The Dynamics of Denial

By Mark Goldwich

We previously talked about the different phases of denials, but now we’re going to learn about the dynamics of denial itself, and how the insurance industry has turned it into a force to be reckoned with, a force that no individual policyholder without significant training can realistically expect to overcome.

The sad truth is, in far too many cases, the Powers That Be can categorize your loss in any way they see fit, and then deny all or part of your claim. And the Powers That Be are, in all likelihood, far better at this categorizing-and-denying dynamic than you are at challenging it. And they are better at categorizing-and-denying than you are at challenging them. .

A dynamic is, literally, something in motion - and that is exactly what you’re going to feel like you’re dealing with when you deal with this strategy: a moving target. You will have been under the impression that you were talking about one thing, and suddenly you’ll get word from on high that, all along, you were really talking about something else - something that the insurance company, by a remarkable coincidence, has no responsibility for.

One word for this process is “dynamic” – but another word, I think, might be “game.” And just like in Las Vegas, it’s a game that the House (in this case, your insurance company) will usually win.

Does this categorize-and-deny game affect all socioeconomic groups equally?
No. In my opinion, lower-income policyholders are much more likely to be adversely affected by what insurance companies do in terms of denial. After just about any kind of disaster, there is a percentage of people in virtually any community whose claim will be denied by their insurers on the pretext that their home maintenance was poor. This group is almost always disproportionately poor, and disproportionately belonging to a minority group.

Image courtesy of wikimedia
In other words, there are certain neighborhoods in a community where a home may not have been painted for a while, and a door may not have been fixed that should have been fixed. In these homeowners’ policies, there are, almost always, innocent-sounding “maintenance” and “wear and tear” exclusions. It seems fair enough: the insurance company isn’t responsible for compensating for normal wear and tear; the homeowner has an obligation to maintain the property. Watch what happens, though. After a disaster or other claim, and after a nightmare of delay and bureaucratic runarounds, the homeowner finally meets with an adjuster.

Can you guess what happens next? The adjuster simply decides that he or she can’t (or won’t) separate the damage of the disaster from the normal wear and tear of a home that happens to be occupied by people who can’t afford a fulltime housekeeping and repair staff. Without a public adjuster, these people may have their claims denied in part or in full, on the grounds that they have failed to maintain their homes properly. Look at it again: “You didn’t paint for a while. That means you must not be covered for a hurricane, because your poor maintenance makes it impossible for me to say for sure that a hurricane caused this damage.”

With a public insurance adjuster working on their side, these policyholders are, in my experience, far more likely to receive a fair settlement from the insurance company … even if there is physical evidence that they could, in a perfect world, have maintained their homes a little better.

Why do adjusters do this kind of thing? Are they really “out to get” homeowners and deny as many claims as possible?
It’s more complicated than that. There are a lot of reasons adjusters may end up denying some or all of your claim. Part of it, perhaps, is simple laziness. (In the example I just mentioned, the wear-and-tear and maintenance issue, an adjuster may spot a few home-repair problems and decide that it’s simply easier to deny the whole claim than to do the work necessary to distinguish water damage from overlooked carpentry projects.)

Other issues might be inexperience, a ridiculously overstacked schedule, or a subtle series of messages from the insurance company to whom they are reporting. Let me be clear: I believe that at the outset of their work with the insurance company, adjusters are told to pay every valid claim.

But that’s a message that might only get sent once or twice during the adjuster’s relationship with the insurer. Far more potent, over time, are the daily messages an adjuster receives.

Even assuming that adjusters are never told (directly) to deny valid claims, they are given little “raps on the knuckles,” little messages from upstairs: “You did this wrong, you did that wrong, you paid too much here, you overlapped there.” It only takes a few weeks for these messages to have the desired effect.

Adjusters, of course, do not want to continue to go through the process of getting their knuckles rapped. They start figuring out for themselves what the insurance company
really wants. And so, by the way, do the engineers, repair and restoration firms and other “experts” sent out by the insurance company to “help” you deal with your situation.

I’ll have more to say about these people in a later blog, but for now, let me just leave you with this hint: If the insurance company sent them, don’t expect them to have your best interests in mind, even if you are the one paying them.

What else can I expect as an excuse for denial of all or part of my claim?
Plenty. The insurance company may “misread” a critical definition of a word within your policy.
Result: Denial. Or: The insurance company may declare that your going on vacation (or having some other reason for leaving the property for a period) invalidated your policy.
Result: Denial. Or: The insurance company may choose to fixate on a clause in your policy that’s designed to remove responsibility for coverage in situation X – and they may try to apply that clause to situation Y, which has only the remotest connection to situation X. Result: Denial. Unless you are working with a professional.

For instance, an insurance company once tried to deny coverage to one of my clients on the
Image courtesy of
basis of a leak in the roof of the property. They had fixated on the word “leak” in the homeowner’s policy exclusion. As it happened, though, that kind of “leak” wasn’t what justified the exclusion used. The relevant section of the policy talked about a repeated leak in a shower area. The leak had to be located specifically in the area of the shower for the denial to stick - and that was not what had happened at all. But that didn’t stop the insurance company from selecting a very tiny portion of that exclusion to quote in support of their denial of coverage. Result: Denial if you’re not working with a professional; no denial if you are working with a professional.

These are the kinds of problems that can be overcome if you use a qualified public adjuster. All are very difficult to spot – and thus difficult to challenge – if you’re unfamiliar with the language of insurance policies or the dynamics of denial.

At the risk of being blunt, let me put this another way: The company knows what it’s doing. You don’t. .

You get the picture by now. It’s in your best interests to work with someone who knows as much about the dynamics of denial as the insurance company does! In the blog, we’ll look at the third major weapon in the insurance company’s arsenal – their remarkable skill at deflecting responsibility for actually paying you what you are owed.

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

Drowning in denial

By Mark Goldwich

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

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

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

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

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

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

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

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

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

In the first case, I would suggest retaining a CPA or other qualified tax professional. In the second, I would suggest retaining a lawyer. In the third, I would suggest retaining a
public adjuster, and letting me, or someone like me, talk to the insurance company and their adjuster on your behalf.

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

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

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

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

Where can I find out more about flood insurance?
Visit this web site right now:

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

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

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

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

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

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

Swimming in Denial

By Mark Goldwich

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

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

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

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

This situation is something that should concern you, since the reality of damage from flooding is looking like something more of us are going to have to prepare for in the coming
years. According to the web site World View of Global Warming, “Meteorologists already see an increase in severity of storms, rainfall, and floods …” They go on to observe that “These anomalies from what we think is ‘normal’ are expected to continue around the world.”

Regardless of your stance on global warming (and its potential causes), regardless of what you believe, or don’t believe, about natural weather cycles, the moral of the story is the same: Think. If you think you’re not likely to be affected by a flood … think again. If you think your homeowner’s policy covers you against flood damage … think again. I
have personally witnessed the tragedy of property owners being without flood insurance. You don’t want any part of it.

If I was told by someone I trust that I didn’t need flood insurance, doesn’t that pretty much end the discussion?
No. People are told all the time -- by insurance companies, attorneys, or occasionally by representatives of mortgage companies or other “experts” -- that they have no need for flood insurance. All too often, this advice is simply incorrect. Sometimes what they say (or mean to say) is, “You are not required to carry flood insurance.” That is not the same as you not needing it.

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

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

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

Is that a hypothetical example, or is this something you actually know for sure that someone has experienced?
It’s not hypothetical. It actually happened to a neighbor of one of my clients. The existence of the eyewitness made no difference whatsoever to the insurance company’s decision. Again the best policy is to consider the insurance company your adversary.

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

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

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

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

More denial next time…

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