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.

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.

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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?

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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: www.floodsmart.gov

• 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.

Deflectors to Maximum

By Mark Goldwich

Rules of Engagement (Star Trek novel) (Photo credit: Wikipedia)

If you are a Star Trek fan then you will remember that any time the Starship Enterprise was being menaced by hostile aliens Captain Kirk would always tell Scotty to set “Deflectors to maximum.”  The ship’s deflectors would then be activated in order to give the Enterprise a way to defend itself against attack.  While both the ship and crew portrayed in the sci-fi series are works of fiction, believe it or not, there is at least one industry that has learned to use deflection as a means of avoiding payment to its customers.

In my book, UNCOVERED, I list three strategies that insurance companies routinely use to reduce or avoid claim payments. The three “Ds” as I call them are Delay, Deny, and Deflect. Deflection is what happens when the insurance company finds reasons to avoid paying money that you actually have coming to you on your claim. Although deflection is listed last on my list of three “Ds”, it can be encountered at any time during the claim.

What, exactly, does the “deflection game” involve? It involves the insurance company finding ways to avoid giving a direct, truthful answer to what would seem to be a fairly basic question: “Who has the moral and legal responsibility to make sure that my legitimate claim is paid in full, promptly and to my complete satisfaction?”

Isn’t that obvious? Doesn’t the insurance company itself have the obligation to pay the claim? The answer that seems obvious to the policyholder, sometimes becomes not all that obvious to an insurance company.  Especially once they involve a multitude of adjusters, engineers, restoration companies, attorneys, insurers, re-insurers, and third-party administrators that are all paid to do their bidding. There are so many cases of insurance companies dodging this issue that I can’t really do justice to the topic in a blog of this size. I can say, though, that it seems the legal system has finally begun to catch up with a few of the worst offenders.

Case in point: In Ohio, a jury held that a life insurance and disability management services company was guilty of breach of insurance contract; the jury awarded the plaintiffs $429,400 in compensatory damages for nonpayment of claims. But that wasn’t all. The jury also found the insurance company guilty of bad faith insurance practices, and mandated an award of $1,130,000 to the plaintiffs. They coupled this with a whopping punitive damages award of $3 million.

Documents from the case give some sense of the elaborate lengths to which some companies will go to avoid paying people the money they are owed. This particular insurance company used a third party administrator, and an affiliate re-insurer (which was also a 40% owner of the third party administrator) to combine their efforts in an illegal scheme to avoid paying completely legitimate claims.

The scheme involved a whole host of complex accounting maneuvers, as well as false information that was submitted to an insurance commission. Now, I realize that, at this point, you may be having some difficulty getting your head around all this. That’s because a) such cases are pretty complicated and b) you’re probably still thinking of insurance companies as responsible businesses with an obligation to take care of their customers. All too often, it seems they’re simply not very responsible and are not thinking about the interests of their customers. 

What in the World?

There are other cases like the Ohio case.  Many have a disturbing, and all-too-common, theme – the insurance company says that paying is actually someone else’s responsibility. But the “someone else” either never follows through or only partially follows through on its obligation to pay. Or they say that the other party’s report or advice “prevents” them from paying you (as if they can’t override the opinion of an outside party). I’ve personally seen this happen many, many times. 

In general, the usual deflection is as follows. After a supposedly licensed and professional insurance company adjuster inspects the property, he or she just can’t seem to figure out whether or not to pay the claim. So, they hire an engineer to help determine what the “cause of loss” was, in order to determine whether or not it is covered. Sounds reasonable, right? Keep in mind, we have done hundreds of these where the cause of loss was as simple as “wind” or “hail”. And the real kicker is, the engineer always tends to be the same one the insurance company uses over and over and over again.  Surprised?  Well you shouldn’t be, since this individual’s very livelihood may depend on maintaining a good relationship with the insurance company. You can probably see why we are not surprised when again and again, the engineer’s report suggests that it was not really wind that caused the shingles to fly off the roof or get beat up during a storm, but that it was just an “old roof” that was “improperly installed”, and had “manufacturing defects”. The adjuster might then say something like, “I’m sorry, but the engineer says it’s not covered, so there’s nothing I can do about it.” THAT’S deflection, and fortunately for our clients, there IS something that can be done about it!

Do all of these cases wind up in court? No. In my opinion, very few of the cases that could go to court ever get there and most policyholders in these situations do not get the impartial hearing they deserve.

Why not? Because many policyholders simply don’t have the time or perseverance to wander through a bureaucratic maze that has no clear resolution. (As we all know, going to court can be a long, expensive process.) After all the delays and denials, many people are simply sick of the process of trying to get the insurance company to pay up. They either take whatever crumbs they’ve already been tossed, settle prior to trial, or give up altogether.

It’s not really that surprising that most of these situations don’t land in a courtroom. By the time most people start thinking about lawsuits, they’ve already been battling the insurance company for a year or more. Then they are told the lawsuit will probably take another two to three years! Be honest. What would you do? Sometimes, when people find themselves caught in the “deflection game,” they’ll give just about anything to be done with the process.

Isn’t the legal system supposed to correct problems like this? In theory, yes. And there are some encouraging signs. A 2007 DecisionQuest poll of practicing attorneys found 75% of respondents would now expect jurors to agree with the sentiment that insurance companies “would do anything to avoid paying even legitimate claims.” That’s refreshing evidence of reality-based thinking within the halls of justice. But most of these cases, as we have seen, never reach a jury. For your own protection and economic well-being, it may be wisest to stop thinking of insurance companies in terms of your friendly neighborhood insurance agent, and start thinking of insurance companies as resembling the people who ran their firms into the ground by setting up a nearly-incomprehensible maze of wholly-owned, partially-owned, and “affiliated” companies … companies whose relationship with one another seems to require an advanced degree.

I realize that sounds like a harsh assessment. But the irresponsible use of deflection warrants it, in my view. Let me give you a brief example that may help you understand why I feel as I do about this.

Think of a big insurance company. Let’s call it Baseball, Mom, and Apple Pie Insurance – BMAPI for short. BMAPI’s motto is, “Faithful and friendly, during good times and bad.” It has an expensive ad campaign that features gorgeous sunsets, adorable puppy dogs, and happy policyholders who dearly love and respect their local BMAPI agent.

Now, if BMAPI handles, say, 1.5 million claims in a year, and then deflects an average of just $300 on each claim, that adds up to nearly five hundred million dollars more for BMAPI to keep for itself and invest as it sees fit.

Yes. Nearly half a billion dollars.

Follow me on this next part, because it’s extremely important.

The number I just used to get to roughly half a billion dollars of extra income for BMAPI was, you will recall, three hundred dollars of, shall we say, “savings.” Now, you might well ask: How realistic is that figure I just used? Is three hundred dollars a valid number - or a dubious number? Hear me, please, when I tell you that my typical additional recoveries – that is, the money I get the insurance company to agree to pay in valid claims over and above what it had already agreed to pay out – is NOT in the hundreds of dollars.

It’s in the THOUSANDS of dollars. That’s an average case.

star trek phaser model (Photo credit: Wikipedia)

Realizing that hundreds if not thousands of dollars are being withheld by the routine use of insurance company deflectors are not science fiction.  They are all too real.  Now if I could only find my phaser.

For more information on bad faith insurance issues, visit: www.badfaithinsurance.org.

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.