Handling storm damage insurance claims

The ferocious storms that continue to pummel California and much of the nation have resulted in massive insurance claims by thousands of business and property owners. Often this is the first time they have ever been faced with filing such claims, says Los Angeles-based Karl Susman, an insurance broker for over 30 years, expert witness in lawsuits involving coverage and agent malpractice issues, and a friend of this column.

He phoned my office, concerned that a great deal of false and misleading advice on how to deal with claims that will result in substantial delays, and asked if we can list steps to take on what not to do from the moment it is clear you have suffered a loss. I could not say yes quickly enough.

When you have a claim, your order of operations should be: 1. Start with the assumption that your insurance company is going to do right by you. Do not rush out and retain a lawyer!

But if turns out that they don't, then ask for a claims manager or supervisor, and if that is still not satisfactory, then consider retaining a public adjuster if you feel they are not being reasonable, and if that still is not satisfactory, then and only then you want to hire an attorney.

For the typical stormrelated loss, hiring an attorney is the absolute last thing you want to do as it takes your claim to a completely different insurance company department. As there are fewer adjusters who are trained to deal with attorneys, this will cause delays, sometimes lasting months and even years with no benefit to the policy holder!

3. If I file a complaint against my insurance company with the Insurance Commissioner's Office over valuation or handling of my claim. Will this help me?

Generally it is a zerosum game. They will send a letter to the insurance company that says, “Please justify your actions with this customer's complaint.” Your carrier answers the complaint with the same documents they gave to their customer. It seldom accomplishes a thing, but, again, we are talking about the average claim. However, the exceptional, bad-faith case is a different story.

(4) Public Adjusters: Is it worthwhile hiring one? I hear they have a bad rap. Is that true? The typical cartoon character public adjuster shows up at your business or home after it has been destroyed, quickly signs you up, and takes a piece of the insurance settlement, leaving you with much less that your own insurance company would have offered you.

This is propaganda, says Susman, adding just as all lawyers aren't crooks, there are good and some very poor public adjusters. In my experience, the main reason people are often dissatisfied with having retained a pubic adjuster is that the expectations of what a PA can do are not often met and the settlement process can be slowed down considerably. I have seen instances where it took years to resolve a claim and the insured got nothing different than what the company first offered.

5. Insurance Companies need the justification to pay claims, so put on your claims adjuster hat, and ask yourself, “If I was the adjuster, what would I need to see in order to pay this additional money?”

The public often thinks that hiring a public adjuster will in some way force the insurance company to do more. But that is not how insurance functions.

6. On national television, we saw RVS at an RV park swept into California's Santa Clara River, totally destroyed. “One was my home business and I have insurance, so what should I do?” a reader emailed.

Susman replies: If you have a total loss like that, I would ask for policy limits. What often happens is that when people have a total loss and they realize they didn't have enough coverage, instead of taking policy limits, they want to fight and get more.

“It is a zero-sum game, the worst thing to do. The message is simple: If you have a total loss, don't try to collect more than your policy limits. It is a waste of time, money and will reward you with heartache.”

7. One of the people whose RV was shown falling into the river said, “I want to sue the RV park instead of claiming under my insurance because 15 years ago something similar happened and they should have warned me to move my vehicle. That is why I want to hire an attorney and pay on a contingency.”

Susman: 15 years ago? Give me a break! Unless you can prove the park ownership was on notice that the river was about to suddenly flood again, you can't blame them. That is why you have insurance.

It is a matter of how far into the future to we think we can peer. As these storms have shown, the answer is, “not very.”

Some final, important recommendations

1. Please, don't forget that claims adjusters are just people. Their job is to hear from folks who are always at their worst! Something bad has happened. Try to have a little sympathy, a little empathy. Be polite!

2. Don't threaten with attorneys or public adjusters. Explain and justify your position. The adjuster would love to give you what you want if you can support your position.

3. Don't exaggerate. Don't lie! This can nuke your entire claim.

4. Don't forget that adjusters paid to settle your claims, not reject them. Help them help you.

5. Think of technology as your friend when claims people are pulling their hair with so much to do. By providing good photos and videos of your loss to your adjuster this will help speed the process.

6. Yearly, review your insurance needs with your agent or broker.

2. Hiring an attorney prematurely or unnecessarily for the typical loss, slows down the process of resolving your claim and can add considerable expense as lawyers will typically be paid a percentage of the settlement