Back It Up

by Mark Goldwich

Water damage claims are one of the most frequent and costly type of home insurance claim. Whether from burst pipes, roof or appliance leaks, flooding, or sewer back-ups, the damage from water can be fast and devastating. Not to mention the mold that can quickly grow if the property is not immediately and completely dried out.

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Water damage can be even worse in the case of commercial buildings. The large multi-national carrier Zurich (www.zurichna.com) says, “Water damage is the number one source of property claims for owners of high-rise residences, hotels, office buildings, retail establishments and other commercial structures.” They noted the total damages to commercial property caused by water is in the billions of dollars each year. In a 2010 study, Zurich found 62% of all water losses were caused by wear and tear or human error, which they suggest could have been prevented by water prevention programs.

However it happens, water can be fast moving, and not immediately obvious, traveling through wall cavities and other tight spaces before being noticed. If the water source is pressurized, and no one is in the property at the time of the leak, tremendous amounts of water can be released in just a few hours, let alone a weekend, or longer. All that water usually leads to damage.

Water damages all kinds of property, and does so relatively quickly. Many building materials and personal property absorb water on contact. Water causes items to stain, swell, sag, weaken, and to rust, and cause electrical components to short out or fail. Finished surfaces may bleed onto carpets, and oriental carpets may have colors run or fade.

The good news is most water damage can be covered by insurance, but you have to know what the insurance covers so you can get the right insurance, with the right endorsements. That is a whole other discussion altogether, and one that should be done with a good insurance agent.

I did want to point out something that demonstrates the level of complexity and subtlety that can be found in insurance policies, and the importance of knowing someone that can assist you through the process, especially when it involves something as frequent, damaging, and costly as water claims.

The example I am thinking of is water “back-up”, as opposed to water “fill-up”. In most insurance policies, damages caused a water “back-up” is not covered, in fact it is specifically excluded, unless you have a specific endorsement called “Back-up of Sewer or Drain”, or something similar, that gives you back the coverage. Since it is an endorsement, it comes at an additional cost. And because insurance is expensive enough, many people tend to decline such endorsements that increase their premiums. On the other hand, most insurance policies do not exclude “fill-ups”, so they can be covered.

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So, what is the difference between a “back-up” and a “fill-up”? As the name implies, a water “back-up” is when water backs up through your sewer or drain pipes, and enter your home, usually at the showers, tubs, and toilets. This water usually originates from beyond your drain line, and unless you have a septic system or drain field on your property, it usually originates away from your premises (community sewer system).

In a “fill-up” situation, there is a blockage in the drain line on your property (or common property in the case of a condominium or similar property), and the water “fills” up in the drain line until it enters the home, again, usually at the showers, tubs, and toilets.

For ease of understanding, I explain it this way…if localized heavy rains cause the city sewers to fail and water is pushed through the city lines and into your lines and it comes out of your drains and toilet, that is a “back-up”, and is generally excluded by homeowners insurance. But if your son is playing with a tennis ball at the same time he is using the bathroom and happens to drop the ball in the toilet as he is flushing (anyone care to guess how I thought up that scenario?), and the ball clogs the line and causes water to come out onto your floors, that is a “fill-up”, and is generally covered under most policies (currently). Obviously, there can be many different scenarios for each type of loss (especially the “fill-up”), but I hope you get the basic picture. If you do, you’re a step ahead of nearly all homeowners, and far too many insurance adjusters.

In the end, the damage looks exactly the same. Water (sometimes called “grey water”, “black water” or “category 3 water”) comes up from drains and toilets. But in one case, the resulting water damage is excluded, and in the other case it is covered. If that wasn't bad enough, I have personally handled several cases where the insurance company adjuster did not seem to know the difference, did not know there was a difference, or didn’t bother to determine whether it was from a “back-up” or a “fill-up”. They simply denied the claim, citing the standard “back-up” exclusion – that is, until I required they revisit the claim and correctly pay the appropriate claims as “fill-ups”.

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I have no doubt this denial scenario happens many times a week, every week of every year, throughout the country. This results in millions of dollars not paid to premium-paying policyholders who purchased the coverage, but did not understand why the claims were improperly denied, did not get adequate treatment from their insurance company, and did not get assistance from an experienced consumer advocate (usually because they did not know they could).

It just goes to show how a subtle difference in terminology, based on the understanding of how a specific loss takes place, can make all the difference in whether or not a claim is paid, and the importance of knowing who to use as a resource for a particular situation.

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 Heat is On

by Mark Goldwich

It’s only the middle of June, but the heat has really spiked  this week in Northeast Florida, leading me to think about just a few of the insurance and home maintenance issues related to higher temperatures.

Image courtesy of ptacunitsforsale.com

First, we know that air conditioners are working overtime during the hot summer months, so whether you have central air, window units, wall or split units, now is not the time for them to fail. Be sure your AC is well maintained by cleaning or replacing the air filter regularly, or having a licensed company perform a maintenance check and do any needed repairs. The relatively small amount of money spent on regular maintenance will certainly outweigh expensive replacement costs, as well as keeping your unit running more efficiently. Our friends at DWG Inc. have a great blog at http://bestacparts.blogspot.com that can answer all your AC related questions.

If you don’t maintain your AC properly, you will usually find one of two things happen. The unit will either stop cooling your living space – this is bad; or, the unit will stop cooling your living space and leak water – this is very bad. Sometimes the leak is fairly minor, especially if caught quickly, but I have seen cases where a few gallons of water escape, damaging floors, baseboards, drywall, and even cabinetry. This usually happens when too much algae growth clogs the AC drain line, and instead of discharging water outside the home, it leaks inside the home. If you have ever watched how much water comes out of a good sized central AC drain line, you know that in just a few hours, you can be dealing with tens of thousands of dollars in damage. Or, depending on the insurance company adjuster you get, you could be told it just needs some minor drying and cleaning. Sometimes it’s just a matter of perspective.

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Hot summer weather also seems to bring more frequent and violent afternoon thunderstorms, often packed with high winds, lightning, and heavy rains. While you can’t do much about the weather, there are things you can do to minimize potential expenses.  Be sure your roof is in good condition by either checking it yourself, or hiring a roofing professional to do this for you. If there are excessive leaves and twigs on the roof, clear them off (I was recently on a roof that had so much leaf debris on it, that the debris was decomposing into a soil-like substance, and was now growing weeds out of it – I asked them for a broom and swept off several trash bags worth!).  If roof vents or other components have rubber seals or tar caulking, check those for weathering cracks and do needed repairs. Especially beyond 10 years, the hot sun can wreak havoc on roofs.

Check your gutters and downspouts for debris that will prevent them from moving water away from your home’s foundation. Keeping water away from your foundation is always a good idea. This is why your yard should slope down as it gets further from the foundation, and why you should not plant shrubs too close to the exterior walls. Since gutters and downspouts are made to move water away from the foundation, this only works if they are kept clear of debris. Exposure to water, especially repeated and prolonged exposure to water, is not good for a home’s foundation. It could cause erosion or compaction of soils which could damage your slab or foundation, seep into your home through minor cracks, and create mold conditions in and around your exterior walls.

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You can trim back large tree limbs that are hanging over your property, or remove dead trees altogether. It might surprise you how a relatively small tree limb falling onto your roof can create a much damage a normally looking tree can do when it crashes through your roof and into your living room! And while these events should be covered by your homeowners insurance, with the way deductibles are rising, it might be a lot cheaper to just do the maintenance.

Too many days of torrential thunderstorms can cause localized or widespread flooding, as thousands of people in Texas can attest. Even if your home is not directly affected, you could be required to evacuate your home for days at a time (as inconvenience as this is, it sure beats being directly affected by flood). Look into purchasing flood insurance if you do not already have it. There is very little that can be done to prevent flood damage, but having flood insurance is probably the best start in terms of minimizing your exposure to this disaster. Take a look at www.FloodSmart.gov for more information on buying flood insurance or taking other steps to reduce the impact a flood can have on you, your family, and your property.

You can buy surge protectors to prevent electronics from being damaged by lightning and power surges. When lightning strikes your home, many of your electronics can be damaged, costing thousands of dollars to replace (and as ever-increasing numbers of electronics have more and more digital components, it is rare that these can be repaired following a strike or surge as they once were.) As inexpensive as surge protectors are, they can more than make up for the expense of having to file a claim following a lightning strike or power surge.

Lightning strikes can also be a source of home fires, just as they are a source of brush fires. Be sure your smoke detectors are working, have the proper fire extinguishers well placed (and know how to use them), have a fireproof safe for your most important documents and valuables, and have an emergency plan (and a recovery plan) the whole family is familiar with.

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Summer heat also means a lot more time in the pool (if you have one), or at someone else’s pool (if you don’t). This again means more maintenance if it’s your pool. Pools increase the chance of accident. You may want to check the chemical and PH levels more often, check and maintain the pump and filter, be sure everyone knows how to swim.  Just as public pools provide a lifeguard, make sure a responsible adult is present at all times when children are in or around the poo;.

Home maintenance and loss prevention is a lot like insurance – you pay a little now to avoid having to pay a whole lot later, and in the meantime you can enjoy some peace of mind while getting more sizzle out of your summer.

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 the Odds?

by Mark Goldwich

If one thing is for certain, it is that there are no guarantees in life. Or, as other people have said, the only sure things in life are death and taxes. I never did agree with the taxes part of that statement, since you can choose jail (or death) over paying taxes.

Anyway, now that I started thinking about death, a concept I’m not at all fond of, I wanted to look at the ways people die, and how they can avoid that, or at least put it off for a while. So I got on the National Safety Council website (www.nsc.org) and found an article titled “What are the odds of dying from…”

To me, this is good information to have for a few reasons. One, if you know the most likely ways you are going to die, you can then learn some steps to help you beat the odds. Also, if you know the least likely ways you are going to die, you can ease your mind a bit when it comes to worrying about dying in a particularly nasty, but highly unlikely way.

For example, the NSC showed Heart Disease and Cancer led the way towards death with 1 in 7 odds. So, if you do just a little research, you can take some pretty easy steps to greatly reduce your odds. Stop (or never start) smoking, exercise regularly, maintain a healthy diet and weight, and see your doctor.

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On the other end of the spectrum, dying from a lightning strike came in last with the odds of 1 in 164,968. Now, I was not thinking of this the other day when I was playing catch in the front yard with my son, under a tree, with lightning cracking nearby. If I did, even though the odds are not high, I would have gone into the house even sooner than I did. Still, there are many other ways to die, but I'm not going to list all the odds. What I will do is give you a few, with some thoughts on how you can reduce your risk. 

Did you know the odds of dying in a motor vehicle crash are 1 in 112? That’s worse than I thought it would be, making me glad I always wear a seatbelt.  Other than that, I could really stand to be more careful when I drive (no texting, no speeding, no aggressive lane changes). Besides improving my life span, good driving habits can save me money on insurance premiums.

Does knowing the odds of death by firearms discharge are 1 in 6,699 make you feel better? This one is tricky, because many of these deaths are caused by the person’s own gun, which means not owning a gun would better your odds. Then again, as a gun owner, I would recommend you take a firearm safety course, use a trigger lock, and take extra care whenever handling or cleaning a gun. After all, the answer to avoid dying in a car accident would be to never drive or ride in a car. This notion highlights the difference between “possible” and “realistic”.

How about choking to death from eating food? The odds of this are listed as 1 in 3,375. As someone that has used the Heimlich Maneuver twice on my own daughter before her 7^th birthday, may I suggest being careful to cut food into pieces too small to choke on, not putting too much food in your mouth at one time, and chewing food well before swallowing. And parents, please particularly watch out for hard candies with your kids. My daughter’s first choking “incident” was on a Life Saver – how ironic!

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Most people have a fear of dying in a plane crash, much more so than dying in a car crash, but when you consider the odds of dying in a car vs. a plane are 1 in 112 vs. 1 in 8,015, I’ll take that plane ride any day of the week. I recall someone asking me why I would jump out of a perfectly good airplane (back in the day when I would skydive for fun on weekends). Even then, without knowing the odds, I would always say, “there is no such thing as a perfectly good airplane” meaning, all planes seem perfectly good, right up to the time they crash. The fact is, skydivers are much more likely to die on the car ride to or from their jump site, or when the plane they are to jump from crashes (this takes out the whole group of jumpers, not just the one that might die during the jump).

Insurance is a system by which financial risk is avoided or reduced by transferring the cost of that risk to another. The event may still happen, but your financial risk is reduced or eliminated. Similarly, taking extra precautions reduces your risk of accidents, and in the case of accidents, it is not just money you are trying to save, it is your health, or even your life. 

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.  

It’s Like Pulling Teeth

by Mark Goldwich

Today, my 13-year old son is getting 4 teeth extracted to make room for wisdom teeth and braces, and to be perfectly honest, I don’t really know all the reasons why, that is just what both the dentist and the oral surgeon say needs to be done, so I am trusting their advanced degrees.  I have no doubt it will be an extremely unpleasant experience for all involved, especially for my son. We have known about it for some time, it has even been postponed at least once, yet everyone is still nervous, anxious, and dreading this day, and the next few days to follow.

So it got me to thinking about the origin of this phrase. My research suggests the earliest found uses in the 1830s, and generally means “extremely difficult” or “stubborn”, and referred to the difficulty found in people giving up information or money. An example from 1831 published in the Foreign Missionary Register of The American Baptist Missionary Magazine (Vol. 12, October 1832, No. 10), in the 23rd October 1831 entry of Mr. Judson's Journal: “When any person is known to be considering the new religion, all his relations and acquaintance — rise en masse; so that to get a new convert is like pulling out the eye-tooth of a live tiger.” Or in 1836 Knickerbocker: “And for this service to the sons, what did I get from the sires? The pittance of a few dollars, which came like pulling so many teeth.” 

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For as long as dentistry has been around, pulling teeth has been a painful and distasteful experience.

And so the same is true for many people when it comes to rendering money or information. At least nowadays, there is nitrous oxide and other forms of anesthesia to ease the pain (at least during the teeth-pulling process). Unfortunately, as my son can attest now that the teeth are pulled, there is little that can be done to make the whole teeth-pulling ordeal completely free of discomfort. On the way home from the dentist, while still feeling the effects of the nitrous, he asked if we could come back tomorrow because “it was fun” and “only took 5 minutes” (it was an hour). Well, it has all worn off, and he has absolutely no interest in going back tomorrow for more “fun”. Or ever.

But what in the world does this have to do with insurance? You see, it has long been my theory that insurance companies deliberately want to make the claim process as difficult and distasteful as possible, mainly because it often ends with the insurance company making a payment. Even if they don’t make a payment, they certainly don’t want you to leave with the notion that, “Hey, that was great, I can’t wait to do that again!” This only makes sense, especially when you consider that every dollar they pay out on a claim, is one less dollar for the bottom line. And again, even if no money is paid, simply considering a claim comes at a cost for the insurance company, which also negatively affects the bottom line.

When you think about it, they have to walk a pretty fine line. They want their claim service to be highly regarded, for claim personnel to be friendly, knowledgeable and accurate, and to have (relatively) few complaints. Yet they don’t want people beating a path to their doors (premium paying doors yes, but not the one where claims submitted ).

So what do they do? They have trained people to practice smiling while they answer phones, because they have been told by consultants that “smiles can be heard over the phone”. Their people are trained in customer service to have numerous word-tracks at their fingertips to keep customers calm, patient, and understanding as they are being “handled”. They set up numerous layers (agents, desk examiners, field adjusters, independent adjusters, supervisors) such that each person can say they are doing what they can for the customer, even when the end result is negative. It’s like a bullet-proof vest that is made up of very thin layers of material, each of which on its own could not stop a bullet, but when combined together are able to diffuse the energy of the bullet, and stop it cold.

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In this way, extracting money, and sometimes information, from an insurance company is a lot like extracting teeth. It can be an emotionally charged, painful process, which even if successful, leaves a bad taste in your mouth, with no desire to repeat the procedure anytime soon. The process also tends to get people frustrated, particularly if they were not prepared for the ordeal.  This makes them much more likely to exit the process with less money, or no money at all, just as suggested in an 1855 quote from Godey's Lady's Book for October, 1855: "Some people it's like pulling teeth to collect from; they dodge and shuffle, and ask me to call again, until sometimes I am quite out of patience."

In my years of helping people with insurance claims, I have had several who were not just willing, but eager to accept less money, sometimes a lot less money, just to be through with the claim process, or “ordeal” as they would call it. In most cases, I could get the policyholders to stick it out with me, letting them know I would not give up on them, if they would not give up on themselves. A few times, nothing I could say would change their minds – their will was broken.

One such case in particular was a woman who lost not only her home of over 40 years to a fire, but she lost her husband of over 45 years to that same fire. With the home a total loss, the insurance company had no choice but to pay her policy limit on the structure. But when it came to her (and her husband’s) personal belongings, they required she detail each and every item the two of them purchased, collected, and possessed during the past 40+ years. It was a painstaking and emotionally painful process, and they offered no assistance, even considering her state of mind. When all she could do was recall about $50,000 dollars worth, they depreciated it all and paid her about $35,000, or about half of her $75,000 limit for contents.

They were nice enough about it, even telling her that if she could think of more items, all she would have to do is submit that as well, but now they would require proof of ownership of any additional items. I assured her she would not have to prove everything as they were saying, and that I would be willing to sit with her and help her remember and document additional items, even those over her policy limits so she could claim those amounts on her taxes as an uninsured loss, but to no avail. Basically, they presented her with the idea of having more teeth pulled, and my offer of anesthesia was not enough to dull the pain.

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Sometimes in life you have to go through things that are not pleasant. Whether it is having teeth pulled, or dealing with an insurance claim, try to keep in mind you’ll survive both. And in either case, I recommend the laughing gas.

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's UPPA With Your Insurance Claim?

by Mark Goldwich

There are always many hot topics in the insurance industry. Right now, especially in Florida, a major hot topic is the Unlicensed Practice of Public Adjusting (UPPA, for short).  In essence, this is where a contractor or other service provider performs the services of a public adjuster without being licensed to do so. This can include things like interpreting an insurance policy, discussing coverage or negotiating a claim settlement. Contractors do this on a  regular basis – and a few of them may not know they are committing a felony.  The rest of them know, but don’t appear too concerned.  Several of them recently spoke before a committee in Tallahassee, explaining, while on camera, how they're performing a needed and valuable service by “assisting” policyholders with their claims.  While the video was sent to the Florida Department of Financial Services for review, the contractors still don’t seem concerned about doing what professionals in my industry have been specifically trained and licensed to do.

Can you imagine a parade of plumbers getting up before a legislative committee, one by one, and

stating for the record that they regularly do repairs to electrical components without a license since they are “familiar” with electricity, have seen electrical work done, and have even done it before themselves?  They could argue that by the time a licensed electrician could be called out, they could have already fixed the problem, saving the consumer time and money.  Unfortunately, those of us in the field who are being hurt by this, as well as the insured consumers who are not getting the full benefit of a licensed, dedicated advocate, can’t expect much will change anytime soon, because we see little to no enforcement of this law.  But we are not giving up, and we will continue to be on the look-out for UPPA violators.

What’s the harm?  Contractors will say that after handling thousands of losses where insurance claims were presented, they know much more than the average homeowner.  And this may be true, but the fact is the vast majority of them are not trained as are licensed Public Adjusters when it comes to dealing with a variety of complex insurance policies, state statutes, and so on.  Also, there is often more involved in these insured losses than just building restoration.  There can be Loss of Use, Additional Living Expenses, Contents, and other policy provisions not related to the building.  As licensed public adjusters, we are familiar with handling all aspects of an insurance claim.

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It would be like me saying, “I have seen so many homes damaged by water, I know better than most homeowners how to extract the water, and use fans and dehumidifiers to dry the home quickly, so you don’t need to hire a water restoration company, I can do that for you.”  NO!  I'm not licensed to do that!  That is why they have a water restoration license, or a contractor’s license, or an electrical license, and I have a public adjuster’s license.

So, why do many contractors insist on handling claims they know they aren't licensed to, especially when they also know public adjusters ARE licensed to do so?  In my opinion, it comes down to time, and money.  The contractors feel sure they can settle claims quicker, and possibly make more money by handling the claim themselves, rather than having a licensed public adjuster handle the claims.  The truth is, they may be able to get the claim settled faster, but they usually have to concede on the amount of money being paid in order to do so.  Most contractors also feel they are good enough at what they do that they can get the same amount of money on a claim that a licensed public adjuster can get.  Time and again, we have found this not to be the case.  Still, many contractors view the fee paid to licensed public adjusters as money drained from their pocket, when in many cases, that money would never have been there if it weren’t for the public adjuster’s expertise.

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Consider this as another consumer alert.  Hire only professionals licensed to handle the task at hand. According to the Florida Department of Financial Services (formerly the Department of Insurance):

“The definition of a public adjuster, as explained in Section 626.854, Florida Statutes, is any person, except an attorney, who, for money or any other thing of value (which would include a contract for repairs):

• Prepares, completes or files an insurance claim form for an insured,
•  Aids in any manner on behalf of an insured in negotiating for or effecting the settlement of a claim, 
• Advertises or solicits for employment as an adjuster of such claims.

Courtesy of thecontractorcoachingpartnership.com

If a contractor is acting as a public adjuster in any manner by negotiating or effecting the settlement of an insurance claim on your behalf, without being licensed as a public adjuster (Section 626.854, Florida Statutes), they could be subject to arrest and may be charged with a third-degree felony as provided by Section 626.8738, Florida Statutes.”

If a contractor knows they are committing a felony, even if they are confident they can get away with it by acting as a public adjuster without the proper licensing, you need to consider what else they would be willing to do, whether for money, convenience, time, or anything else.  We know a lot of contractors, and we regularly recommend they change the wording of their ads, car signage, websites, etc., as well as what they say to consumers and insurance adjusters.  We don’t want to see them get into trouble, and we remind them that in 2013, three roofers from a well-known local roofing company were arrested, booked, and faced up to 5 years in prison because they informed homeowners they were “insurance specialists” and could assist the homeowners in dealing with their insurance companies.  While those arrests certainly have not stopped this practice from occurring, we believe insurance companies and the DFS are  looking to make examples of contractors engaged in UPPA.

Whether you are a contractor or a consumer, it's better to be safe than sorry by understanding how UPPA can affect your insurance claim.

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 ABC's of AOB's

by Mark Goldwich

Image courtesy of cartoonstock.com

Whether you're visiting a doctor’s office or other medical facility, they will usually require you sign a form called “Assignment of Benefits”. These forms are used by the medical providers to bill the patient’s insurance company directly for the services they render. This allows them to access the insurance benefits rather than requiring payment directly from the patient. In a homeowner's insurance claim, assignment of benefits forms are often similarly used by water mitigation companies, mold specialists, and other contractors. Similar to assignment of benefit forms in the medical field, the assignment of benefits during a property insurance claim lets contractors bill the insurance company directly for the services they perform at your home. As with the medical services, these homeowner services are often done on an emergency basis, and advance payment is not an option.

So why is this an issue? Well, that depends who you talk to. Contractors will tell you the assignment of benefits are important and needed because consumers don’t have the knowledge or claims savvy that the contractors do, leaving the consumer at the mercy of the insurance company and their paid representatives.  On the other hand, an insurance industry trade group recently provided a position paper on assignment of benefits stating:

The single biggest factor driving the explosion of AOB-related lawsuits is that trial attorneys can collect “one-way attorney fees’’ when suing insurance companies over claim disputes. One-way attorney fees allow attorneys suing insurers to collect legal fees if they win but don’t allow insurers to collect fees if they prevail. One-way attorney fees were intended to level the playing field between consumers and big insurance companies but have become an incentive for attorneys and vendors to file AOB lawsuits. In the majority of AOB lawsuits, the policyholder has already been made whole and had their home or auto repaired. Rather than a “David versus Goliath’’ issue, it has become a battle between attorneys and vendors against insurance companies.

But according to attorney Sean Shaw of the Merlin Law Group:

This is precisely the point of the attorney fee statute…to level the playing field. Insurance companies have the resources to hire an attorney in every case and fight any and all claims. The insured does not have that ability. The purpose of the fee statute is to discourage insurance companies from fighting valid claims and to reimburse successful insureds if they are forced to sue. I assume the industry opposes the fee statute in all circumstances since the logic of their position hear would extend to all subjects…not just AOBs. In other words, the industry is saying that the fee statute is an incentive for attorneys to sue insurance companies in all circumstances. I understand that insurance companies don’t like the fee statute because it puts them at risk…but that is exactly why it is a great tool for consumers.

In a legal brief to the First District Court of Appeal in Security First Insurance Company vs. State of Florida, Office of Insurance Regulation, Security First suggested that the fraud and abuse surrounding AOBs lead to higher premiums for insurance consumers:

          The typical scenario surrounding the use of an “assignment of benefits” involved         vendors and contractors, mostly water remediation companies, who were called by an insured immediately after a loss to perform emergency remediation services, such as water extraction. The vendor came to the insured’s home and, before performing any work, required the insured sign an “assignment of benefits”—when the insured would be most vulnerable to fraud and price-gouging. Vendors advised the insured, “We’ll take care of everything for you.” The vendor submitted its bill to the insurer that was, on average, nearly 30% higher than comparative estimates from vendors without an assignment of benefits. Some vendors added to the invoice an additional 20% for “overhead and profit”, even though a general contractor would not be required or hired to oversee the work. Vendors used these inflated invoices to extract higher settlements from insurers. This, in turn, significantly increased litigation over the vendors’ invoices. 

But without AOBs, those in favor of AOBs say consumers would be unable to complete repairs and would be at the mercy of insurance adjusters. In his editorial Insurance-assignment forms simplify, attorney Paul T. Zeniewicz makes the case for AOBs:

Courtesy of cartoonstock.com

Think about the last time you went to the emergency room. You filled out paperwork for each health-care provider (physician, anesthesiologist, etc.), and your insurance company dealt directly with those providers. This is because you signed an "assignment of benefits," or "AOB," form. An AOB is a legal form that allows a medical provider to bill your insurance carrier directly.  AOBs are backed by more than 100 years of Florida insurance law. AOBs allow home-repair contractors to bill insurance carriers without requiring anything out-of-pocket from the homeowners after their home has been damaged.

Imagine your kitchen is flooded from a broken pipe. Every second the damage to your home grows worse. Your contractor tells you, "The bill to remove the water from your home is $5,000, and I need payment immediately." Your insurance company won't issue payment for 60 days; meanwhile, water and mold destroy your home.

Insurance companies do not like AOBs because vulnerable homeowners are much easier to push around than a licensed contractor. The idea that contractors use AOBs to "inflate" their bills is nonsense. Although the overwhelming majority of Florida contractors are outstanding, reputable businesses, a minority inflate prices. An AOB only determines who gets stuck with the inflated balance.  With AOBs, the insurance company has to fight the dishonest contractor. Without AOBs, homeowners are stuck with the inflated bill. AOBs protect homeowners from fraudulent contractors because the insurance company, not homeowner, has to fight the fraud.

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The bottom line on AOBs is, insurance companies, their attorneys, and legislators who receive large campaign contributions from insurance companies, are consistently and firmly against the AOBs, while restoration contractors and insurance consumer advocates are in favor of AOBs as a way of leveling the playing field. Both can make strong arguments for their respective sides.

As a public adjuster, I am not a proponent of AOBs, but if the insurance companies are dead set against it, it is probably good for the insurance consumer, and given the size and power of insurance companies, insurance consumers need all the help they can get. But I will add, you need to know the contractor you are dealing with if they are asking you to sign an AOB form, simply because in the hands of somebody bad, they can be used for bad things. I also find a lot of contractors use these AOB forms as a way of getting away with adjusting claims without a license, and this is a 3^rd degree felony in Florida.

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It’s also important to note how insurance companies and their representatives describe the subject as a “crises” requiring “immediate reform” in order to “stem fraud and escalating claim costs”, because they do this every time they want to get their way. It reminds me of Shakespeare’s quote, “The lady doth protest too much, methinks”. And while we’re quoting literature, I would also say don’t look up if the insurance industry is running around like Chicken Little screaming, “The sky is falling!” Instead, you might be wise to cover your behind.

 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.

Keeping Your Head Above Flood Waters

by Mark Goldwich

You may have noticed storm season is picking up. On the news you may see stories of tornadoes and hailstorms, because these tend to be large, violent, and spectacular events. But the same storm systems that create conditions for twisters and hail, can also  bring major amounts of rain. And with this rain comes localized flooding. Often, stories of flooding go unreported because they are so localized, sometimes affecting just part of one county, or a neighborhood, or even just one street. Needless to say, if it's your street, this is a big deal as far as you are concerned. And I know what some of you are thinking, “That’s never been a problem in my neighborhood.” Keep in mind, it was never a problem in their neighborhood either, right up until the moment it happened.

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So let’s just imagine for a moment that floods can happen pretty much anywhere (because they can), and with very little notice (because they do). What should be considered when thinking about floods?  How can we protect ourselves? More importantly, how do we prepare for something that can happen without notice? Even for seasoned insurance adjusters, flood claims are some of the most difficult claims to handle. The flood policies are written differently than standard homeowners policies. They are more strict in their coverage. Often they have lower limits. They don’t pay for you to live somewhere else while your home is being repaired, and they are not intended to “make you whole” as standard policies attempt to do. They are merely there to help bear the brunt of a flood loss. These flood policies are not written by your insurance company. Instead they are put out by the federal government, through the Nation Flood Insurance Program, which is part of FEMA. So, you can think of these policies as being more like social security – nothing more than a safety net to save you from ruin, .

But that's not to say flood insurance is a bad thing. When floods devastate a region, invariably there

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are large numbers of people who don’t have flood insurance. Why? Simply because it's not required as standard homeowners insurance is (if you have a mortgage). And you will always see some homeowners who do have flood insurance right next to those that don’t. The ones that have flood insurance will almost always fair better than those that don’t, especially when it comes to worrying how they will recover from the disaster. Those without flood insurance are typically ruined. They lose nearly all their possessions, they can’t afford to repair their homes, and they must depend on family, charity, or government to get by at all. On the other hand, those who do have flood insurance can get most of their belongings replaced, most of the repairs done on their homes, and they may only need temporary assistance, or may only dip into savings, or have to take out a small loan.

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The point is, the first step to surviving a disaster like flood, is to be prepared to begin with. That does two important things right away: It helps shift some financial risk from you to someone else who can better afford it (which is the purpose of insurance), and it can give you some peace of mind. Besides the fact that flood insurance is not required, even if you have a mortgage, many people still do not get flood insurance for one simple reason – they don’t live in a flood zone. If I had a dollar for everyone that has been devastated by flooding that didn’t think would ever happen because they were not in a flood zone…let’s just say I’d be very well off. And then, when they find out how inexpensive flood insurance can be when you are “not in a flood zone”, they get even more depressed.

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Besides, just think about these “flood zones.” We toss the phrase around a lot, but do we really know what it means? How are flood zones created? By whom? And do they ever change? Well, flood zones are created by government officials, mainly using computer models and past experience, and yes, they can change over time – usually right after your home floods for the first time. For years, I have been saying, “If you trust the government to accurately draw your flood zones now, you might be standing in a long line and depending on the government to help you later.”

So please consider buying flood insurance – no, I don’t sell flood insurance, so that is not my motivation for being a proponent of flood insurance. It’s not even because my business can generate revenue on flood victims only if they have insurance. Instead, it’s simply because I have seen far too many people who didn’t have flood insurance when they needed it. If you have ever been to an area that has been ravaged by flood, it is something you will never forget.

When it comes to flooding in a non-flood zone, the risk may not be great, but then neither is the cost. If it never happens, you’ll have had peace of mind at a reasonable price. If it does happen, you can look like the smart guy on the block. So shift the financial burden, and be in a position to rebuild your life.

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And while you're planning to survive disaster, you might as well do it right. Create a written disaster

plan (the internet is full of checklists and plans). Buy and stock emergency supplies in a disaster kit. Make sure the whole family is aware of the plan by reviewing it every year. Have one of more places to meet up if the family is not together when disaster strikes. Think about how you will communicate if phone lines or cellphone towers are down. Take photos or videos of your property – the building and the contents, and keep a copy in another location. Have a plan for your business as well. A major component of surviving disaster is the preparation that takes place before  disaster strikes. The better prepared you are, the better you will do during and after the disaster.

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.