Seems Absurd, But It Must Work

by Mark Goldwich

Today I wanted to highlight a pair of recent claims that provide great insight into the strategies employed by property insurance companies (I could do a lot more than two, but for the sake of brevity I’ll just use the two). As we go through these together, you will note a few things both have in common, even though they are being handled by different adjusters at different insurance companies. And one thing is for sure, you don’t want to be treated like any of these people.

Image from en.wikipedia.org

In the first claim, a family experienced a failed supply line to an upstairs commode. This is fairly common, as all toilets have supply lines that remain under pressure, just waiting for the next flush, and these supply lines tend to be made of fairly inexpensive material with very simple connections. These lines can easily go unnoticed for decades (until they fail). When they do fail, the water does not usually drip out. Rather it pours out at a rate that can be measured in gallons per hour. And I’m not sure how these plastic lines know, but they seem to prefer to rupture in the middle of the night, or when people are away on vacation. Devious little suckers, right?

In this case, the line failed during the night, and spewed water for hours until the next morning, when both the upstairs and downstairs were inundated with water. And wouldn’t you know it; the upstairs bathroom where the line broke was right above the kitchen, where all the cabinets became soaked as well.

Sounds pretty straightforward - and it should be. But for some reason in this case, the insurance adjuster who initially inspected the loss only estimated about $18,000 in damages, and the insured wanted a second opinion after we were recommended to her by a co-worker of hers. It turns out her co-worker friend was right, and our estimate was more than double that of the insurance company.

Weeks turned into months as the carrier dragged its feet at every turn. First they wanted the adjuster to go back out to try to correct the estimate; then they wanted a national contractor to complete what they call a “peer review” estimate. The idea is the national contractor will write a fair estimate for what they would do the work for. In reality, the contractor knows they are usually not getting the job, and even if they do get the job, they know they can always submit a “supplemental” invoice to their pals at the insurance company so they can make a good profit. In this case, the national contractor rep told me before coming out that they will never do a job when a public adjuster is involved. Company policy. So, what do you think that does to the value of their estimate? If you guessed, “they write a low estimate”, then your intuition matches my experience. The rep was there for less than 20 minutes, mainly taking photos, and rarely measuring the room sizes, since we were giving him our estimate as a reference.

Image courtesy of flickr.com

Low and behold, the national firm generated an estimate that was much higher than the insurance company adjuster’s estimate, but it was still $12,000 less than our estimate. It is now 4 months since this loss took place, the insurance company has paid less than half of the contractor’s estimate, which is still $12,000 less than our estimate, and the insured is seriously considering accepting their offer, as they are tired of the claim dragging on. And trust me, if we were not helping her, she would have already accepted much less, just to get on with her life. Absurd, but it works.

In the next case, someone I have known for years recently asked me to look at his insurance settlement, admitting he had no idea whether it was fair or not. He had suffered wind damage to his roof, and the insurance company quickly paid to repair the damage, which totaled about half of his entire roof. So far he (and the insurance company) was lucky, as no water had leaked inside despite a number of severe rainstorms.

Immediately upon inspection of the roof and the paperwork he had received from his insurance company, I could see they were not just off on the amount being offered, they had failed to bring to his attention key facts which clearly warranted their paying for his whole roof to be replaced. They must have made a mistake, I thought, and this should be easy for them to fix. I told the insured I would let the insurance company know of their mistake, and if they simply corrected it and paid him in full, I would  charge him nothing.

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So I wrote the insurance company a half page letter, clearly explaining what their error was, why it was an error, and I even provided them with an estimate for the proper amount. After days of no response, I called the carrier, and was told the adjuster no longer worked for the insurance company. OK, I said, but didn’t you get my paperwork? Isn’t someone else going to handle this now? The rep politely said the claim was closed. I understand, I answered, but when you received my paperwork asking for the claim to be reevaluated, why wasn’t it reopened and given to someone else to handle. I could tell that if I never called them, they certainly were never going to call me. She then stammered a bit and suggested they just received my paperwork the day before(this had in fact been faxed and emailed to them about 10 days prior). Then she said she would get the claim to a manager to review it. When I asked how long it would take for someone to contact me, she admitted she had no idea. You could hear the embarrassment in her voice.

A few days later, I received an email from the new claim handler. It was very brief, and simply said he wanted to offer an initial compromise settlement of about $4,000 more than what was previously

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paid. A compromise?, I thought, this was very straightforward. They completely ignored their own policy and state statutes calling for a full roof replacement, which meant they owed about $10,000 more. What was there to compromise? So I responded in considerable detail, showing my math for exactly how I reached the amount I claimed was due, and asking him to point out any error in my math or in my reasoning. He responded by suggesting I was inflating my measurements, and overestimating the costs. He did so by misrepresenting actual numbers presented by myself, the original adjuster, and our local property tax appraiser’s website. His misrepresentations were clear and obvious. If he thought he was being tricky, he was quite mistaken. So I factually pointed out each and every misrepresentation that he made, and again offered him the opportunity to do the right thing.

You would think at this point, seeing that I was not falling for any of his tricks, let alone all of them, that he would just give up and pay the claim in full. No, he simply dusted himself off, and in another very brief email, offered another $1,000 to settle the claim. He was still about $5,000 short. I am certain here too, that if I were not involved, this insured would in all likelihood have accepted the additional money.  This would have forced the homeowner to take out a loan to get the roof replaced. Another absurd attempt to get an insured to settle for less than what was owed. I can’t help but believe that it must work on the vast majority of insureds, or they wouldn't resort to these tactics so often.

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

When Things Go Wrong and Then Right

by Mark Goldwich

Last week I wrote about an insurance claim that actually went right from start to finish (a fairly rare occurrence in my experience). This past week I was reminded of the awful reality of how rare that is, and how terrible it can be when things go wrong (at least until they go right).

Image courtesy of flickr.com

Imagine you are the grandmother of 5 children, and you are their sole caretaker and guardian. That sounds pretty tough enough, doesn’t it? Now imagine that the home the 6 of you live in is completely destroyed in a fire…2 days before Thanksgiving! Are you crying, yet? If not, just wait.

Now imagine you contact your insurance company of many years, and they assure you (on the phone) that everything will be alright, and they will send an adjuster out right away. An adjuster does come, but instead of paying you for the loss, or even advancing you some money for a place to live, or for clothes to wear (other than those on your backs), or for your next meal, you are told they will be sending an expert to investigate and determine the cause of the fire, and that you will have to make yourself available for a recorded statement.

During that recorded interview, you are asked about your finances, your medical history, your relationships, if you have a criminal history, whether you are taking prescription medications, where you were and what you were doing when the fire broke out, whether you or anyone you know had anything to do with the fire starting, and just enough other questions to make you feel like a suspect in the arson of your own home (when it wasn’t even caused by arson to begin with).

Image courtesy of en.wikipedia,org

Weeks pass as adjusters and investigators inspect the home and consider whether or not to pay any part of your claim. All the while you are forced to live with a relative who has 3 children of their own (that’s now a household of 8 kids for those of you with rusty math skills!). Weeks turn into months, and you don’t hear anything from your insurance company well into January (certainly you have a tear at this point, right?).

It is easy to understand how anyone could begin to lose hope at this point, but fortunately one of the fire restoration companies that came around looking to bid on the job told you about a public insurance adjuster that might be able to help get the claim processed. You contact them, agree to hire them, and finally things start to go right. Within days you get a $5,000 advance so you can move into your own place while your home is being repaired. The mere sight of the check causes you to completely break down. And not long after that, your public adjuster calls to say another $235,000 is on the way.

This is what countless numbers of people go through every year in dealing with their insurance companies. And it is what gives me great pride and satisfaction in my chosen career.  I was at a networking event with the adjuster that handled this claim recently, and we told the story of this claim.  When we were done, the woman sitting next to me (vice president of a local credit union) was staring at me, with a mixed look of shock and disgust, and said, “I don’t get it, why wouldn’t they just pay her?” to which I replied, “Why would they want to do that?”  “Isn’t that the whole reason for insurance?” she asked. “Yes” I said, “but if they paid her, their profits would be less, wouldn’t they?”

Image courtesy of Pixabay.com

 Obviously, I was toying with her a bit, but she soon realized what I have been saying for years – the smiling faces you see on TV and the catchy jingles you hear on the radio for insurance companies are not what you will likely be faced with when you actually file a claim. You will go from loyal customer to financial adversary. Every penny they pay out in claims is money taken from their bottom line. And they don’t like that.

This story illustrates that things can go very wrong in the course of an insurance claim. But as we have seen, things can also go right, either straight from the beginning or after they started going wrong. Unfortunately, most people will never be told they have the option of hiring a professional adjuster to assist them on their claim. For them, the ending to the story could be just as heart-wrenching as the beginning.

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And this is why I network, promote, talk to people, and use social media blogs. I want everyone to know they don’t have to settle for less than everything they are entitled to. I want them to know they have options, and they don’t have to simply accept poor treatment from an insurance company. They don’t have to hire me. They don’t have to hire anyone. I just want them to know they have the right. I really just want them to know, because people who know make better decisions that lead to happier endings.

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

When Things Go right

by Mark Goldwich

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

Image courtesy of commons.wikipedia.org

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

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

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

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

Image courtesy of commons.wikimedia.org

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

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

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

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

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