Is it Time for Your Insurance Checkup?

By Mark Goldwich

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We regularly go to the doctor to get a health checkup. We don’t always like it, but we do it.  We take

our car to the mechanic regularly for a checkup (or tune up). We even have our air conditioners checked regularly. We may dread having to do all of these things, but we do them for one good reason. If something is important, it is important monitor it regularly, in order to make sure it is well maintained and functioning properly.  To neglect this is to court by having the machine break down.

Your insurance policies are no different. These policies cover some of your most valuable assets, like your home, business, car, your worldly possessions, even your life and health. It is for this reason that you should take the time for yearly insurance checkups to review your policies (preferably with a knowledgeable insurance agent). Many insurance companies themselves realize the importance of this, and will contact you to schedule the checkup. But if they don’t, you should take the initiative to schedule this preventative maintenance yourself.

What should you look for in your policies in preparation for the checkup?

Most every insurance policy has a “Declarations Page” or similar overview of your policy coverage, limits, deductibles, the policy period, your contact information, and your agent’s information. Use this form as the basis of your review and checkup. Make sure the information on the policy is current and accurate. I would recommend you use the expiration date of the policy period and schedule the checkup with your agent about 60 days before that. Think about the policy limits – are they too high, too low, or just right? Have there been any significant changes to the property being covered? Did the mortgage company change? Did one or more named insured change? Did you add or lose property? Is the deductible manageable? You want the deductible just high enough to manage, because the higher the deductible, the lower your premium, and you don’t want a deductible so low that you would be tempted to file smaller claims.

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Then consider the coverage and exclusions of your policy, to the best you can understand them. Make

notes of any questions that you have, so you can ask your agent when you meet. What about special endorsements or exclusions? Are there some you have that you don’t need, or no longer need? Are there some you would like but don’t have? This is the difficult part, because unless you know what is available, you probably will not figure out what you are missing. Again, make notes so the meeting with your agent will be as productive as possible.

I know it is difficult to read and understand your insurance policies. It is tedious even for me, a trained public insurance adjuster. While you do not need to understand every word, the more of it you know, the less scary it will seem, and the better equipped you will be when it comes to seeing what changes you might want to make.  This step also makes the checkup easier for you and your agent. It is like all those other items we mentioned earlier; the better you take care of yourself all year, the better your physical will go; and the better you maintain your car or air conditioner, the better they will run with fewer problems or breakdowns.

Do You Have a Clean Bill of Health?

The goal here is twofold: 1) Understand your policies more clearly, and 2) Ensure you have the right policies, limits, endorsements, and deductible for your particular purposes. One this is certain, the time to find out about these things is not after something happens and you need the insurance, because then it is too late to make the needed changes. I can’t tell you how many times I have seen people dealing with insurance nightmares that never would have happened if they just took the time to make a few corrections to their policies. Sometimes it is something as simple as making sure the names are correct. People get divorced, marry, or pass away.  They change mortgage companies from time to time. When these things happen, the policies need to be updated with the most current information.

From you-can-be-funny.com

And remember, as an insurance professional, your agent should be a big help to you in understanding

what the policies do and do not cover. Sure, it is their job to “sell”, but only a truly unscrupulous agent would try to sell you more than you need, and in my experience, most are too worried about the negative repercussions of selling you unneeded insurance to do this. Don’t get so caught up in saving a few dollars that you give up coverage that could really come in handy should disaster strike.

So before the year gets too far underway, get out your insurance policies and your calendar. Plan out a day when you can review your policies, make your notes, and meet with your agent. Just like your health checkup, it won’t be something you look forward to, but once it is done, you’ll be glad you did it.

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.

Beating the Dealer

By Mark Goldwich

If information is power, then information shared is more powerful, and large groups wielding information are the most power of all.  For those who read my posts, it’s no secret that the insurance industry is a business that sets out to take as much money from policyholders as possible, in the hopes that it will never have to pay any of it back. To be quite honest, policyholders themselves actually hope they never have to use what they have paid for in the first place.  But when they do need it they don’t want or expect to have to jump through a number of bureaucratic hoops to get paid.

In a lot of ways the insurance industry is a lot like the casino industry.   If you have ever gone to Las Vegas, then you know what I mean. Vegas offers games and sets the rules and the odds so that every wager favor the house.  The insurance company like the casinos accepts a little bit of your money at the time it takes on the risk of having to cover a loss at some future date. But the odds of having to pay off have more to do with the fine print in the contract (i.e. The Rules), or the interpretation of those rules when the player (i.e. The Policyholder) wins. 

Rule #1: The Rules are Subject to Change

Image courtesy of en.wikipedia.org

The thing is, the insurance industry has in essence turned the entire game on its head by making the policyholders into gamblers. The industry has become the house that in essence controls all the

rules. Every time the insurance industry has to pay a claim, they look at the risk involved. If they don’t like the odds, they change the rules of the game, or the odds of losing, or the maximum payout, or all of these – without changing your cost to play. Imagine what would happen at the twenty-one table if in the course of the game the pit boss announced that blackjack paid even money.  Have you ever seen a riot in a casino?  Yet the insurance industry does this all the time.  You pay the same to “play”, and they pay out less if you “win”. Pretty good deal for the house, right?

Sometimes though, the insurance industry goes even further in using their clout to change the law. It’s a very real possibility that the law will change if the insurance company feels they are taking on too much risk. And the greater the clout that insurance industry lobbyists have at their disposal, the more one-sided the game has become.   That’s the bad news for consumers.

The good news is that the insurance industry does have a few vulnerabilities. With all the information available on the internet, the world has become much more transparent. Like Jordan Zimmerman once noted, “A tsunami of angry consumers is a disaster, too. And if your business model is pissing off consumers, it needs to change, quickly, even if — especially if — the government owns your company.”

Unfortunately, the government doesn’t typically own insurance companies, but they do regulate them. On the other hand, insurance companies have powerful lobbyists, who spend big money to have the ear of lawmakers.   The problem is that lobbyists are sometimes involved in crafting new insurance laws, which again directly benefits the insurance companies.

en.wikipedia.org

So what can you do? You can get involved. There is no way to bring about change if consumers just sit back and idly accept everything the insurance companies do to them. Arm yourself with knowledge, and be ready to challenge the insurance companies when they tilt the rules yet further to their advantage. Let your Congressman or woman know that you aren’t going to stand idly by.  The only way to effect change is by banding together. Be aware of high profile cases where insurance companies try to abuse their power and falsely deny claims they should rightfully be paying, and make other people aware as well. The same holds true when new legislation is being enacted, or when existing legislation is being amended. Be aware, be engaged, and be involved with others who are aware and engaged.

Carefully vet the candidates you are considering voting into office. Do some research and find out if your candidate is connected in any way to the insurance industry. If so, you may want to reconsider. A candidate connected to the insurance industry may be looking to line their own pockets, and not really looking out for you, just like the insurance company that you think is on your side, but is actually fighting against you to change the law and keep from ever having to pay on any claims.

If you feel you are alone, or don’t know where to start, groups like United Policyholders are on your side. In their own words, they don’t take money from insurance companies. That’s a good sign that they are on your side. And they are a non-profit organization, which also suggests that they are trying to actually help, and not just be another organization with its hand out.

But, they need your support. Visit United Policyholders at www.UpHelp.org, and find out how you can help. You can register with them to get up to date information on what’s happening in the insurance industry. They have tons of information, tools and resources. And you can donate so that United Policyholders has working capital to continue its efforts to empower you as a policyholder. And just for the record, I am in no way affiliated with United Policyholders. As an insurance consumer that happens to be hyper-aware of this industry, I find this to be an organization worthy of mention here.

As we have learned from the insurance industry itself, they win because they make the rules. Well, the truth is, there is strength in numbers. But we can only win if we only stick together and fight the insurance industry every time they try to change the rules to their favor. We can only hope to level the playing field by banding together. So register today and get involved.

You can also get in touch with state and national public adjusting groups. You will find us on the social media sites and blogs. These provide access to industry professionals and information that could help you or someone you know, whether to fight for your rights on an insurance claim, or to learn more about a politician or upcoming legislation.

You may not see it, or hear much about it, but one thing is certain, the battle is being fought right in your own backyard. You can continue to look the other way, and hope you are not affected, or you can help defend yourself, and your neighbors, before we are all dealt a losing hand.

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.

That Sinking Feeling

By Mark Goldwich

Image from failures.wikispaces.com

If you live in the state of Florida, you know what a sinkhole is. In fact, even if you live outside of the state of Florida, and just happen to watch the national news from time to time, you probably know what a sinkhole is. Most of your information about the subject probably comes from news reports centering on homeowners who live in the state of Florida, usually in the central part of the state, who are unlucky enough to have the earth open up and eat their homes, forming gaps wide enough to make the homes unlivable.

If you were to ask a geologist what a sinkhole is, he or she would tell you that a sinkhole is a depression in the earth's surface, occurring gradually or suddenly, typically caused by chemical reactions within underground rock formations, or by suffusion within underground minerals like Sandstone. The geologist might go on to tell you that a sinkhole can range in width from about 3 1/2 feet to 2000 feet. And the geologist might also mention that sinkholes, which are found all over the world, vary widely in form and structure.

You know what a sinkhole is. I know what a sinkhole is. An engineer or geologist knows what a sinkhole is. I suspect most kids in the state of Florida know what a sinkhole is.  But for some strange reason, the insurance industry in the state of Florida doesn't seem to know what a sinkhole is – or rather, they didn’t like what it used to be.

Don't misunderstand. The various insurance companies have written plenty of policies covering damage to Florida homes arising from sinkholes. The problem is though, that when Florida homeowners try to collect on those policies, they find that what the insurance company considers a sinkhole doesn't match up with what the homeowner thought he or she was buying insurance to protect the home against.

Here is what happened. The insurance companies took a look at all the money they were paying out

on valid claims for damages arising from sinkholes – you know, the kind you see on the news gobbling up houses or portions thereof, and causing tens of thousands of dollars in damage to homes? But more than that, they also had to pay on many more claims where the damage was not so horrific. The costs added up and the bean-counters didn’t like it.

Financial Sinkhole image from moneysavingmom.com

The insurance companies decided two things. First, they did not like paying out all that money to homeowners. And second, it didn't make sense to suddenly stop covering sinkhole damage – presumably because there would be legal and/or public relations problems with that course of action.

So the industry just lobbied for a law, which passed the Florida legislature (as many do, when backed by the full faith and credit of the insurance industry lobbyists). They created a much narrower, more restrictive definition of what constitutes a sinkhole.

This new definition affected countless policies and countless unsuspecting homeowners who had relied on the policies. If the sinkhole appeared, the homeowner found that what he or she thought was a sinkhole – what a qualified geologist thought was a sinkhole – was in fact something else under Florida law. What it was, besides a devastating financial loss to the homeowner, is hard to say. Because for all intents and purposes, a hole that opens up unexpectedly beneath your house, causing cracks and other damages, and costs tens of thousands of dollars to fix, would seem to be a sinkhole.

Insurance companies in Florida don't have to call it that, though, because their friends in the Legislature have decided they don't have to. Good thing for them, too, because calling these things sinkholes would mean the insurance companies had to pay homeowners for the damage. As it stands now, they only have to pay damage for "catastrophic ground collapse" incidences.

Image courtesy of moneyandmatters.com

The question arises: when the actual coverage provided against the risk of subterranean voids damaging their homes dropped through the floor (no pun intended), did the premiums the consumers have to pay drop dramatically too? If you have been paying attention to the examples of how insurance works thus far, you already know the answer. This is all part of a disturbing trend that has played out over the past couple of decades. Consumers in Florida find themselves carrying more and more of the financial risk for events they think they're covered against – but aren't.

The "sinkhole problem" I have just described for you is part of a much larger problem facing the insurance customer. The problem is this: having discovered it has substantial legislative power at its disposal, the industry has now committed itself to using that influence in support of the strategic goal of giving consumers less and less value over time for the same amount of money.  This trend is clear in a hundred little ways. One is the sinkhole maneuver I just described. Another variation has to do with the replacement of flooring, or other surfaces, for that matter.

Let's say you're hanging a ceiling fan in your home. You're up on a ladder, and you accidentally drop a tool. That tool hits and cracks one or more squares of ceramic tile on your floor. You survey the damage and ask yourself, "Hmm… Am I covered for that?" And you climb down from the ladder to check your original policy. It tells you that yes, you are covered for this kind of damage and that the insurance company is obliged not only to repair the damaged tile, but replace the entire tile floor if they can't locate a matching replacement tile. That, you tell yourself, is why you have been paying premiums all these months and years. You're in the clear, right?

Actually it turns out that you're not in the clear. When you go to your insurance company to file the claim, your company adjuster tells you that you've missed an important update that went out by mail.

“That's entirely possible,” you think to yourself. There are a lot of official looking notifications that come through from your insurance company. You don't scan each and every one of them word for word.

A cynical person might conclude that that's what the insurance companies are counting on, because one of those updates informed you of a change in your policy that puts you in a very bad position.

One such notice might say the total maximum damage you're covered for a loss such as this is $8,000. Because your specific tile is now out of stock, it's impossible to match the tile you broke when you dropped that tool. You now have  the choice of placing a piece of tile on your floor that doesn't match – which would drop the value of your home – or replacing the whole floor, which could cost you $30,000 (for example), less the $8000 the insurance company is now willing to pay.

You;re out $22,000 for something you thought was covered – something that actually was covered when you bought the policy. But then you got that notification in the mail. The one you did not read thoroughly enough. As it turns out, it doesn't really matter whether you read that notification not, because there was nothing you could have done to win that coverage back.

Image from en.wikipedia.org

You're paying about the same amount for the premium, but your coverage has declined in value. You have no options. How did that happen? The insurance company lost a high-profile lawsuit that held in such situations, both the policy and the law mandated that the company was obliged to replace the entire floor. This however, was a case of the consumer winning the battle but losing the war.

Specifically, ONE consumer won the battle. The rest of the consumers lost the war when the allies of the insurance industry decided that it was time to end that kind of lawsuit once and for all. They pushed through legislation that allowed the insurance company to declare that its liability in such circumstances was limited to a certain fixed amount: in this case, $8,000. Note: this is not to say everyone has a limit of $8,000 on tile flooring, or roofing, or screen enclosures, etc., just that you need to check your policy and be sure you know what your limits (and sub-limits) are.  As you can see, this is not really a sinkhole problem and it's not really a tile problem. The real problem is that either way, you're sunk.

It's a problem where the insurance industry continues to sell you something, month after month, that what you thought was worth X, is no longer worth that much.  Lately this trend has gotten worse – a court has since ruled that the damage described above is now considered “marring,” part of the standard insurance policy exclusion for “wear and tear.” Really? Accidentally dropping a heavy object on a tile floor is now “wear and tear?” And now that insurance companies are no longer paying millions of dollars each and every year on these claims as they have been for decades, do you know how much your premiums have gone down? You guessed it – ZERO!

The next time you are on that ladder, if you hope to avoid that sinking feeling, be EXTRA careful!

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.

In the Beginning

by Mark Goldwich

Image provided by revivebismarck.org

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

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

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

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

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

OSHA.gov

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

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

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

Some of these unspoken “BigCo Family” assumptions were:

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

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

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

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

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

Provided by indiedb.com

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

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

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

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

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

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

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

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