What Will Your Insurance Policy Pay If You Break a Compact Fluorescent Light Bulb?

July 13, 2008

Everybody’s singing the praises of the new compact fluorescent light bulb (CFL). And for good reason…they save tons of electricity.

But what happens if one breaks inside your house or business?

My opinion is that most people will simply sweep up the mess and not give it much thought. But there is a BIG, dangerous component in a bulb called Mercury, and mercury is one of the most toxic substances known to man.

If you break a CFL bulb, you’ll likely find that the proper cleanup could be very costly. And you’ll likely find that there is NO COVERAGE in your property insurance policy. Most policies have environmental cleanup exclusions. Even if your home is damaged by a tornado, hurricane or fire, the broken bulbs could cause you to incur thousands of dollars in environmental cleanup costs that your insurance policy will EXCLUDE.

Because CFLs contain a small amount of mercury, the Environmental Protection Agency (EPA) recommends the following clean-up and disposal guidelines:(1)

1. Before Clean-up: Ventilate the Room

* Have people and pets leave the room, and don’t let anyone walk through the breakage area on their way out.
* Open a window and leave the room for 15 minutes or more.
* Shut off the central forced-air heating/air conditioning system, if you have one.

2. Clean-Up Steps for Hard Surfaces

* Carefully scoop up glass fragments and powder using stiff paper or cardboard and place them in a glass jar with metal lid (such as a canning jar) or in a sealed plastic bag.
* Use sticky tape, such as duct tape, to pick up any remaining small glass fragments and powder.
* Wipe the area clean with damp paper towels or disposable wet wipes and place them in the glass jar or plastic bag.
* Do not use a vacuum or broom to clean up the broken bulb on hard surfaces.

3. Clean-up Steps for Carpeting or Rug:

* Carefully pick up glass fragments and place them in a glass jar with metal lid (such as a canning jar) or in a sealed plastic bag.
* Use sticky tape, such as duct tape, to pick up any remaining small glass fragments and powder.
* If vacuuming is needed after all visible materials are removed, vacuum the area where the bulb was broken.
* Remove the vacuum bag (or empty and wipe the canister), and put the bag or vacuum debris in a sealed plastic bag.

4. Clean-up Steps for Clothing, Bedding, etc.:

* If clothing or bedding materials come in direct contact with broken glass or mercury-containing powder from inside the bulb that may stick to the fabric, the clothing or bedding should be discarded. Do not wash such clothing or bedding because mercury fragments in the clothing may contaminate the machine and/or pollute sewage.
* You can, however, wash clothing or other materials that have been exposed to the mercury vapor from a broken CFL, such as the clothing you happened to be wearing when you cleaned up the broken CFL, as long as that clothing has not come into direct contact with the materials from the broken bulb.
* If shoes come into direct contact with broken glass or mercury-containing powder from the bulb, wipe them off with damp paper towels or disposable wet wipes. Place the towels or wipes in a glass jar or plastic bag for disposal.

5. Disposal of Clean-up Materials

* Immediately place all cleanup materials outdoors in a trash container or protected area for the next normal trash pickup.
* Wash your hands after disposing of the jars or plastic bags containing clean-up materials.
* Check with your local or state government about disposal requirements in your specific area. Some states prohibit such trash disposal and require that broken and unbroken mercury-containing bulbs be taken to a local recycling center.

6. Future Cleaning of Carpeting or Rug: Ventilate the Room During and After Vacuuming

* The next several times you vacuum, shut off the central forced-air heating/air conditioning system and open a window prior to vacuuming.
* Keep the central heating/air conditioning system shut off and the window open for at least 15 minutes after vacuuming is completed.

Man, they are serious, aren’t they?

(1) Environmental Protection Agency, http://www.energystar.com


Wildfires, Depreciation and Coinsurance in Contents Claims

July 5, 2008

If you don’t understand this part of the insurance contract, it can cost you thousands of dollars at claim time.

In a Homeowner policy, there is not usually a section entitled “Co-insurance.” But the clause is listed in the Section I, Conditions, of the standard Homeowners HO-3 form. It’s also in the Loss Conditions portion of any Business Insurance policy.

Go find your policy and turn to the Conditions section, and read the part labeled “Loss Settlement.” I thought about putting a copy of the section in the book to make it easy for you. But the reason I wrote the book is to shake you up and get you more involved in your own claim. You’re going to get paid hundreds or thousands of dollars more because of the stuff in the book, and you’re not going to give me any of it. So, get busy and read your policy.

Let me at least translate the legalese: The insurance company requires you to carry policy limits on the Dwelling equal to no less than 80% of the full replacement cost of the building (not including foundations or underground pipes, wires or drains). If you do not carry 80% of the full replacement cost, the insurance company will penalize you when you have a claim.

Simple. But dangerous for your cash flow.

If you have a home that has a replacement cost of $100,000, and your policy limit for the Dwelling is $100,000…no penalty! You’re insured 100% to value. You really should be insured 100% to value all the time.

Please remember that being insured to value does NOT mean that you insure your dwelling or building for its market value or sale price. Insure the dwelling or building for the amount of money it will take to rebuild the dwelling or building completely. Don’t include the cost of the land your dwelling or building sits on. Insurance companies don’t insure dirt.

In this example, you could be insured for as low as $80,000, and receive 100% of any claim with no penalty. However, you’d still be technically underinsured. In the case of a large loss, you would not collect all you should to make you whole again.

Insure your property for anything less than the percentage shown in your policy and there could be a coinsurance penalty.

There’s a simple formula to figure co-insurance:

What you DID buy divided by what you SHOULD have bought.

DID x loss minus deductible = claim amount

Here’s a quick example:

The value of the property $150,000
Coinsurance percentage 80%
The limit of insurance is $100,000
The deductible amount is $250
The amount of the loss is $20,000

Step 1: $150,000 x 80% = $120,000 (the minimum amount of insurance to meet your coinsurance requirement)
Step 2: $100,000 (what you did) divided by $120,000 (should have done) = .67, or 67%
Step 3: $20,000 x 67% = $13,400
Step 4: $13,400 – $250 = $13,150

You see? It really is quite simple to figure out.

Sometimes, there is a coinsurance requirement on the Contents portion of the coverage, too. The same rule applies, and the same method of figuring out if there’s a penalty applies.

The BIG problem is that most people don’t figure out that there is a coinsurance problem until AFTER they have a loss of some kind.

There are a few obvious reasons that property is under-insured:

1. When you filled out your insurance application, you used a figure that is too low for replacement cost of your house. This could come from:

A. Ignorance…meaning you don’t really know how much it would actually cost to replace your home.

B. Simply using the same policy limits on your new policy as you had on your old policy.

C. Being too cheap, and buying a policy with lower limits to save premium dollars.

2. Your agent doesn’t know what it would cost to replace your house when he submits the application.
3. The agent was bidding low price to get your business, and made some cuts to get the premium down.

About the only thing that you can do to minimize a coinsurance penalty is to challenge it.

If your adjuster tells you that you will have a coinsurance penalty assessed against your claim, make him provide his calculations of the coinsurance penalty.

The first thing that the adjuster has to do to calculate coinsurance is to calculate the valuation of your property. EVERYTHING ELSE he does is based on that calculation. If it’s too high, your coinsurance penalty will be too high.

He will calculate either the Replacement Cost Valuation (RCV) or he will calculate the Actual Cash Valuation (ACV). The policy will tell him which valuation to use. He doesn’t get to choose on his own. Most Homeowners policies are RCV on the dwelling. Most commercial property is ACV, although an endorsement for RCV is available for a small extra premium.

To calculate the property valuation, the adjuster can use:

1. A Wild A** Guess (often done)

2. His estimating software. Some estimating software has valuation built in, so all he has to do is enter data about the age and condition, the size of the building, the features, etc., and that software will do the work for him.

3. Marshall and Swift (M&S). The absolute standard in the insurance industry for building valuation is a company called Marshall and Swift. All adjusters know about M&S, even if they don’t know how to use their database. (If your adjuster doesn’t know about M&S, or how to use it, get another adjuster FAST.) Even if the adjuster uses M&S, you need to review the data he entered to obtain the valuation. If he entered wrong data, the valuation will be wrong, too. For example, if he used the area of your house at 2,000 square feet, and your house is only 1,600 square feet, the entire valuation will be wrong.

There are a bunch of variables that are entered into a valuation software program that have a DIRECT bearing on your valuation. Things like:




Number of rooms


Finishes and extras

Basement or slab foundation

YOU can now use the Marshall and Swift valuation program, just like an adjuster. They have built a website where any person can go and calculate their own property valuation. They charge about $8-$15 for each valuation. There is a tutorial on the home page of the website, which will tell you exactly how to use the program. It’s super easy and very accurate.

Go to: http://www.swiftestimator.com


Remember, require your adjuster to furnish a copy of his valuation calculations for your property. Compare it with the Marshall and Swift valuation to make sure it’s accurate. If you don’t have the ability to get your own valuation, take the adjuster’s valuation and show it to a real estate broker. Not just an agent, but a broker. The broker will likely be able to look at your property and the valuation, and tell you if it’s accurate.

If you have calculated a lower valuation than the adjuster, insist that he use your valuation for his coinsurance calculations.

If you’re read my book BEFORE you have a claim, call your agent and make sure that you are insured to value.

If you’re read my book AFTER you have a claim, call your agent and ask him why you’re NOT insured to value. If your agent messed up, and you can prove it, you could have grounds to make a claim against the Errors and Omissions Liability coverage of your agent.

If you’re reading this book to figure out how to collect every dollar you’re entitled to collect, then…

FIGHT FOR EVERY PERCENTAGE POINT!! Every percentage point of a coinsurance penalty is worth hundreds or thousands of dollars. Don’t allow yourself to be cheated out of all of the money you are entitled to collect!

Wildfires, Depreciation and Contents Claims

July 5, 2008

Next are the most important two questions that exist concerning depreciation:



1. Who determines the correct amount of depreciation?

2. What method is used in determining depreciation?

Answer to Question 1:

The insurance company will determine the amount of depreciation that is subtracted from the replacement cost of your property UNLESS YOU CHALLENGE THEIR FIGURES.

Answer to Question 2:

A. Insurance companies and insurance adjusters use published depreciation tables to determine the useful life and depreciation of a vast assortment of property. I have posted depreciation tables in the Resources Section on my website that you can print off for yourself. I’ve also listed links that you can click on to see other depreciation tables.

B. Most adjusters and claims departments these days have sophisticated estimating software that has the depreciation tables built right into it. So, when the adjuster writes his estimate, he will enter certain data, like the age and condition of the property, and the estimating program automatically depreciates the property.

C. Lots of times, an adjuster will use his experience and just take a wild guess. This is sometimes known as “Gut Depreciation“. It’s a wild guess based on past experience in calculating claims. You might have heard this sort of guessing called a WAG (wild-a** guess) or a SWAG (scientific wild-a** guess) or an EWAG (educated wild a** guess). You would be very surprised how often a WAG, EWAG or SWAG is used in an insurance adjuster’s life. You’d also likely be surprised how often adjusters’ WAGs are accurate.

But now, let’s consider how this depreciation, RCV, and ACV stuff affects YOU in your claims.

A standard Homeowner’s Policy settles the Dwelling loss on RCV. However, it settles the Contents loss (sometimes referred to as Unscheduled Personal Property, or UPP) on ACV. Read your policy carefully to determine what kind of coverage you have.

Most insurance companies have an endorsement that you can buy that provides replacement cost valuation on your Contents. The premium is only a few dollars more, and you should NEVER be without this endorsement on your policy. If you find that you do not have this Replacement Cost (RC) coverage on your Contents, DO NOT LET ANOTHER 24 HOURS PASS BEFORE YOU ADD IT TO YOUR POLICY.

So, if you have a Homeowners loss, and you don’t have the RC endorsement, the adjuster is going to depreciate ALL of your contents. ALL OF THEM.

If you have a policy that has the Replacement Cost Valuation endorsement for Contents, the adjuster and insurance company is going to use depreciation to create something called a “holdback of recoverable depreciation.”

Remember Chapter One, “Water, Water Everywhere?” In that chapter, I told you about recoverable depreciation. My homeowners insurance company used this process in my water claim. They will use the same process in your Contents claim.

Our Homeowner Policy had a Replacement Cost Value (RCV) clause. Here’s what the policy says about RCV at the time of a loss:

“Conditions, How losses are settled.

2. Under Unscheduled Personal Property Coverages:

We will pay only the actual cash value of the damaged property until actual repair or replacement is completed.”

So, even if you have the RC Endorsement on your policy, the insurance company will hold back the recoverable depreciation until you replace your damaged property. If the adjuster doesn’t calculate depreciation correctly, the insurance company could withhold hundreds or thousands of dollars from you that you need to replace your damaged property.

Remember the reason I wrote the book? To show you how to collect hundreds or thousands of dollars MORE in settlement that you are entitled to collect?

Well, you are entitled to a VERY ACCURATE calculation of your CONTENTS loss.

Here are the things that YOU MUST DO.

1. Require the adjuster or the insurance company to provide you with a copy or copies of the exact depreciation tables that they used to determine the depreciation on every item of your Inventory list. Once you have the tables, you can compare each item to the tables to make sure that you are paid exactly what each item is worth.

2.. What if you find that your adjuster or insurance company has used the WAG/SWAG method? DO NOT ACCEPT IT. There are depreciation tables for nearly everything. Insist on receiving the depreciation tables that the adjuster or insurance company used on your claim.

You need to have access to depreciation tables that are industry accepted tables. So, here’s another resource for anyone with a computer and the ability to go to a website.

Go to: http://www.claimstar.net

At the top of the homepage is a horizontal bar that has words in it. Move your cursor to the far right until it is over the words “Tool Chest.” A drop-down menu will appear. Move your cursor down to “Depreciation Calculator.” Click on it.

Now, a page will open that allows you to find a depreciation schedule either by keyword search, or on another drop down menu that lists every type of property from different categories.

This is a SUPER tool! This tool will get you hundreds…possibly thousands of dollars more in your Contents claim, because the depreciation will be accurately calculated.

Once you prove that you’ve replaced the damaged property, the insurance company will release the holdback amount to you.

You see, it’s simple…but not easy!

Wildfire Victims and Their Contents Claims!

July 5, 2008


Picture a homeowner couple in Southern California. They had a home in a wooded area, and wildfires began. The local Fire Department came to their home and required that they evacuate because the winds shifted and the fire was coming straight for their home. They gather up their most valuable possessions and leave their home. Three days later, they return to find a smouldering pile of ashes…a total loss.

This article is about the Contents portion of the claim. The insurance company will not just write you a check for the policy limits in your Homeowners policy. You’re going to have to prove your loss.

The insurance company adjuster MIGHT give you an inventory form to fill out. They might not. But, they ARE going to expect you to submit a complete, accurate inventory list.

I hope that you videotaped all of the interior of your home PRIOR to the loss, and have secured that videotape in a safe deposit box off-site. Then, you could view the tape and write out the inventory.

But let’s just assume that all you have is ashes. What to do next?

Get a copy of a JC Penney catalog. Better, get two…one Fall/Winter, one Spring/Summer. Get your hands on as many other catalogs as you can find. As you look at the pages of the catalogs, you’ll remember the things that you had in your home. You will find hundreds or thousands of dollars in personal property that you likely would not have remembered owning. Not only will you remember dozens and dozens of items, but you’ll have a retail price from a reputable retailer right at your fingertips.

Please don’t misunderstand what I’m telling you to do here. I’m NOT telling you to write down items on your inventory list that you did not own. That’s fraud, and you can go to jail for fraud. I’m simply showing you a way to remind yourself of things long ago purchased, and possibly stored and forgotten. For example, how many parents bought a vaporizer to run in their childrens’ rooms at night when the children were sick? That vaporizer might not have been used in years, but you owned it, and you have a right to collect for it under the terms of your policy.

Write down EVERYTHING. Your inventory list will likely take dozens of pages. Remember to show (1) replacement cost, (2) age of the item, (3) Price paid.

When I say “write down EVERYTHING,” I mean it. Thumbtacks, Q tips, makeup, bobby pins, tools, extension cords, light bulbs….if you owned it, record it.

You can be certain that the personal property you DO NOT INVENTORY will NOT be paid for.

Next article will discuss what happens next, when the adjuster begins to apply depreciation to your Contents Inventory. How can you win this fight?

What do you do if wildfires force you to evacuate from your home or business?

July 5, 2008

Additional Living Expense (ALE) Claims


Over the past few years, wildfires in the Western United States have been horrendous, displacing tens of thousands of people from their homes and businesses, and causing billions of dollars in fire damages. But what happens when the local authorities force you to evaluate when fire gets too close?

There’s coverage in the ALE portion of the policy! I promise that the insurance companies are not running radio and TV ads, alerting their policyholders about THIS coverage!

Here’s a exact quote from the ISO homeowners policy:

“If a civil authority prohibits you from use of the “residence premises” as a result of direct damage to neighboring premises by a Peril Insured Against in this policy, We cover the Additional Living Expense and Fair Rental Value loss…..for no more than two weeks.” (1)

In a Homeowner insurance policy, you’ll usually see ALE coverage listed as Coverage D. Sometimes, it’s called Loss of Use.

Additional Living Expense (ALE) coverage is just what you might think it is. When you have a covered loss that makes the place you reside unfit to live in, and it forces you to spend more on normal operating costs than you usually spend, ALE coverage pays.

Your policy probably reads just like the following: “Additional Living Expense, meaning any necessary increases in living expenses incurred by you so that your household can maintain its normal standard of living.”

ALE covers things like:

a. Temporary housing, like in a hotel, an apartment or rental house. If you lived in a modest home, don’t expect the insurance company to pay for the finest hotel room in town. But on the other hand, if you lived in an expensive home, you should EXPECT AND DEMAND that the insurance company pay for temporary accommodations of like kind and quality. Remember, if you had a mortgage on your home, you still have to pay the mortgage payment while the home is being repaired. Lots of times the loss is severe and the adjuster knows you’ll be out of your home for weeks or months. The insurance company will save money if it places your family in an extended stay hotel, or in a short term apartment or house lease. In addition to saving money on rent, the insurance company can pay advances on Contents, and if you’re in an apartment or house, you’ll have a place to store your new contents, like furniture, clothing and kitchenware.

b. Laundry and dry cleaning. If you had laundry facilities at your residence, it will cost you more to get your clothes cleaned. The extra cost you incur is covered.

c. Meals. This is where many people misunderstand their claim. Certainly, if you cannot buy and prepare your own meals, you’ll incur higher food prices. But insurance companies won’t usually pay for costly steak dinners and high bar tabs. You’re going to have to be able to explain your meal purchases, so don’t go overboard. You’ll have to make an accurate estimate of what your family normally spends per month on food. That can certainly include restaurant meals that you normally buy. Just remember that ALE is paying for items OVER your normal standard of living. Keep METICULOUS RECORDS of your food purchases. If the insurance company places you into a temporary apartment or efficiency hotel that has a kitchen, they’ll stop paying for most extra meals.

d. Boarding costs for pets. Someone has to take care of your pets while you cannot live in your home. This is covered.

e. Increased transportation costs for all your vehicles. Do you have to drive your children to school, since your temporary accommodations are not in the old school district? That’s covered. Do you have to drive further to and from work? Covered. Do you have further to drive to doctors, dentists, ballet classes, soccer games, etc.? The increased cost is covered. Did I say KEEP METICULOUS RECORDS? Most office supply stores have automobile expense logbooks for sale for a dollar or two. Stop by and pick up one for each car you drive, and write down EVERY TRIP. Keep all receipts for every penny you spend on transportation.

f. Furniture rental for a temporary residence. You have to have chairs and beds and other stuff…even pots and pans, dishes and temporary electronics. However, don’t try to get them to pay for a 60″ plasma flat screen TV rental if you had a 27″ color TV at home.

g. Relocation and storage expenses. Perhaps some of your personal property was not damaged. Perhaps some was damaged, but the restoration contractor is cleaning and repairing it. Once it’s cleaned and repaired, it’s got to be stored somewhere until you can move back home. Covered.

h. Costs of telephone or utility installation at your temporary residence. This would include deposits that the utility companies might require. Don’t forget garbage pickup at your temporary place. It’s all covered. Even cable TV hookups would be covered if you had cable at home prior to the loss.

What if you stayed with relatives, and did not incur increased rent, and many of the other expenses shown above? Another scenario is that you just simply do not want to go through the process of documenting all of your extra expenses. The policy gives you the option to be paid “Fair Rental Value”, which is: “the fair rental value of that part of the ‘residence premises’ where you reside less any expenses that do not continue while the premises is not fit to live in.”

How much would your house rent for? That’s the question.

You’ll need to make a comparison between your residence, like it was before the loss, and properties in the neighborhood that are comparable to yours. A good real estate broker can be very helpful in substantiating these comparable properties and the monthly costs of them. Once you determine the Fair Rental Value of your home, you must subtract expenses that do not continue during the restoration period, such as some utilities, garbage pickup, landscaping services or maid services.

Some insurance companies will still pay for extra transportation costs, relocation expenses, storage of contents and utilities in addition to Fair Rental Value. Some will make you choose either ALE or Fair Rental Value. Find out from your insurance company what they are going to do, and make your decision.

Go to the website at: http://www.insurance-claim-secrets.com and find the Resources tab. Download the ALE worksheet and make as many copies as you need. Use it as your guide to record and submit your ALE claim.

If your records and receipts were damaged in your loss, contact your utility companies, credit card companies and other creditors and get copies of the last couple months’ bills. You’ll need these records to confirm your normal operating expenses.

Finally: Don’t be surprised if your adjuster or claims examiner tries to disqualify some of your legitimate expenses. Don’t just accept what the adjuster says. If it’s a truly legitimate expense, FIGHT FOR IT!! Go over the adjuster’s head to his supervisor. Keep fighting. Send them a letter that insists that they give you written denial of any legitimate expenses. Once you have that in your possession, call your state Department of Insurance (DOI) and register a written complaint. You never know what impact a DOI complaint will have on your claim.

(1) Insurance Service Office, Inc., “Policy Kit for Insurance Professionals,” 1990.

Wildfire victims will lose tens of millions without this information!

July 5, 2008

The Southern California wildfires are causing the largest population evacuation in California’s history, and over $1 billion dollars sofar in property damage. Once the TV cameras leave the damaged areas, the property owners and policyholders will have to get busy with the process of filing insurance claims.

I’m Russell D. Longcore, the nation’s foremost authority on property insurance claims. I’m the author of the book “Insurance Claim Secrets REVEALED!” My book shows consumers how to take control of their insurance claims, and collect hundreds or even thousands more dollars in their claim settlements.

I spent the last 15 years of my 34-year insurance career in the claims adjusting side of the business. I became increasingly sickened by the ways that insurance companies minimized, shrunk, depreciated and flat-out denied claims that they knew were legitimate claims. So, I wrote a book showing consumers how to take control AWAY from the insurance companies. I know ALL the tricks, and I reveal them in my book.

Writing that manuscript got me fired from an international claims adjusting company! What kinds of information is in this book that scares the adjusters and insurance companies so much?

So for you, the reader of this article, I have posted a Top Ten List of crucial steps in the claims process. Then, I wrote and posted a complete article about each of the Top Ten.

Most people don’t read their insurance policies. Even when they try to read them, they find them frustratingly complicated. Insurance policies list what you must do to file a claim, but they NEVER tell policyholders HOW to do it.

The “devil” of the claim is in the details of the claims PROCESS, and the insurance companies hardly EVER explain the process. If they did, it would cost them millions more. Insurance companies do whatever they can to control the CLAIMS PROCESS. But, if you learn the CLAIMS PROCESS from me, you’ll be able to take control of the process away from the insurance companies, and add hundreds or even thousands more dollars to your claim settlements!

Insurance companies will pay the least amount of money that the policyholder will accept to settle the claim. But, if you allow the insurance company to handle your claim for you, how will you ever know whether you got ALL you were entitled to collect?

Let me share some of these strategies with you.

  1. For the hundreds of thousands displaced from their homes, there is coverage in the homeowners or renters insurance policy for living expenses while you were displaced. In that coverage, there is a whole list of eligible expenses that you don’t know about and it’s not listed in the policy. The insurance companies will likely not tell you this, but I’ll tell you.
  2. How will you reconstruct your inventory of personal property? I’ll show you how.
  3. The insurance company will depreciate your dwelling and personal property, even if you have replacement cost coverage. Let me tell you how to beat this process.
  4. Are you underinsured? If you don’t FIGHT THIS PROCESS, the insurance company will determine how much your dwelling is worth, and if you have enough insurance. If THEY say you’re underinsured, they’ll hit you with a penalty. I can show you how to fight and get the correct valuation on your property.

Watch for my next four articles. In them, I’ll expand on each one of the four points listed above. In addition, read each of the articles about the Top Ten List.

You can win the insurance game when you have the right tools!!