Public Adjusters: How To Choose the Right Public Adjuster

June 20, 2009

Public Adjusters (PAs) are licensed claims adjusting professionals that represent the policyholder in the calculation, preparation and submission of a claim. They do not work for the insurance company. They work for YOU, the person or business who suffered the loss.

Public Adjusters only work on property claims, such as homeowners, apartment complexes, and businesses. They do not represent clients in auto or liability claims.

The biggest challenge for a policyholder who has had an insured loss is the calculation, preparation and submission of his claim. Most people do not have the expertise to submit an insurance claim, and they end up leaving hundreds or even thousands of dollars “on the table” that they are entitled to collect…but don’t collect. A PA will maximize your claim settlement.

I strongly recommend that you contact a PA any time you have a property claim. A consultation will customarily cost you nothing, but their representation could collect thousands more for you.

When it’s time to find a Public Adjuster, do the following:

1. Use your computer search engine and search for “Public Adjuster” along with your city or zip code.
2. Look in the Yellow Pages under “Public Adjusters.”
3. Go to: http://www.napia.com which is the website for the National Association of Public Insurance Adjusters and get referrals in your area.

Contact at least two PAs in your area and interview them with these questions:

1. Are you licensed in your state?
2. How many years have you been a PA?
3. Do you have a specialty?
4. Can you provide a list of at least ten satisfied customers with phone numbers?
5. Do you have documentation of your success in insurance settlements?
6. Have you ever had a complaint filed against you with the Department of Insurance?
7. Please explain your fees and how you are paid.
8. Please provide a copy of your retainer contract.

Based upon the information you receive from each PA, and how you get along with them, make your choice which PA will be on your team. Then work together to collect every dollar that you are entitled to collect.

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Restoration Contractors: Liability Issues That Can Affect YOU!

June 16, 2009

If you are the victim of an insured loss, such as a fire, flood, tornado or hurricane, you will likely have to hire a restoration contractor to complete repairs on your home. However, here is an issue that most property owners never consider…until it’s too late.

That issue is the liability insurance of the restoration contractor. No matter if you are the owner of residential or commercial property, you could have major liability issues in the process of the restoration.

Restoration contractors are customarily general contractors. That means that they manage the work of sub-contractors. They may hire plumbers, framing crews, roofers, electricians, drywall crews, painters and other artisans to complete the work on your property. Many times, the restoration contractor has a crew of workers on his payroll. But, there are some restoration contractors that only act as construction managers.

There’s nothing wrong with that arrangement if the job gets done on time and on budget.

You’ll be entering into a contract with the contractor you choose. In addition, you will be granting authority for your contractor to work on your premises, as well as his sub-contractors. Here is where you must take care to protect yourself.

In the pre-contract process of verifying your chosen contractor’s credentials, you will have required the contractor to provide you with a current copy of his insurance certificate. Take a few minutes and phone the insurance company and confirm that the coverage is in effect, and that the policy dates are correct.

You must insist that the restoration contractor carry General Liability, Completed Operations and Workers Compensation insurance (if he has employees). In addition, you must insist that each sub-contractor furnish the same insurance certificates. The only exception would be a contractor who worked alone and had no employees. That fellow would not need Workers Compensation insurance.

Another very important strategy is to insist that ALL the contractors place you on their insurance policies as an “Additional Named Insured.” That way, if anything were to happen in the course of repairs, such as a worker injury or some other liability issue for which they are liable, THEIR insurance policy would defend and indemnify on your behalf.

This one strategy could save you hundreds of thousands of dollars in a lawsuit award, and thousands in legal fees defending the suit.

Don’t leave yourself vulnerable to liability and lawsuits. Use this strategy!


Personal Property Claims: The Depreciation Trap

June 10, 2009

Personal property claims can be some of the most frustrating claims in the insurance claims process. The deck is stacked against you if you have any kind of insurance policy that insures your personal property. This is true for property owned by homeowners and renters as well as the personal property owned by businesses and other commercial entities.

Personal property, also commonly known as “Contents,” is usually described as any property in or on the insured premises not permanently attached to the building. Naturally, your policy will give you a definition that is more exact that this one, and will also have exclusions about some property that is not covered.

Many property insurance policies have the Replacement Cost (RC) Endorsement on the policy that covers the contents. The claims process for your Contents is the trap laid by the insurance companies. Don’t think that your insurer wouldn’t do that to you…they ALL do it.

Here’s the method of settlement found in all policies with the Replacement Cost Endorsement.

You submit your contents claim inventory. On that inventory you will have listed all of your contents, item by item, and the replacement cost. The insurance company will apply depreciation to each item of your contents, based upon its age and condition. Subtracting the depreciation amount from the replacement cost gives you the Actual Cash Value (ACV) of your property, whether business or personal.

The insurance company settles RC claims by issuing two separate checks. The first check will be for the ACV amount. According to the Loss Conditions in the policy, the insurer only pays you the RC of your contents once the replacement has been made.

For example, if you had an item with an RC value of $1000, and the depreciation amount was 30%, or $300, you would receive the first payment of $700. But, $700 does not replace the item. In order to receive the RC amount you will have to use $300 of your own money plus the $700 paid by the insurance company to make the replacement purchase. Then you are eligible for the second check, the $300 reimbursement.

Now…think about the same example if your entire contents claim is $100,000.

The insurance company “holds back” $30,000. In order for you to make the replacement purchases, you will have to find $30,000 of your own money, make the purchases, and then get reimbursed by the insurance company.

Where are you going to get that $30,000? Savings? Credit Card? Get a loan? Or perhaps you’re like many people that don’t have those cash resources available to them. They cannot make the replacements at all.

Do you see the trap?

Here is a strategy of three things you can do to minimize the effects of the Depreciation Trap.

1. Demand that the insurance company provide you a copy of the Depreciation Tables that they used to calculate your loss.

2. Compare each item, line by line, to be certain that the proper amount of depreciation was assessed by the adjuster.

3. Challenge any and all incorrect depreciation amounts.

By using this three-step strategy, you will maximize your Contents claim amount.

There is another Contents strategy that you MUST use when documenting your Personal Property claim. It relates to the personal property you won’t be replacing.

I knew a family that had a major fire loss. The wife was an attorney for many years. Then, when she had her first child, she decided to leave the business world and be a full-time mom. She had a closet full of expensive business suits, blouses, shoes and accessories. She was not going to replace them, since she was not using them any more for work clothing. So, we worked hard at establishing the highest possible value on her wardrobe. The ACV money that the family was paid for her wardrobe was used to make RC purchases of other items that did need replacing.

You can use this strategy in your Contents claim. Your home, condo, apartment or business is full of personal property that you’ve purchased over the years that (a) is obsolete or (b) you’re not using anymore. A business could have inventory items or office equipment that is unsold or obsolete. In each case, you have every right to be paid the correctly calculated ACV for those items. Then, you can use those dollars to offset the “holdback” amount when you are making your replacement purchases.

Don’t be a pushover! Don’t allow the insurance company to depreciate your Contents without a fight!

Fight back and WIN!


Hurricane Preparedness: Prune Your Losses

June 8, 2009

Hurricane preparedness goes beyond making sure your insurance policies are up to date. There are some practical things you can do around your property, whether home or business, that can lower the risk of storm damage.

The National Climactic Data Center published statistics for 2007 that showed property damage from storms at over $7.4 billion. 2008 totals were higher with the Texas hurricanes. I imagine that you do not want to be part of the 2009 storm statistics.

Let’s concentrate on the simplest remedies. When storms arise, the exterior of your home can be damaged by those high winds and heavy rain. So, roofs, siding and windows are the first line of defense in a storm scenario.

Here are some tips for lowering your risk exposure:

• Make sure that your roofing is in good repair. Well-installed roofs are less susceptible to damage.
• Make sure that your siding is tightly attached to the building.
• If a storm is heading your way, consider boarding up your windows to protect them from being broken by flying debris.
• Caulk windows and doors to prevent wind-driven rain from entering around the openings.
• Cut down unhealthy trees on your property.
• Prune tree limbs that overhang your home or power lines, or overhang your neighbor’s property.
• Clean out roof gutters so rain doesn’t back up and cause interior water damage.
• Move your outside furniture and other personal property into inside storage so it is not blown against your building or a neighbor’s building.

With these tips accomplished, your property has much less exposure to damage from wind and rain. Of course, if your area is struck by a Category 4 or 5 hurricane, missing shingles and siding will be the least of your worries.

At that point, you’ll be glad you updated your insurance policy.

You DID update your policy, didn’t you?


Hurricane Season 2009: Seven Tips To Be Ready

June 1, 2009

Today marks the beginning of the Atlantic hurricane season, and early predictions by NOAA suggest that this will be an average season with as many as four to seven hurricanes.

The National Hurricane Center says there is a 70 percent chance of having 9 to 14 named storms, of which 4 to 7 could become hurricanes, including one to three major hurricanes (Category 3, 4 or 5).

Hurricane season runs from June 1st through November. Tropical systems all get names, and the first one will be named “Ana” when it reaches sustained winds of at least 39 mph. Tropical storms become hurricanes when winds reach 74 mph, and become major hurricanes when winds increase to 111 mph.

Here are Seven tips on getting ready for hurricanes or tropical storms:

1. If you have property in a hurricane-prone area, seriously consider buying flood insurance from the National Flood Insurance Program. Buy the coverage now, not when storm clouds gather. Go to http://www.floodsmart.gov for more details.
2. Dig out your property insurance policy and read it. If there is anything you do not understand, call your agent and get your questions answered.
3. Make sure that you are insured 100% to replacement value. In this economy, market value has dropped, but replacement value is still high. A good average for replacement value is $80.00 per square foot.
4. Make sure that you have the replacement cost endorsement on the building and the contents.
5. Be sure what your deductible is. In many hurricane-prone areas, the insurance companies assess a deductible which is a percentage of the building policy limit, such as 2%, 3% or 5%.
6. Contact a Public Adjuster (PA). Have a conversation about the services a PA can perform for you when you have a major loss. Knowledge is power, but knowledge can also get you a lot more money at claim time.
7. Remember that if a civil authority issues an evacuation order, your homeowners policy will cover your Additional Living Expense while you’re out of your home. Read the policy for the details.

Let’s hope that this hurricane season will pass without even one storm striking land!


Texas Windstorm Insurance: Insanity in the Texas Legislature

April 22, 2009

Representative John Smithee, (R) Amarillo, has introduced HB911, which would, if passed and signed by the governor, cause the price of windstorm insurance – required of all coastal property owners – to soar by as much as 60 percent. Additionally, it wouldn’t cover nearly as much and for certain properties, it would not be available at all.

Smithee is the Chairman of the House Committee on Insurance. He cites a need to replenish the Texas Windstorm Insurance Association, the state risk pool, after the onslaught of Hurricanes Katrina and Rita in 2005, and Ike in 2008. The Association became the only insurer available for millions of coastal Texans after many insurers pulled out of windstorm coverage after the hurricanes.

The Texas Windstorm Insurance Association currently carries 215,537 policies totaling $58.6 billion in exposure. According to a December 2008 Texas Windstorm Insurance Association status statement, 43,079 of those policies are in Nueces County, with a total exposure of $11.4 billion.

House Bill 911 would, among other things:*
• Assess windstorm insurance rates based on geographical location, meaning coastal residents would pay more than inland residents. Rates could go up 60 percent for current coastal policy holders.
• Require coastal homeowners to purchase federal flood coverage.
• Cap windstorm insurance coverage at $250,000 per residence (homestead), well below the current $1.7 million cap, leaving thousands of homes uninsurable to their current value.
• Exclude coverage for rent houses, second homes, condominiums, apartments or other multi-family units.
• Decrease the maximum coverage for commercial buildings from $4.1 million to $1 million.
• Decrease the maximum coverage for government structures, such as schools and courthouses, from $4.1 million to $2.1 million, meaning those entities would have to use tax dollars to purchase more expensive, private insurance, if it’s available, to make up the difference.
• Create a 60-day waiting period before losses could be sought, as opposed to current policy, which prevents new coverage once a hurricane is in the Gulf of Mexico.
*Source: House Bill 911 and an analysis from the Galveston Windstorm Action Committee Inc.

I have no problem with higher premiums for coastal policyholders. That is simply accurate underwriting. Happens in all types of insurance. But don’t be fooled. If rates go up at the coastal states, they will rise state-wide. Texas is a windy state.

But that’s where my agreements end. The rest of this bill is trash.

Here are the elements of the bill I oppose:

Caps on windstorm coverage – Don’t cap coverage, charge the proper premium amount for the risk.

Requiring coastal property owners to buy Federal Flood insurance – it’s tyranny to force a property owner to insure for flood. If the owners want to remain uninsured, it is their right. That doesn’t mean a lienholder could not require flood insurance as a requirement for a mortgage. But that is a collateral protection issue. The federal government does not have a security position in a homeowner’s property without some mortgage in place (Freddie Mac, Fannie Mae, VA loans, etc.) To require flood insurance is a violation of property rights.

Excluding coverage for non-homestead dwellings, rental homes, apartments and condos – what kind of idiocy is this? There are millions of second homes, rental houses, condos and apartment buildings in the 14 coastal Texas counties. How would making them uninsurable help the situation?

The 60-day “deductible.” Texas law now states that, once a hurricane or named storm enters the Gulf of Mexico, new coverage cannot be purchased. But those storms usually make landfall, if at all, within a few days. In addition, in the peak of the hurricane season, storms are seldom 60 days apart. Look at Katrina and Rita, about 30 days apart. This proposal hurts Texans.

Smithee is from Amarillo, a city over 650 miles from the Texas Gulf Coast. That’s a distance equal to the distance from New York to Charlotte, North Carolina. I know that’s somewhat obscure, but this nut case is a long way from the water. It illustrates just how far out of touch with reality he is.

So, if a bunch of insurers have stopped writing windstorm coverage in Texas, and the Texas Windstorm Insurance Association is the insurer of last resort for many Texans, where are they supposed to go to get insured to value?

This kind of legislative nonsense could bring the Coastal economies to a screeching halt. Lenders would stop lending on properties that could not be insured to value. Insureds with losses could lose everything.

Texans, both inland and coastal, need to bombard their elected representatives with their opinions on this very bad bill and demand that it be rejected.

In the film industry, there is the widely known name of Alan Smithee. It is an official pseudonym used by film directors who wish to disown a project because they were so disgusted with the final product. I can only hope that someone paints the name “Alan Smithee” on this horrid bill.


Insurance Claims: You Must Spend Money to Collect Money

March 31, 2009

Insurance claims are getting more and more complicated. Insurance companies are on a mission to increase their profits. That may mean that your insurance company will deny claims, delay claims and defend claims to beef up their bottom line.

The fabled management consulting firm of McKinsey and Company was retained a short time ago by three of the largest Property/Casualty companies in the world. That would be Allstate, Liberty Mutual and State Farm. McKinsey’s mission…as always…is to show companies how to earn more profits. Their final report recommended “The Three Ds”…defend claims, deny claims and delay claims.

All three companies have used this strategy aggressively to boost profits for their shareholders. Concurrently, all three have experienced higher than ever complaints of claims handling. Other companies have noticed the higher profits, and will likely follow suit.

I’m leading with that part of the story to show you that the claims experience you may look forward to…or have had…or are experiencing right now…is not a mistake, or an isolated incident.

So, what can you do when you have a claim?

First: understand that you cannot just trust the insurance company to take care of your claim for you. They are protecting THEIR money. The moment you file a claim, you become their adversary. If you allow the insurance company to handle your claim for you, you are a fool. They will cut corners and pay the absolute LOWEST amount possible to get you to sign a Full Release and close the claim. You will leave hundreds or even thousands of dollars on the table that you could have collected.

Second: just because you have a deductible on your insurance policy doesn’t mean that the deductible amount is all you’re going to have to spend. You need to realize that you might have to spend some extra money to collect the money you’re entitled to collect.

Like what?

– $50-$200 to have your attorney review ALL the documents the insurance company asks you to sign.

– $50-$200 to get an independent appraisal of your car if it’s been damaged.

– $50-$200 to get an independent restoration contractor’s estimate of your real estate property if it has been damaged. Many restoration contractors will do an estimate for free, but be prepared to pay for it.

– $50-$200 to have your attorney supervise your recorded statement with the adjuster.

– $50-$200 for an Independent Medical Examination if you are injured in an accident that was not your fault.

These are just a few of the claims expenses you should EXPECT to pay on your own behalf. Your policy states that it is YOUR RESPONSIBILITY to prove your claim.

But cheer up!! Spending a small amount of money to prove your claim will usually result in you collecting hundreds or even thousands more dollars in your claim settlement.