the atrium was inundated with rising flood water, which entered your home causing water damage to your dwelling and personal property.” The letter kindly suggested they report the “Flood” claim directly to their flood insurance carrier. If they would have asked whether there was flood insurance (and they probably did), they would have known there was no flood policy in effect. They then included the section of the policy titled, “EXCLUSIONS” which says they don’t cover for “water damage, meaning: flood, surface water, waves,…” and also included exclusionary language which was actually removed from the policy by an endorsement the owners purchased (this would lead most people to believe certain events were not covered, when they actually are covered).  So the insurance company adjuster spent 30 minutes “investigating”, and just as quickly sent a letter denying the claim.

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On the other hand, I spent 2 hours at the property, in the home, the atrium, the neighbor’s property, in the front yard, the street in front of the home, and down the street looking at the drainage situation, and I determined this is not a “flood” loss, nor is it “surface water”. You see, real flooding occurs when rain accumulates as a result of “overflow of inland or tidal waters; unusual and rapid accumulation or runoff of surface waters from any source; or mudflow. I think we can safely eliminate mudflow and overflow of inland or tidal waters, which leaves us with the surface water exclusion attempt.

I would (and I will) argue that the water that fell in the atrium in this case is not surface water, it is simply rain water. Surface water is most simply defined as ”water on the surface of the ground”. For the purposes of insurance claims, courts have ruled differently, but generally define surface water as “water which is derived from falling rain, and is diffused over the surface of the ground, while it remains in such a diffused state, and which follows no defined course or channel, which does not gather into or form a natural body of water, and which is lost by evaporation, percolation, or natural drainage.” A bit more complex, but the way I see it, the rain never touched the “ground”, it was not allowed to “diffuse”, and it was forced to follow a course defined by the walls of the atrium.

Image courtesy of commons.wikipedia.org

If this occurred on the enclosed balcony of a 10^th floor condo (and I have handled similar claims in ^th floor condo balcony. The water from the neighbor’s yard did not enter this atrium. Instead, at some point, the water in the atrium simply could not escape to the neighbor’s yard fast enough. Also, the drains were so full of water they were not allowing water to escape fast enough either, and this policy contained an endorsement that could provide limited coverage for such a loss (but the insurance company never mentioned this).
the past), it would not be considered surface water by most adjusters (although I would not put it past a few to try). To me, there is not much difference between this situation and the 10

According to the insurance company, this loss was caused by flooding, or perhaps surface water, and is not covered. In my opinion, the loss was not caused by flooding or surface water, and should be fully covered (the damages could ultimately exceed $20,000). They spent 30 minutes “investigating” the claim, found what they say are 2 reasons why it should not be paid, and apparently could not find, or did not look for, any way to make a payment. On the other hand, I spent 2 hours on just my first inspection, and found their conclusions to be inaccurate and reached in haste. Time will tell, as they say, but I’m betting we’ll be successful in recovering an appropriate payment for our insureds.

In this article I used a real case to highlight the difference between an adjuster that simply goes through the motions of handling a claim with minimal effort or thought (and possibly with an objective of not finding coverage), versus an adjuster who aggressively seeks a way to find the maximum coverage, even when initial evidence suggests no coverage exists.

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.   

Everything's Debatable

by Mark Goldwich

With the first round of GOP Presidential debates behind us, and in the shadow of the Iran Nuclear

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“deal”, I thought this would be a good time to write about debating and negotiating, and how it relates to insurance.

For me, the word “debate” is just fancy-speak for “argument”. Debaters are people who purport to be knowledgeable on a subject that present opposing viewpoints. The main difference is debates are planned, moderated, and  usually conducted with rules or conditions. Arguments are not nearly as formal, and can break out pretty much anytime. Still, it comes down to two or more people with opposing positions, trying to state their case effectively, so as to sway the other side, or the audience.

Negotiations are not much different either. Two or more sides come together with the hopes of reaching an agreement, or common ground, to establish an outcome. In the process, the parties argue (or debate) their positions to reach an agreement satisfactory to them. Early in my adjusting career I was taught the definition of a negotiated agreement was one in which “all parties are satisfied, but none are happy”. In other words, everyone gives up more than they wanted to, but they get enough to make the agreement, or take the deal. I was also taught that there were proven techniques and strategies that could be employed when negotiating. Once of my first supervisors strongly recommended I buy a book called “You Can Negotiate Anything” by Herb Cohen. This was over 25 years ago, but I still remember it, and it gave me a foundation for thinking differently about negotiating. And it didn’t just apply to insurance, as the title implies. It applied to just about anything.

As we saw in the presidential debates, even parties on the same “side” can disagree substantially, and

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occasionally an “argument” breaks out. And as we saw following the Iran negotiations, there can be significant differences of opinion on whether or not one party gave too much, and got too little.

But back to insurance. With insurance, you can’t negotiate when you enter an agreement to pay an insurance company to insure your property (or your life or health, for that matter). And remember, insurance – while often described as a “product” – is actually a legally binding contractual relationship. But with one major difference than most other contracts you enter into. When you agree to contract for insurance, you have no say in the wording of the policy. It is a unilateral contract – the insurance company writes the policy/contract, and you either accept it or you don’t. For the most part, this is not a good thing, with one main exception. Typically, if there is a dispute regarding the language of the policy, courts will generally rule in favor of the party that did not have a say in writing the contract.

Now, while you might not have a say in how the policy contract is written, you do have a say in what you get paid should you have a claim (shhhh, don’t let the insurance company know – they are under the impression that they get to tell you what they are going to pay, and you just have to accept it). 

Why do they think this way? Because in nearly all cases, insureds accept whatever the insurance company offers them. After all, who usually knows more about insurance and estimating damages, the insurance company or the insured? Who sends out a professional, licensed insurance adjuster, well versed in what they will and will not pay for? Who follows this process up with a letter on official letterhead that includes language from the actual insurance policy? Who has consultants, engineers, and attorneys at the ready, and depending on the insurance industry for their very livelihood? And who handles tens of thousands of claims each and every year, the insurance company or the insured? Of course, the insurance company has a huge advantage throughout the process.

But that does not mean you can’t negotiate an insurance claim, or renegotiate a previous insurance

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claim, and get a better “deal”. In fact, that’s exactly what we do every day for people. Even people who are educated, or business savvy, or whatever, tend to do poorly when it comes to dealing with their insurance company. It is simply because they are not skilled in negotiating with insurance adjusters.

This may be confusing because on the one hand I said negotiating is simply arguing or debating your position to reach an agreement. But remember, to do this effectively, you have to be knowledgeable on the subject, and in the case of insurance claims, the subject can be obscure, unfamiliar, technical, and if you’ve ever read an insurance policy cover to cover, quite convoluted. This is why professional public adjusters tend to fare much better at negotiating insurance claim settlements with company adjusters. We are familiar with policy language, construction, basic engineering, construction codes and standards, and while we are not lawyers, we are trained on applicable rules, laws, and legal cases. We also spend each day immersed in the process of adjusting and negotiating claim settlements. For the most part, we know what the insurance company adjusters know (sometimes more), putting us on a level playing field, which is a tremendous advantage when it comes to negotiating any agreement.

What are some other ways to gain advantage in an insurance claim negotiation? There are many, but

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being educated on the subject is certainly a great start.  I would suggest you remain calm, and not be emotional, but be able to use emotion to bring the other party to your side. Instead of screaming at an adjuster about how you are tired of living with the damage, calmly describe how it affects your children, your spouse, or your ability to eat or sleep. Describe what you are enduring so they can picture having to go through that experience themselves.

Don’t negotiate with yourself. Typically, this means you don’t make the first offer, and you don’t make two consecutive offers in a row. But once the insurance company has presented their offer, don’t expect them to make another offer simply because you rejected the first (they know that trick).

Stay in the real world. Don’t exaggerate figures or make unreasonable demands, just because you believe their figure or offer is unreasonably low.  Take the time to really listen to the other side. Show them that you are considering their position, and not dismissing them. Reiterate their points back to them, letting them know you heard them, before replying with your counter-points. Then, see if you can find areas of common ground.

Ask to speak to someone higher up the chain of command. The further up you can go while making reasonable arguments, the better your chances they will contact their subordinates and ask them to resolve this so you won’t keep calling them. Obviously, they expect this, and will resist, but you can persist and respectfully insist. If the claim supervisor won’t talk to you, ask for the claim manager, or the vice president of claims, or the owner of the insurance company. It will not always work, but it does work.

When negotiating directly with someone, don’t feel compelled to fill moments of silence. For some

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reason, most people dislike “dead air” time. Control yourself. Quickly filling the gaps with more words is a sign of desperation.  Be willing to suspend the negotiations for another day, or walk away altogether. This again shows you are confident in your position, as opposed to being weak. As has been pointed out with regard to the recent Iran proposal, a bad deal is worse than no deal at all. Follow up verbal negotiations in writing, memorializing the discussion. Naturally, you will want to spin this correspondence in a way favorable to you, but without completely distorting it – you want to maintain your credibility throughout the negotiations.

Don’t go into the negotiation with concrete expectations of absolute victory. Imagine the worst outcome, and consider the lowest amount you would accept. Then ask yourself,” if they offer me one single penny less, would I walk away?” If the answer is “no”, you need to reconsider the lowest amount you would accept, and then ask yourself that same question again and again until you are certain you would walk away without a deal. That’s your bottom line.

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Never begin your negotiations with your bottom line, and don’t be afraid to state a higher figure is your bottom line, even if it isn’t. Using this card too often will damage your credibility.

Finally, assume the other party knows these tactics and strategies as well (and maybe more). Negotiation is like a dance – dress well, learn the steps, perform with confidence, and you should be fine. And when all else fails, hire a professional.

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.