Russell D. Longcore
INSURANCE
CLAIM
SECRETS
REVEALED!
TAKE CONTROL OF YOUR INSURANCE CLAIMS !
ADD HUNDREDS OR THOUSANDS MORE DOLLARS TO YOUR
CLAIM SETTLEMENT!
Order this book online at: www.insurance-claim-secrets.com or
Most AMA Publishing titles are available at major online book retailers.
© Copyright 2008 Russell D. Longcore
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the written prior permission of the author or publisher. Requests to the publisher or author for permission should be addressed to the Legal Department, Abigail Morgan Austin Publishing Company, 1750 Powder Springs Road, Suite 190, Marietta, Georgia 30064, (678)234-2923, fax (877)688-5879 or online at: http://www.amapublishing.com
Library of Congress Control Number: XXXXXXXX
ISBN: 978-0-615-27116-3
Manufactured in the United States of America
9 8 7 6 5 4 3 2
Ama
Abigail Morgan Austin Publishing company
1750 Powder Springs Road, suite 190
marietta, Georgia 30064
Phone 678-234-2923 fax 877-688-5879
www.amapublishing.com
E: amapublishingco@gmail.com
Russell D. Longcore has been nominated by the Georgia Writers Association for the 2008 Georgia Author of the Year Award! The Georgia Writers Association is affiliated with the Department of Humanities at Kennesaw State University, and is funded by the Georgia General Assembly and the National Endowment for the Arts. This is the 44th annual awards ceremony, and is the most prestigious writing award in the State of Georgia.
This book is Russell's first book! The book is written about insurance claims...not exactly an exciting subject. So, can you imagine how compelling and important this book must be for Russell to receive such a prestigious nomination for an award?
* * * *
On October 20, 2008, Russell D. Longcore was notified that this book was a Finalist in the USA Book News Best Book Awards 2008! The book was listed in the category Personal Finance. You could not do better for your personal finances than to buy and read this book!
* * * *
William "Chip" Merlin is a nationally-known attorney who goes beyond the fine print. His Tampa, Florida law firm solely represents the rights of residential and commercial policyholders.
Here is his stunning quote: "Insurance is one of the most important financial products any person or business can purchase. The sad reality of the insurance industry's broken promises is made transparent through the astonishing revelations by Russell Longcore in this book."
* * * *
“Thanks for writing your book. It explains things so the rest of us can understand.”
Dawn A., Houston, TX
* * * *
“I was really glad when I came across your book. I wish we had come across it sooner. Thank you for writing a book and making yourself available for questions.”
Marie R., Warren, NJ
* * * *
“Hey
Russ,
Great book! I am sure I will give your
books away as gifts too...”
Andy S., Westminster, MA
“I heard the DJ on the local radio station talking about Russell's book, so I immediately downloaded it when I got to work. It has been a great help to me. Not only does it talk about vehicle accidents but property damage and more, as well. I would recommend anyone dealing with an insurance company to buy this book. Well worth the knowledge you gain to determine if the insurance company is treating you fairly. Knowledge is power when dealing with insurance companies.”
Lisa W., Winston, GA
* * * *
“Russell
D. Longcore deals with this head-on, and in terms that you and I can
easily understand. His honest, direct, straight-forward approach is
excellent.
It's not a question of "if" you're going
to need to know and understand the facts about which Longcore writes
in this book - but "when." Longcore addresses those things
which the insurance industry would just as soon you never knew, and
certainly won't tell you, until after-the-fact. Based on personal
experience, I hope it's not too late for you.
If you're
considering the purchase of a new policy, or are about to renew a
policy - regardless of the type - READ THIS BOOK FIRST.
INSURANCE
CLAIM SECRETS REVEALED! is a book deserving of a FIVE STAR rating,
because it will guide you in your thought process, and protect you in
ways that you've never suspected, nor imagined. Pass it up at your
own peril.”
Sanders H., Atlanta, GA
* * * *
“At the end of Feb. 2008 a tornado went through our neighborhood. Fortunately the damage we sustained was inconvenient damage. We had several trees down, one unfortunately hit the back of our car, and lots of debris, and the top of our neighbor's pine tree was dropped onto our roof. We called our insurance agent to report and started the clean-up. The weekend after the storm I was listening to the radio and heard Russell Longcore being interview by Elyse Glink. I was so impressed, I immediately got online to his website and bought the E-book. It downloaded right away and I started to read. Fortunately our house is now back together and we are only out of pocket the amount of our deductible. There is so much information in this book and it's easy to read and understand. No one should be without it.”
Dee K, Atlanta, GA
Disclaimer
The information in this book is general in nature and does not take into account each and every situation that could possibly arise. You must thoroughly review your own insurance policy to determine your rights and responsibilities, and the rights and responsibilities of the insurance company. The information provided herein is intended to be current and accurate. However, such information may not be sufficient to deal with your individual situation.
Trafford Publishing, the author, contributors or distributors do not warrant, guarantee or represent in any manner that the information presented herein is suitable for you. No portion of this book is intended to provide you with legal advice regarding your individual policy or claim. The information herein is meant to assist and guide you, and should not be relied upon as a substitute for independent research, tax and legal advice. Before acting on our advice, we recommend that you seek legal counsel from your attorney.
The laws governing each state will not only vary, but are continuously subject to change. We strongly urge you to seek legal advice before taking any action.
Cover art beautifully done by Daniel Wright.
This book is dedicated to my Redhead, Julia Ann.
You are the great love of my life.
Table of Contents
Introduction ................................................................................................iii
Foreword.................................................................................................. xvii
Chapter One Water, Water Everywhere…………................1
Chapter Two Insurance Company Games and Scams..........9
Chapter Three You’re Fired!......................................................15
Chapter Four Don’t Be In A Hurry .......................................25
Chapter Five Notify the Insurance Company .....................35
Chapter Six Should I Get a Lawyer? ...................................39
Chapter Seven Claims Adjusters ..............................................45
Chapter Eight Dangerous Liaisons .........................................53
Chapter Nine Public Adjusters ...............................................57
Chapter Ten Homeowner Claims .........................................67
Chapter Eleven Property Appraisals and Estimates ............ 71
Chapter Twelve Additional Living Expense (ALE) ................79
Chapter Thirteen The Killer Flying Beer Keg ............................83
Chapter Fourteen Hurricane Losses ..............................................87
Chapter Fifteen Thanks, I Depreciate That ..............................93
Chapter Sixteen Residential Water Claims ..............................101
Chapter Seventeen Deduct This!....................................................109
Chapter Eighteen Disc-Catching Dog ........................................113
Chapter Nineteen Advance Payments ........................................117
Chapter Twenty Appraisal Clause .............................................121
Chapter Twenty One Co-Insurance Clause .....................................125
Chapter Twenty Two Mold Claims.....................................................131
Chapter Twenty Three Russ Has a Wreck! .........................................135
Chapter Twenty Four Collision Claims........................................145
Chapter Twenty Five Recorded Statements ..............................149
Chapter Twenty Six Comprehensive Claims ..........................153
Chapter Twenty Seven Diminished Value ....................................161
Chapter Twenty Eight Duck! .........................................................167
Chapter Twenty Nine Business Insurance Claims ....................171
Chapter Thirty The Crispy Critter....................................173
Chapter Thirty One Settling Your Claim ................................177
Appendix ..................................................................................................183
INTRODUCTION
There’s a little song that says, “Love makes the world go around.” I hate to be the one to tell you this…but that’s not true.
There’s also a song in the musical “Cabaret”, that says, “Money makes the world go around.” That’s a little closer to reality, but still not all the way true.
Insurance makes the world go around.
Nearly everything that we touch, and nearly everything that touches us, is insured. Without insurance, most of the everyday products and services we just accept as normal could only be purchased by the wealthy. Without insurance, businesses could not protect themselves from liability lawsuits. There would not be thousands of ships that carry cargo between nations, as investors in the ships and the cargo could not be sure they wouldn’t be financially wiped out if their ships sank on the high seas.
If it weren’t for insurance, very few people would ever get a home mortgage or an automobile loan. Think about it….what bank would lend YOU money for a house when their collateral might burn to the ground? Same for a car…what bank would lend money when the car could be destroyed in an accident?
Closer to home, people who were found to be negligent in a court of law would be financially wiped out making restitution to their victims. People would be reluctant to even drive their car to the market for fear of getting in an accident that was their fault.
Our world would be very different, and our capitalist system of economics would be radically different without insurance. Just think of how the world economics worked just 400 years ago in the days before insurance was invented.
That’s what our world would be like today without insurance.
A significant portion of every adult’s income is spent for insurance. We insure our health, our lives, our vehicles, our businesses, our homes and our toys.
Have you ever heard the term “insurance poor?” That’s the feeling one gets when he sees a large portion of his disposable income paid out in insurance premiums. It usually also means that the person doesn’t think that they’re getting their money’s worth. I say that because people don’t usually complain about the price of something if they perceive that the value is worth the price. I’ve heard LOTS of people say that they‘re “insurance poor,” and I know how they feel.
Yet, for all of the money that consumers spend on insurance, hardly anyone understands how it works. Fewer still ever read the policies that they buy. That lack of understanding leaves the consumer very vulnerable, and likely to receive far less money in any insurance settlement than the amount that they are entitled to collect.
I’ll tell you a story about my own recent auto accident in Chapter Twenty Three, and how much money I could have lost if I had not been prepared. There’s also a story in Chapter One about my homeowner’s claim, and the thousands of dollars I collected that would not normally have been paid out.
But first, let me tell you a little bit about me.
I’ve been around the insurance business since 1973. In late 1972, my wife and I bought our first house for $21,500.00. Three little bedrooms, one bath, 1008 square feet on a half-acre lot. It wasn’t much, but it was ours. Naturally, we bought a homeowners insurance policy just before closing…the bank required it. In January of 1973, Gary Sherman, the Farm Bureau Insurance agent who sold the policy came to the house one evening to deliver the policy, and try to sell us auto and life insurance. I don’t remember if he was successful that night in selling us more insurance, but he asked me if I’d be interested in becoming an insurance agent.
I was nineteen years old, working as a laborer in my father’s construction company, in January in Michigan. I wasn’t real excited about working outdoors, and didn’t see much future in it. This guy was offering me inside work…wearing a coat and tie.
What do you think I said?
YES!!!
By the end of April, I had passed my state licensing exams, and gotten my agent licenses. I was on my way as a Farm Bureau Insurance agent. I was the youngest agent that the company had ever hired in their history. Soon after that, Gary and his manager Jim Wood3 moved down the street and started an independent agency. I joined them.
After five years, I went back into the family construction business, and eventually became Vice President of the three construction companies we owned. I always kept my licenses active, and sold various types of insurance on a part-time basis.
In 1986, I sold my portion of the construction companies back to my Dad, and went back into insurance sales full-time. I sold term life insurance and investment securities, and did pretty well.
In 1992, we moved from West Michigan to Atlanta, Georgia. Shortly after arriving here in Atlanta, Hurricane Andrew devastated South Florida and Louisiana. The insurance companies were completely overloaded with claims, as were the independent claims adjusting companies that served those insurance companies. In those instances, insurance companies and adjusting companies rely heavily on temporary adjusters…”storm troopers,” as they are called. The companies look for people with either insurance experience or construction experience.
I had both.
A national independent adjusting company hired me immediately, and in a few days I was in Miami.
What an amazing experience catastrophe adjusting (CAT duty) was!! I remember, on my first day, standing on the roof of a one story house in Kendall, Florida, measuring and making a diagram of what was left of the roof. I looked up, and as far as the eye could see in every direction were roofs with blue tarps on them.
Even right then, I knew I would love claims adjusting.
I could hardly believe that someone was going to pay me a lot of money to look at damages and write estimates. I’d been writing estimates for years. I thought I’d died and gone to heaven.
(I hope that you have work that you love. Most of the people that I know don’t like what they do for a living.)
Once the CAT duty was over, I came back to Atlanta, and soon I’d found a full-time job with an independent adjusting company. I’ve been a claims adjuster ever since.
There’s a position in the claims adjusting field that’s called a “General Adjuster,” or GA. It’s kind of like being a General in the military. The GA position is as high as an adjuster can go. To qualify, you have to take a lot of insurance coursework, have a peer review of your claims handling work, and have a depth of experience.
It normally takes an adjuster at least ten to fifteen years to attain this position. I made it in four years. Now, I’m an Executive General Adjuster. That means I handle the most complicated and huge losses, and supervise the work of other adjusters.
I’ve had some of the best training in claims that a fellow could possibly get. The companies I worked for kept sending me to various schools, each one more advanced than the last. I also did a lot of study through trade institutes. That helped me rocket forward in the claims business.
For a couple of years, I even did work for an insurance company as Home Office General Adjuster and property Claims Examiner. I got an insider’s look at how claims are processed in an insurance company claims department. Boy, did my eyes get opened by that experience! It’s one thing to investigate a claim as an adjuster, and then send a report to a claims examiner at the insurance company. It’s a whole different experience to be the claims examiner, making the decisions on what is covered and what is not covered…what claims get paid, how much gets paid, and what claims get denied.
One of the most important things that I learned as a Claims Examiner was that people were usually not very impressed with the adjuster that handled their claim. The best adjusters are detail oriented, curious and self-motivated. Unfortunately, many adjusters are not thorough, seldom curious, and somewhat lazy. Most of the reports I received were mediocre in quality. There were a notable few adjusters who did a superb job.
I think I’ve adjusted just about every kind of claim you could think of…homeowners, automobile, worker’s compensation, ocean cargo, trucking, inland marine, jeweler’s block, liability, business income, commercial property…and loved every minute of it. The money hasn’t been bad, either.
An Executive General Adjuster bills his hourly time at $175.00. That’s my hourly rate.
Friends, I’m haven’t told you all of this history to brag. I’d just like you to know that I know what I’m talking about in the insurance sales and the insurance claims businesses.
Just like you, I’ve been an insurance consumer all of my adult life…even earlier, as a teenager with my ’59 Jeep. But, unlike most of you, I’ve had the chance to experience both sides of the insurance world…. as a consumer, then as an agent and adjuster.
That’s why I am so excited about writing this book!
Here’s exactly why I wrote this book. Most of the people for whom I’ve adjusted claims had never had a property or casualty insurance claim before. (We’re not dealing with health, life or worker’s compensation insurance in this book. We can get to those topics in my monthly newsletters. If you’re reading this book as a eBook, click here if you’d like a free subscription. Or if you‘re reading the paperback book, look on the back cover for my website address. Please register for the free newsletter there.). Most of those same people had NEVER read their policy, even after filing the claim. They had no idea what the claims process was, and they relied on me...the adjuster…to walk them through the process.
It is for you, and people just like you that I write this book. Many times, people who have had a loss are on the raw edge of emotion. Isn’t is natural to be fearful in a situation where you don’t feel you’re in control…where you don’t know what will happen next, and you’re scared you’ll be “ripped off?” Most everyone has heard a story from a relative or friend about an insurance claim that went badly.
People like that need solid advice and a strategy on what to do to get their claim paid.
They need to understand the claims process completely so that they are not at the mercy of the insurance company, the claims adjuster and the claims examiner.
They need to be paid every dollar that they are entitled to collect.
They need to have peace of mind knowing that their claim was handled correctly.
Insurance companies rely upon the ignorance of their own policyholders. So do many claims adjusters. An uninformed policyholder will rarely argue with an adjuster, because they don’t know what they don’t know.
Let me repeat that phrase so you can think about it long and hard.
MOST POLICYHOLDERS OR CLAIMANTS DON’T KNOW WHAT THEY DON’T KNOW.
They don’t know what is in their insurance policy, and they don’t know the claims process, and that lack of knowledge can cost them thousands in settlement dollars and all of their peace of mind.
Everything that you must do to file a claim is in your insurance policy. WHAT’S MISSING IS HOW TO DO IT.
Think of it this way: I hand you a blueprint for a small house, and tell you, “Build this house over there on that lot.” I’ve told you WHAT to do…I’ve even given you a document that tells you what must be done. WHAT’S MISSING IS HOW TO TAKE THAT BLUEPRINT AND BUILD THE HOUSE.
Do you know how to pour concrete or lay cement blocks?
Do you know how to install shingles?
Do you know how to install electrical wiring?
You may build a house, but it probably won’t look anything like what’s on that blueprint.
If you’ve never built a house before, you won’t know what to do first…or next…or last.
House building takes experience. Or it takes very detailed instructions on how to build a house…step by step with no steps left out.
If you have NO EXPERIENCE in house building, then you must either rely on someone who does have that experience, or you must follow step-by-step instructions…or some combination of both.
That principle is exactly the same in filing an insurance claim of any type. It doesn’t matter if you’re in the United States, or Canada, or Brazil, or Panama, or Germany, or France, or Egypt, or South Africa, or China, or India.
It doesn’t matter if your claim is a Homeowner, or Auto, or Commercial Property, or Liability, or whatever kind you may have. If you have NO experience in filing a claim successfully, and getting every dollar you’re entitled to collect, then you must rely on either someone who does have that experience, or you must follow the step-by-step instructions IN THIS BOOK…or some combination of both.
Insurance companies can increase their profits on your lack of knowledge. (To read about other ways insurance companies increase their profits at your expense, read Chapter Two.)
I believe that what you don’t know can hurt you…it could even change the course of your life for the rest of your life. I believe that your lack of knowledge about the claims process could change the destiny of your children’s lives and generations into the future.
For example, consider a family who owns a home. The house burns to the ground, and everything they own burns with it. The family didn’t know that they had to keep their home insured to value, and did not have enough coverage. So the insurance company hits them with a co-insurance penalty that reduces their settlement by a big percentage. (This topic is explored in Chapter Twenty One.) The family did not do a good job of taking inventory of their contents, because now they are forced to do it from memory, as the contents are now ashes. The contents are not insured for replacement cost, and the contents portion of the policy is settled for Actual Cash Value, or depreciated dollars. Their choice is to either take money out of savings, children’s college funds or their retirement savings to pay the difference. Another choice…if they don’t have any savings, is to simply rebuild or buy a smaller house and replace their belongings with a lot less belongings. That is, after paying off the mortgage of the house that burned.
Or, they could just rent a house forever.
Mom and Dad have their lives permanently altered for the rest of their lives. Because of the fire, there’s no money for college, and the children don’t go to college.
Everybody in that story suffered because Mom and Dad were not prepared. Even the grandchildren yet unborn will have their lives affected because their parents did not get a college degree, and that affected their parents’ ability to earn a higher income.
You see? One loss, not properly handled, can affect your destiny and your children’s destiny, and generations to come. You may accuse me of melodrama, but this stuff happens regularly.
Read this book, and make sure it doesn’t happen to you.
Remember the scene in the movie, “The Wizard of Oz,” where Dorothy and her friends are standing before the Wizard? He’s making big noises, and shooting off fire, and scaring them silly. Just then, Toto tugs on a curtain off to one side, and reveals a rotund little man behind that curtain throwing switches and moving levers. At this point in the story, Oz thunders, “PAY NO ATTENTION TO THAT MAN BEHIND THE CURTAIN!!!”
The insurance claims process is a lot like that. The companies don’t want their policyholders to question the claims procedure, or figure out that it can work very differently from the way that it looks. Insurance companies and claims adjusters want policyholders and claimants to be compliant and trusting. That decreases the size of the settlements, and increases the profits of the insurance companies.
I’m going to be your “Toto.” In this book, and at my website, I’m going to pull back the curtain and show you how things really work. I’ll show you how you can take control of your insurance claims and your policies, and add hundreds…even many thousands of dollars…to your insurance claim settlements. These are dollars that you are ALREADY entitled to collect from your policy.
In addition to the “how-to” parts of the book, I’m going to include some stories of claims I’ve actually handled over the years. They’re stranger than fiction…some are kind of gruesome…and all true.
Dorothy had a little dog and three friends that helped her get to the Land of Oz. That was her team. Let’s stop for a minute and think about teams.
I started playing baseball on the Pee Wee League team in Kent City, Michigan, in the summer of 1962. I was 8 years old. I was always a second string first baseman, because my cousin Thomas was better than me at everything…hitting, running, fielding. All of the kids on that team were from that little village of about 600 people in West Michigan, and we had been playing together since kindergarten.
We won the league championship that year…and the same boys kept playing together as we got older. Our coaches were Don Kik and Pete Imkamp, and they administered discipline and love in equal doses to a bunch of small town boys.
We won every championship every summer until I was 14…Pee Wee League, Little League, Pony League, Junior Varsity. The summer I turned 14, we moved to a bigger town (a whopping 2,500 people) where my Dad had a construction business. As a sophomore in the spring of 1969, I finally became a starting first baseman. I played on the Junior Varsity at school, and that team won the conference championship.
I never knew what it was like to play on a baseball team that was not the champion. But remember, I wasn’t the star on any of those teams. I was an average player on a championship team.
But I still got to share in the glory…just like a star.
Have you ever been on a sports team? Did you play Little League baseball, or Youth Soccer, or football, or basketball? If you did, you know how important it is to have great players on your team.
You also probably remember how painful it was when your team lost.
Friends, the stakes are way too high when it comes to handling an insurance claim.
You cannot afford to have your team lose now.
When it comes to your insurance coverage…no matter what kind of insurance…you need to have a team. But…
WHO DO YOU HAVE ON YOUR TEAM?
The insurance company has well trained adjusters who are experts in the claims process.
ANYONE LIKE THAT ON YOUR TEAM?
The insurance company has well trained claims examiners who are experts on reading and interpreting YOUR insurance contract.
ANYONE LIKE THAT ON YOUR TEAM?
The insurance company has staff attorneys that can answer their questions if a legal issue comes up in your claim. The company will hire the best trial lawyers money can buy to defend the insurance company in court if your claim goes to trial.
ANYONE LIKE THAT ON YOUR TEAM?
The insurance company has Training and Compliance experts to make sure that the claim is handled correctly, and according to the state statutes where the loss occurred.
ANYONE LIKE THAT ON YOUR TEAM?
The insurance company has forensic engineers at its disposal, who will make engineering inspections and write reports for them.
ANYONE LIKE THAT ON YOUR TEAM?
The insurance company has forensic accountants at its disposal. These are accounting experts who can evaluate a complicated loss, like a luxury home or a business income loss.
ANYONE LIKE THAT ON YOUR TEAM?
The insurance company has personal property replacement companies at its disposal. These companies give super low prices to insurance companies on everything from automobiles to electronics to jewelry, and everything in between. You’ll probably have to pay retail.
ANYONE LIKE THAT ON YOUR TEAM?
The insurance company has salvage companies at its disposal, in order to take damaged goods and sell them, thereby recovering some of the money the insurance company paid in your claim.
ANYONE LIKE THAT ON YOUR TEAM?
The insurance company has private investigators at its disposal. These people will perform background checks, neighborhood interviews, public records searches, even conduct surveillance of YOU at home and at work.
BUT, WHO DO YOU HAVE ON YOUR TEAM?
DO YOU EVEN HAVE A TEAM?
DO YOU THINK THAT YOU MAY BE AT A HUGE DISADVANTAGE?
Keep reading…your disadvantage is just about to disappear!!!
FOREWORD
KEEPING PROMISES
In one way, insurance is nothing more than promises made between two parties.
In another way, it is much, much more than that. It’s legally binding contract.
The insurance company writes a policy that makes commitments to you…promises.
The insurance company expects you to pay a fee, called a premium. In the policy, there are things that both of you must do, which is your way of keeping your promises.
The agent who sells you a policy makes promises about how the policy will protect you. We all hope that those promises made by the agent are actually found in the policy!
When it is all said and done, the process of filing a claim, and getting that claim paid, is the way that the promise is kept. It is the essence of the insurance contract.
CLAIMS ARE ALL ABOUT KEEPING PROMISES.
That’s one of the things I like best about being a claims adjuster.
The reputation of an insurance company is usually not spoiled by charging high premiums, because few people complain if they’re convinced that there’s more value in the policy than the amount of money they pay.
The reputation of an insurance company is usually not spoiled by paying huge commissions to their agents, because most people couldn’t care less how much money their agent makes.
The reputation of an insurance company is usually not spoiled by investing money poorly.
Reputations of insurance companies are usually ruined due to poor claims handling.
Insurance companies spend millions of dollars in advertising to convince you that you’re better off or smarter to do business with them. They tell you how many people switched to their company last year. (They never say how many people left or got cancelled though) They want you to buy their policies and remain their customers for a long time. In the insurance business, that’s called “persistency.” Persistency means policies that stay on the books for a long time. Agents get bonus money when they have good persistency.
I consider it part of my job as an adjuster to make the insurance company and the agent look good. If I treat the policyholder with compassion and respect, and do everything I can to get their claim paid as soon as possible, I know that the policyholder will think positively about the insurance company and the agent that sold them the policy. I even tell the policyholders what a great agent and great insurance company they have…just so they don’t miss my point.
I do this quite selfishly…I freely admit it. If the agents are happy with the way I take care of their clients, they will ask for me to be the adjuster whenever their policyholders have a claim.
I also know that the claims examiners at the insurance companies are human beings just like you and me. They love people who make their work easier, and don’t love people who make their work harder. If I send them good reports that contain all the information they need to pay a claim, they can pay the claim and close the file.
For a claims examiner, cleanliness is not what’s next to godliness...a closed file is next to godliness!!
For me, that kind of service to others is the some of the best and most satisfying part of the work. But, far and away the greatest satisfaction comes when my strategies help people recover thousands more dollars in their claim settlements!
But now that this book is published, my level of satisfaction is going to grow exponentially!
This entire book is about helping YOU, THE POLICYHOLDER OR CLAIMANT, maximize the amount of money you are entitled to receive from the insurance company when you have a loss.
I can’t possibly help more than a few hundred people in a year. I’m only one guy in one place. However, with this book, millions around the globe will be helped getting their claims paid.
Deepak Chopra says that one of the most important things we can do for ourselves is to turn our inner dialogue from the question “What’s in it for me?” to “How can I help?”
This is my greatest motivation for writing this book. I can truly envision millions of people the world over reading this book and doing the simple things it shows. I envision those millions of people collecting untold millions of dollars that they would not have collected if it were not for the strategies in this book. I am eager to receive letters and emails from people all over the world, telling me how this book made a difference in their lives.
Perhaps one of those people who write to me will be you. I’m waiting to hear YOUR story.
This book is dedicated to my Redhead, Julie. I made her a promise that I’d love her forever, and I’m keeping that promise. In all of my life, I’ve never known a more fascinating woman. I’m still amazed and thankful every day that she loves me. Thank you, Julie, for your loving patience with a guy writing his first book. Took me two years, but I did it!!
I’d also like to thank Corey Rudl of the Internet Marketing Center. Corey tragically died in an auto racing accident on June 2, 2005. But it was Corey who gave me the idea in July of 2004 to write a book about what I know best.
My sincere thanks to:
Dr. Tim Ryles, former Georgia Insurance Commissioner. Tim was so very gracious to read my manuscript and make very important recommendations.
Geri Lumsden and Bill Day for reading the manuscript and offering their expertise.
Charles Dale, VP of Operations at Jansen International, Houston, Texas, for making helpful recommendations for the chapter on Public Adjusters.
The folks at Trafford Publishing Company. They have helped make my dreams come true.
Finally, to all my readers around the globe – past, present and future. Thanks for such wonderful support. May your lives be enriched and restored, and may you achieve peace of mind and heart.
CHAPTER ONE
WATER, WATER
EVERYWHERE
In this chapter, you’ll learn that your insurance adjuster doesn’t always know what he’s doing, and the only one who is responsible for getting all the money you’re owed is YOU.
In September 2005, the internal plastic water line that feeds our refrigerator’s icemaker burst, and started leaking water out on the floor of the kitchen. Naturally, this happened while no one was there to see it, and was leaking behind the refrigerator. Some of the water got over to a nearby wall and got under the vinyl floor. The 40-year-old plywood underlayment acted like a sponge, and soaked up the water, causing it to buckle and swell. So, when we discovered it, I quickly closed the valve under the sink that fed the icemaker line. But the floor was already damaged and would need repair.
We called an appliance repairman, who did find the cracked line and replaced it.
And all of a sudden, we had an insurance claim.
There is a major difference between a slow leak that occurs over time and a burst water line that happens suddenly. The normal Homeowners policy will not cover the slow leak. Please refer to Chapter Thirteen, Residential Water Claims.
Here’s what it says about the slow leak kind of loss in my Homeowners policy. It probably says the same thing in your policy.
Under “Dwelling and Other Structures” coverages, we do not cover loss resulting directly or indirectly from:
6. Continuous or repeated seepage or leakage of water or steam from within a plumbing, heating, automatic fire protection or sprinkler or air conditioning system or from within a household appliance which occurs over a period of weeks, months or years.” (Underlined emphasis mine)
That means that the sudden water damage losses are covered. Your policy will say something very close to this. Read it for yourself.
I called our insurance company and reported the claim. The next day, one of their claims examiners called me to verify the damage and start the claims process. I mentioned to the examiner that I was an insurance adjuster, and that I could save them a bunch of money hiring an independent adjuster if they’d like to work with me. I offered to get a restoration contractor’s estimate and send them photos of the damage. I had already written a damage estimate on the estimating software that I have in my computer. I offered to send them a copy of that estimate. Amazingly, they declined the offer, and said that they’d be giving this loss assignment to an independent adjusting company in my area.
The next day, I received a call from the local adjuster, and he made an appointment to inspect the damage the following Saturday.
When I went to the door that Saturday morning, I was greeted by a fresh-faced, clean-cut young man who announced that he was my adjuster. This young man couldn’t have been more than 25 or 26 years old. I’ve got clothes older than this kid. I asked him about his experience in claims, and found that he’d been in claims for about three years. This was his first job out of college. He did primarily homeowners losses.
I told him that I was a General Adjuster, and he didn’t even know what that meant. So, I had to explain to him that it meant I’d been a claims adjuster for a long time, had gone through a lot of schooling, and was now handling large commercial and industrial losses.
We went into the kitchen. I stood out of the way so I didn’t impede his work. He measured the room and photographed the damage. I didn’t point out anything out of the ordinary because I wanted to see what kind of estimate he would write without my input. After all, I was writing a book about claims, and what it takes to get paid all that a consumer is entitled to collect.
I gave him a copy of the appliance repairman’s paid invoice so he could document the cause of the damage.
He explained that he would be writing an estimate and sending it to the insurance company. I asked him to send me a copy of his estimate, and he agreed to do so.
He didn’t do it, though.
About a week later, I received a letter from the claims examiner at the insurance company. The letter included a copy of the adjuster’s estimate and a check for $309.64.
The estimate was accurate in its measurements, but that’s where the accuracy ended. The boy adjuster wrote an estimate that replaced the plywood underlayment for the part of the floor that he could see, and put down a new vinyl floor throughout the kitchen. The amount of the estimate was $1,701.94. He applied depreciation of $392.30, subtracted our $1,000 deductible and the Actual Cash Value (ACV) claim amount was $309.64.
Our Homeowner’s 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 Dwelling and Other Structures Coverages:
We will pay only the actual cash value of the damaged property until actual repair or replacement is completed.”
So, the insurance company was correct to pay the ACV up front. I had 180 days to make repairs and show that I’d spent or incurred the RCV, and collect that depreciation amount of $392.30 that they had held back.
However, let’s get back to the estimate of the boy adjuster.
The plywood underlayment had swollen under about half of the kitchen floor. More importantly, it has swollen under the sink base cabinet right next to the refrigerator. The cabinets in our kitchen were custom built in place, not the kind that come in a box from your local home improvement store. All the young adjuster would have had to do to discover this was to look inside the cabinet, but he didn’t. The sink base was going to have to be removed before the flooring could be repaired. But that meant the custom sink base cabinet would have to be dismantled to be removed.
The boy adjuster missed this.
Dismantling the sink base means first removing the faucet, then removing the sink, then removing the countertop. That also meant that the dishwasher on the other side of the sink base would have to be disconnected and reconnected after repairs.
The boy adjuster missed this.
The countertop was also a custom laminate. Trying to remove it would destroy it. The countertop was also glued down to the top of the base cabinets. So, new countertop of like kind and quality would be required…not just over this cabinet, but for all the countertop on the rest of the cabinets.
The boy adjuster missed this.
The cabinets were custom built when the house was built in 1970. So, the sink base cabinet would have to be custom rebuilt. We were pretty confident that a finish carpenter (no, not a carpenter from Finland) could build the cabinet to match the other cabinets perfectly. But, it would be expensive. Then, all of the cabinets would have to be repainted to match. More expense.
The boy adjuster missed this.
After I reviewed the boy adjuster’s estimate, I called the claims examiner at the insurance company. I reminded him that I had offered to save him the cost of the independent adjuster. Then, I told him about all of the things that his boy adjuster had missed.
The examiner was not happy.
So, I offered again to have a local restoration contractor write an estimate for repairs, and that I’d submit that estimate to the examiner. He finally agreed. I even offered to have my contractor meet at my home with the boy adjuster and agree on an estimate. The examiner told me that wasn’t going to be necessary.
The restoration contractor’s accurate estimate was $5,785.45. I sent it to the examiner, and he sent me a supplemental check for another $3,897.26. The repairs got done, and I got my total holdback amount of $970.85.
Friends, this was a small loss. It does not compare to a fire, or tornado, or hurricane. But, in this one small loss, where a young adjuster didn’t notice obvious things about the damages, there was a difference in settlement of $4,475.81.
Now let’s say for a moment that I was an average person who had never read his homeowner’s policy. Let’s also say that I was not familiar with home repairs and remodeling. (Do you think that there might be TENS OF MILLIONS of people just like that?) With just those two assumptions, I would be at a big disadvantage. A person like that could receive the estimate and check from the insurance examiner, and be led to believe that those repairs were all he was entitled to collect.
The insurance company didn’t offer to have my contractor meet with the adjuster and reach an agreed estimate. As a matter of fact, they declined the offer the first time. I had to get my own contractor to write an estimate.
If I had been that average guy, my lack of knowledge about the claims process….in this one small loss….could have cost me almost $4,500.00 !
Or, stated another way…by simply using the strategies in this book, I collected almost $4,500 more than the insurance company was first willing to pay. In defense of the insurance company…once I presented the correct amount of the loss, they willingly and quickly paid. But they never offered any assistance to help me make sure my claim was correct.
I didn’t expect them to, and neither should you.
In defense of the boy adjuster, he seemed to be sincere, and I believe he was doing his best with the knowledge he had. I never thought for a minute that he was trying to cheat me or shortchange me.
But, now that I’ve defended the insurance company and the adjuster just a little…let me ask you to think about YOUR situation.
What if the adjuster that the insurance company sends to your house is as inexperienced as the one I had?
What if you’re not very familiar with home repair, and you are forced to rely upon the mercy and goodness of the adjuster? How does it make you feel when you know you’re vulnerable because of what you DON’T know?
What if your adjuster is an adjuster purposefully writes an estimate meant to save the insurance company money? The adjuster can do that in a number of ways:
1. He can use unit pricing in his estimate that is below what it actually costs.
2. He can leave out repairs and hope you don’t catch it.
3. He can leave out repairs because he doesn’t know what he’s doing.
4. He can tell you that you have to use the insurance company’s “approved contractor or vendor.”
5. He can apply high depreciation.
What if your loss is after a tornado or hurricane, and your adjuster is a temporary adjuster, also known as a “Storm Trooper?” These types of adjusters have very little training and often write inaccurate estimates.
QUESTION: How are you going to protect your assets and be sure that you’re collecting all the insurance proceeds you’re entitled to collect?
ANSWER: By doing exactly what I tell you in this book!!!
You…and ONLY YOU…are responsible to collect all the insurance proceeds you are entitled to collect.
CHAPTER TWO
INSURANCE COMPANY GAMES AND SCAMS
Here are just a few of the actions I’ve seen one insurance company take to cut costs in the handling of claims. I saw these actions from the inside during the time I was a claims examiner for that company.
1. Independent Adjusters (IA). This company uses IAs from lots of different companies all over the United States. They spend many millions of dollars a year for the services of these adjusters. This particular insurance company handles about 2,500 claims every MONTH…just in their Property Insurance Department. The insurance company knows that their volume of business makes up a pretty large percentage of the income of many of these claims adjusting companies. So, the new VP of claims made a decision to renegotiate the fees that the insurer would pay to the IAs. Naturally, the amounts were reduced, not increased. In order to do this, dozens of new IA companies were hired at the new reduced rates. The assignments to the IAs on the old contracts were abruptly stopped.
Let me assure you that the new fees are so low that adjusters who
get these assignments will do the very minimum effort required to settle a claim. That is not good for any of their policy holders.
The company also had a small number of Field Staff Adjusters scattered around the country. The company did a time and expense study, and determined that it cost less per claim to have an employee/adjuster handle it than to have an IA handle it. They also discovered that the average amount of the settlement check was lower when an employee/adjuster handled the claim. So, now the company is in the hiring mode, adding many more field staff adjusters to handle property claims around the country.
One of the big drawbacks to this change is that many of the field staff adjusters are young (and/or brand new in the business) and not adequately trained, either in interpreting the company’s insurance policies, or in the adjusting process. Many of the field staff adjusters know little about construction and disaster repair. However, the new VP knows up front that the field staff adjusters don’t have to be very well trained to do their job just well enough to close lots of files.
These changes, using more staff adjusters and less IAs, and paying the IAs less, will save the company millions per year in claims expenses.
2. Estimating software. In the insurance claims adjusting industry, there are lots of companies that produce estimating software. There is software for auto repair, dwelling repair, commercial building repair, contents replacement, and many other applications. The programmers use vast databases of materials costs, labor costs, geographic locations, ZIP codes, and much other data to come up with software that will figure out how much it costs to fix or replace something in your area.
As you might expect, some software is more accurate than others. Some estimating software consistently calculates a lower price for repairs of dwellings.
Can you guess where this is going?
The new VP of Claims did another study, in which he took various estimates from all over the United States and compared those estimates to the estimating software from Software Company X. Company X is ALWAYS lower in its unit prices. The study confirmed what the new VP suspected….that if our claims department and the field staff adjusters used Software Company X’s estimating software, our average estimate amounts would drop by about 12%. That means that claims can be settled for a lower dollar figure.
For example, an estimate written by an independent adjuster in Iowa might have a total of $20,000.00. If someone in the claims department entered the exact same measurements and quantities into Company X’s estimating software, the total might be $17,600.00.
Please remember this: The prices in EVERY company’s software are just ESTIMATES…they usually don’t represent how much it actually costs to complete the repairs. USUALLY, the cost to repair is higher than the estimate total.
The new VP knows something else, too. He knows that nearly every claimant will accept the insurance company’s estimate…and the check that’s sent to them…without question. They might not like it…they might not be able to repair or replace their property for the amount of money that the insurance company pays. Those policyholders might have to use their own money to make up the difference.
So, the new claims procedure is to use Software Company X’s estimating software for all field staff adjusters. The examiners are “encouraged” to compare the estimates from other independent adjusters with Company X’s database to see if the estimate can be lowered.
3. Replacement cost holdbacks. This method of cutting costs is the most ruthless and cynical of all.
At this insurance company, they write an all-risk dwelling policy, which only covers the dwelling and other unattached structures. There is no Contents coverage, and no Additional Living Expense like the standard HO-3 homeowners policy. All risks are covered subject to exclusions carefully listed in the policy.
(These policies are usually written through mortgage company escrow accounts. If your Homeowner insurance is paid through your mortgage company’s escrow account, you might have one of these policies, and not even know it. Read Chapter Three for more details.)
Under the “Conditions” section in the policy, it tells the policyholder about the method that the insurance company pays a claim. These kinds of policies pay replacement cost valuation (RCV) on the Dwelling damages. That means that the policy pays whatever it costs to repair the property, up to the policy limits. However, the estimate for repairs is written with depreciation applied to the loss.
See Chapter Fifteen for a description of Depreciation.
For any claim greater than $1,000, the insurance company “holds back” the depreciation amount, and pays only the Actual Cash Value in the first check. Once the policyholder has made the repairs and provided proof that the repairs are completed, the insurer will release a second check for the holdback amount. The policy states that the policyholder is eligible to receive the holdback amount if the repairs are completed within 180 days of the date of loss, and a letter is sent to each policyholder stating this in clear language.
The Conditions of the policy are not the cynical and ruthless part. When any policy gives Replacement Cost coverage, the insurance companies have a right to see that the insured property is actually replaced. So, the insurance company is correct to issue a first check for the Actual Cash Value.
For example: You, the insured, had lightning strike your house, and destroy your television. The TV is five years old, and you paid $500 for it. To buy the same model TV today would cost $600. The depreciated value of that TV is $250, or half of its useful life. So, the insurance company would issue a check for $250, with the understanding that if you cashed the check and did not buy another TV, you would not have made a replacement. However, if you do buy another TV for $600, and send the insurance company a copy of your receipt, they would send you another check for $350.
See how that works? That part is OK, and completely fair. It’s the rest of this story that will make you mad.
At this insurance company, the average size of all claims is about $4,000. The average holdback amount is about $800. For the first year or so that I worked there, we did not holdback any amount less than $1,500. That larger amount of holdback occurred on the larger losses, like heavy fires or total losses. The claims managers had made the decision that it made the examiners’ jobs easier to not have to reopen a closed file and pay a holdback on the smaller claims.
Remember, this company’s claims department handles about 2,500 claims per month. You can see that just the average holdback amount runs about $2 million a month, or over $24 million per year.
The new VP of Claims did another study about the holdbacks. He discovered that less than 50% of the policyholders who were eligible to receive a holdback amount ever actually contacted the insurance company and requested that holdback. The policyholders usually didn’t understand the letter they were sent which explained the holdback procedure, and didn’t call to get an explanation.
So, another new procedure was put into place. The claims examiners were instructed to go back to applying the depreciation amount for any loss over $1,000, just like it said in the policy.
The new VP of Claims figures he’ll save the company another $15 million per year just on this one change alone.
At no time did the VP ever suggest that the policyholders receive another letter after their claim had been settled to remind them that they still had a certain amount of money they may be eligible to collect. Oh, no! Perish the thought!! On the contrary…the Vice President demonstrated that his loyalty is to the profitability of the insurance company…just as it should be.
Now, don’t you imagine that these kinds of cost-cutting measures are everyday occurrences in MOST of the insurance companies’ claims departments? I am not suggesting that the claims departments should be operated inefficiently. I am not suggesting that the insurance companies don’t have the right to make business decisions that favorably affect their profitability.
What I AM saying is that two of these three examples increased the profitability of this one insurance company by REDUCING THE AVERAGE SETTLEMENT AMOUNT OF CLAIMS!!! This company is actually cheating its own policy holders out of millions of dollars that the policyholders could be collecting…SHOULD be collecting…but WON’T be collecting.
It’s perfectly legal…but, in my opinion, highly immoral! What kind of people purposely cheat their own customers…all the while telling the public about how fast their claims are settled?
And the insurance company did it relying upon the ignorance of their customers…the policyholders!!!
What should you learn from this? Ask your self these questions:
Are you really “in good hands®?”
Is your insurance company really “on your side®?”
Is your insurance company “like a good neighbor®?”
CHAPTER THREE
YOU’RE FIRED!
YOU DID YOUR JOB TOO WELL!
Can you imagine that this could happen to you? It did happen to me…here is my true story.
There is an extremely important strategy for you, the homeowner, in this chapter.
It is really important that you read this chapter all the way through. If you have your homeowners insurance premium paid by your lender out of an escrow account, THIS STORY WILL SHOCK YOU. IF YOU ARE NOT VERY CAREFUL, YOU COULD END UP WITH NO COVERAGE ON YOUR HOUSE. Or, you could end up with inferior coverage at four times the price…without your consent!!
Please read on…it’s going to take a little work to get to the shocking part. Hang with me.
In the last chapter I told you how I worked for a couple years as a claims examiner at the home office of an insurance company. But it was not just a normal property insurance company. This company sells hazard insurance to mortgage companies and banks in the United States. Let’s call this company…”ABC.” (That’s not its real name, nor is it the initials for its real name.)
You or I could not buy one of these policies, even if we wanted to. Why? Because ABC’s customers are the mortgage lenders.