Let me preface with this — I do work for a major insurance carrier. I am not in claims, but as an underwriter I see policies and their respective claims every single day.
Insurance companies aren\’t out there actively screwing customers. They aren\’t looking for ways to avoid paying claims. The mantra is \”pay what you owe — not a penny more and not a penny less.\” Customers pay for coverages. War is not covered (ever). Nuclear stuff is not covered (ever). Floods are not covered (ever). Folks who didn\’t buy flood coverage are victims of their own stupidity or cheapness. They are not victims of evil insurance companies.
Read your contract. Some things are paid at ACV (actual cash value), which means (for example) if your 25 year old vacuum cleaner is destroyed, you don\’t get money to buy a brand new vacuum. You are indemnified, which means you get the cash equivalent of a 25 year old vacuum. This is usually the source of the \”insurers wouldn\’t pay me what they owe me\” complaints. Folks simply don\’t read the contract to understand what they\’re getting.
If you didn\’t pay for the coverage (i.e. it\’s not listed on your coverages doc and/or in the contract) you don\’t have coverage for it. All the screaming in the world won\’t get you the coverage, unless your independent agent has a great relationship with his/her underwriter (we do make exceptions on things…all you have to do is ask).
I\’ve heard a lot of rumors about documents being forged or altered or companies just not paying out claims. However, I haven\’t seen a single shred of evidence. Most of the howling is from political types looking for re-election or some free air-time. You\’ll see indivudals say they were screwed this way or that way, but if you saw the other side of the coin (i.e. what I see every day), you\’d probably find there is a good reason they didn\’t get what they thought they should get. For example, I saw a one of our customers complaining online that my company had refused to pay for a substantial claim. He included his name, so I looked him up, just in case he was right.
What I found in the claim file was that he couldn\’t provde he\’d owned any of the property he claimed. He couldn\’t find anyone to substantiate his claims. He had lied about the circumstances of the loss. He had contradicted himself in at least 8 different parts of his statement. We denied his claim, and rightfully so. With that said, the last letter that went to him said, \”If you can provide the requested evidence to substantiate your claim, we would be happy to re-open your claim and pay for your loss.\”
I can tell you, in absolute and total honesty, that I have never seen a claim where the adjuster underpaid a claim. I see hundreds of claims per year across all P&C product lines (home, auto, fire, umbrella, rec vehicle, motorcycle and watercraft); it has been my experience that adjusters tend to pay more than what is due.
Adjusters are human (despite popluar belief). I\’ve consoled them after they\’ve had to deal with a particularly disturbing claim. They generally get into the claims business (and believe me, not everyone can adjust claims) because they have a genuine desire to work with people (and after all the nastiness they get from the public, there\’s a high turnover rate) and to do good things.
Things I can tell you about the different companies. You get what you pay for — i.e. if you\’re the type of person who shops for the lowest possible price, you\’re going to get budget service as well. Go to an independent agent and ask them about the type of relationship they have with their companies. You\’ll probably hear about three kinds.
1 – regional carriers (tend to be smaller). Pros – they know well the areas they service, so premiums tend to start off lower. They also often offer the best service because of the \”we\’re small/hometown\” relationship. Cons – they don\’t have deep pockets, so large losses like Katrina will send them into a nose-dive. They\’re more likely to have knee-jerk rate increases and non-renewal actions to preserve profitability.
2 – Large national carriers (these are the folks you see commercials for all the time. Pros – they have deep pockets and wide exposures, which means they are less likely to jack up your rates every time there is a hail storm. Cons – you won\’t necessarily get very good service from them, because your policy doesn\’t mean as much to them.
3 – Other carriers that are different for whatever reason. There are some large carriers that provide great service. There are some regionals that won\’t give you the time of day if there\’s a claim. There are some carriers you can\’t get with unless you below to an organization (government employees, military etc,).
I\’d recommend that you shop based upon service, instead of price. Find yourself an excellent local, independent agent and make yourself a valuable customer. If you constantly shop your insurance, hop from company to company, you have little (and what I mean by little is zero) bargaining power.
Sorry for the long post, but I get so very tired of the \”insurers are Nazi\’s\” stuff. It isn\’t a conspiracy. Cooperate with your adjuster, provide what you\’re asked for (i.e. proof of ownership) and you\’ll be indemnified for what you\’re owed.
\”Insurance Companies should not pay for water damage…
BUT THEY SHOULD PAY FOR WIND.
They are trying to get away without paying for any damages by blaming the water.
MR. HOOD STOOD UP TO THE PLATE AND WENT TO BAT FOR THE PEOPLE AND HE HAS DONE MORE THAN ANY ELECTED OFFICIAL FROM LA TO FL.\”
Two weeks after Katrina struck, Mr. Hood filed a lawsuit to force insurance companies to pay for ALL damages from Katrina including FLOOD. He \”feels\” it is unconcionable for the homeowner\’s policy to exclude flood.
Mr. Hood has only his political career on his plate.
Interesting point, Roger. I\’ve seen several posts where you\’ve included the same bits of information (no slam on you, it\’s obvious you\’re passionate about this issue).
I\’d offer a couple of things. I know that some companies (I can only speak knowledgably of my company of course) add in the \”profit\” component when adjusting claims. When I look at claims info, there\’s a line-item for \”profit and overhead\” for the person doing the repairs and/or work on the property. This info is more obvious on an auto claims adjustment, though, I will admit that.
I would add one more thing regarding the story of the Allstate claims rep who says he routinely screwed people for years. This is just one guy — I would never agree that every single company does the right thing 100% of the time. Nor would I posit that all adjusters (or claims managers) are ethical. Likewise, not all agents are ethical, and (not) surprisingly, customers think nothing of padding their claims to \”make up for their deductible.\” I am not so sure that we should offer a blanket painting of the insurance industry as crooks/thieves looking to cut a buck or two.
I would agree that companies are looking to limit expenses and exposures as much as possible (we do have to return a shareholder profit — i.e. we aren\’t a NPO). What I am saying is I would like to see some specific examples where there has been wholesale defrauding of customers.
\”When I look at claims info, there\’s a line-item for \”profit and overhead\” for the person doing the repairs and/or work on the property.\”
__________
Contractors place, and repair and/or replace, homes.
Insurers, to properly indemnify a client / structure, use construction industry generated calculations for the calculated replacement cost of a given property, and necessarily include contractor overhead and profit in those calculations.
Their replacement cost calculations for the structure would, easily, not make sense otherwise.
Calculations of the replacement cost of a given property carry over into premiums.
__________
*\”– Indemnity is the basis and foundation of insurance coverage.
The objective is that the insured should neither reap economic gain nor incur a loss if adequately insured.
This objective requires that the insured receive a payment equal to that of the covered loss so that the insured will be restored to the same position after the loss as before the loss.
The calculation of this payment results in under-compensation if an insurer deducts prospective contractors’ overhead and profit and sales tax in determining the actual cash value under a replacement cost policy.
The value of contractor´s overhead and profit, as well as sales tax on building materials, has been included in the limit of liability for which the insured has paid premium.
If the insurer in determining actual cash value excludes costs that are included in the determination of liability limits, on which the insured´s premium is based, the insurer reaps an illegal windfall because the insurer receives premium on insurable values for which loss may never be paid.\”
Receiving premium (dollars) equaling future loss values, and not returning those loss values to claimants, equals receiving premium on insurable values for which loss is never paid.
Over priced premiums, illegal windfall dollars gained, and illicit contingent profit potential, are by-products of synthetically undervalued loss claim estimations.
All of which can be \”hidden\” by year-end loss-ratio appearances, and \”proper\” profit margins not exceeding regulatory boundaries, and insufficient market conduct examination of carriers claim settlement practices.
Should the premium rates need adjusting downward, after the illegal scheme bears the profit desired, carrier compliance with regulators gives the whole process a veneer of legitimacy…
Every day specific examples of keeping those contractor overhead and profit loss values claimants are paying insurers for, and are entitled to honestly receive back, are being generated by Allstate, USAA, Safeco, Farmers, State Farm and the TWIA, in Texas.
Some insurers claim a primary – general (structure placement / replacement) contractor is \”needed\” for a loss, so as to include those contractor overhead and profit loss values in estimating the value of the loss.
Not so.
Again, \”The value of contractor´s overhead and profit, as well as sales tax on building materials, has been included in the limit of liability for which the insured has paid premium.
If the insurer in determining actual cash value EXCLUDES costs that are included in the determination of liability limits, on which the insured´s premium is based, the insurer reaps an ILLEGAL WINDFALL because the insurer receives premium on insurable values for which loss may never be paid.\”
Predetermined replacement loss values, knowingly collected, and knowingly not repaid, apples-for-apples, thus creating illegal windfall, is knowingly defrauding people…no?
Underwriter, If you would like specific hard copy evidence that this is so, for the past 4 years, please feel free to contact me.
With all due respect, I\’ve mentioned more than one insuers\’ conduct in my commentaries, which are based on, proof positive, on-going unfair claim settlement conduct…right under claimants noses.
I\’ve also repeatedly stated that honorable insurers and adjusters exist.
In all, consistent in-the-trenches claim data, tell very interesting stories…
Roger wouldn\’t like it if we painted the entire construction industry as fraudulent by using an example of 1 contractor. If people weren\’t so greedy, no one would have any problems, and that goes both ways.
I hope that some jack-leg State Judge upholds Hood\’s silly lawsuit. Just watch the insurance companies leave Mississippi like a herd of Water Buffalo. Will the last insuror turn out the lights?
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Let me preface with this — I do work for a major insurance carrier. I am not in claims, but as an underwriter I see policies and their respective claims every single day.
Insurance companies aren\’t out there actively screwing customers. They aren\’t looking for ways to avoid paying claims. The mantra is \”pay what you owe — not a penny more and not a penny less.\” Customers pay for coverages. War is not covered (ever). Nuclear stuff is not covered (ever). Floods are not covered (ever). Folks who didn\’t buy flood coverage are victims of their own stupidity or cheapness. They are not victims of evil insurance companies.
Read your contract. Some things are paid at ACV (actual cash value), which means (for example) if your 25 year old vacuum cleaner is destroyed, you don\’t get money to buy a brand new vacuum. You are indemnified, which means you get the cash equivalent of a 25 year old vacuum. This is usually the source of the \”insurers wouldn\’t pay me what they owe me\” complaints. Folks simply don\’t read the contract to understand what they\’re getting.
If you didn\’t pay for the coverage (i.e. it\’s not listed on your coverages doc and/or in the contract) you don\’t have coverage for it. All the screaming in the world won\’t get you the coverage, unless your independent agent has a great relationship with his/her underwriter (we do make exceptions on things…all you have to do is ask).
I\’ve heard a lot of rumors about documents being forged or altered or companies just not paying out claims. However, I haven\’t seen a single shred of evidence. Most of the howling is from political types looking for re-election or some free air-time. You\’ll see indivudals say they were screwed this way or that way, but if you saw the other side of the coin (i.e. what I see every day), you\’d probably find there is a good reason they didn\’t get what they thought they should get. For example, I saw a one of our customers complaining online that my company had refused to pay for a substantial claim. He included his name, so I looked him up, just in case he was right.
What I found in the claim file was that he couldn\’t provde he\’d owned any of the property he claimed. He couldn\’t find anyone to substantiate his claims. He had lied about the circumstances of the loss. He had contradicted himself in at least 8 different parts of his statement. We denied his claim, and rightfully so. With that said, the last letter that went to him said, \”If you can provide the requested evidence to substantiate your claim, we would be happy to re-open your claim and pay for your loss.\”
I can tell you, in absolute and total honesty, that I have never seen a claim where the adjuster underpaid a claim. I see hundreds of claims per year across all P&C product lines (home, auto, fire, umbrella, rec vehicle, motorcycle and watercraft); it has been my experience that adjusters tend to pay more than what is due.
Adjusters are human (despite popluar belief). I\’ve consoled them after they\’ve had to deal with a particularly disturbing claim. They generally get into the claims business (and believe me, not everyone can adjust claims) because they have a genuine desire to work with people (and after all the nastiness they get from the public, there\’s a high turnover rate) and to do good things.
Things I can tell you about the different companies. You get what you pay for — i.e. if you\’re the type of person who shops for the lowest possible price, you\’re going to get budget service as well. Go to an independent agent and ask them about the type of relationship they have with their companies. You\’ll probably hear about three kinds.
1 – regional carriers (tend to be smaller). Pros – they know well the areas they service, so premiums tend to start off lower. They also often offer the best service because of the \”we\’re small/hometown\” relationship. Cons – they don\’t have deep pockets, so large losses like Katrina will send them into a nose-dive. They\’re more likely to have knee-jerk rate increases and non-renewal actions to preserve profitability.
2 – Large national carriers (these are the folks you see commercials for all the time. Pros – they have deep pockets and wide exposures, which means they are less likely to jack up your rates every time there is a hail storm. Cons – you won\’t necessarily get very good service from them, because your policy doesn\’t mean as much to them.
3 – Other carriers that are different for whatever reason. There are some large carriers that provide great service. There are some regionals that won\’t give you the time of day if there\’s a claim. There are some carriers you can\’t get with unless you below to an organization (government employees, military etc,).
I\’d recommend that you shop based upon service, instead of price. Find yourself an excellent local, independent agent and make yourself a valuable customer. If you constantly shop your insurance, hop from company to company, you have little (and what I mean by little is zero) bargaining power.
Sorry for the long post, but I get so very tired of the \”insurers are Nazi\’s\” stuff. It isn\’t a conspiracy. Cooperate with your adjuster, provide what you\’re asked for (i.e. proof of ownership) and you\’ll be indemnified for what you\’re owed.
Katrina Survivor,
You stated:
\”Insurance Companies should not pay for water damage…
BUT THEY SHOULD PAY FOR WIND.
They are trying to get away without paying for any damages by blaming the water.
MR. HOOD STOOD UP TO THE PLATE AND WENT TO BAT FOR THE PEOPLE AND HE HAS DONE MORE THAN ANY ELECTED OFFICIAL FROM LA TO FL.\”
Two weeks after Katrina struck, Mr. Hood filed a lawsuit to force insurance companies to pay for ALL damages from Katrina including FLOOD. He \”feels\” it is unconcionable for the homeowner\’s policy to exclude flood.
Mr. Hood has only his political career on his plate.
4-19-2006
Mark,
In brief, I do NOT support ideas that try to create synthetic INDEMNIFICATION coverage value, when none (rationally and honestly) exists.
I do support the opposite though.
Please consider my commentary in that context.
rogerpoegc@yahoo.com
Interesting point, Roger. I\’ve seen several posts where you\’ve included the same bits of information (no slam on you, it\’s obvious you\’re passionate about this issue).
I\’d offer a couple of things. I know that some companies (I can only speak knowledgably of my company of course) add in the \”profit\” component when adjusting claims. When I look at claims info, there\’s a line-item for \”profit and overhead\” for the person doing the repairs and/or work on the property. This info is more obvious on an auto claims adjustment, though, I will admit that.
I would add one more thing regarding the story of the Allstate claims rep who says he routinely screwed people for years. This is just one guy — I would never agree that every single company does the right thing 100% of the time. Nor would I posit that all adjusters (or claims managers) are ethical. Likewise, not all agents are ethical, and (not) surprisingly, customers think nothing of padding their claims to \”make up for their deductible.\” I am not so sure that we should offer a blanket painting of the insurance industry as crooks/thieves looking to cut a buck or two.
I would agree that companies are looking to limit expenses and exposures as much as possible (we do have to return a shareholder profit — i.e. we aren\’t a NPO). What I am saying is I would like to see some specific examples where there has been wholesale defrauding of customers.
4-19-2006
Underwriter,
You stated;
\”When I look at claims info, there\’s a line-item for \”profit and overhead\” for the person doing the repairs and/or work on the property.\”
__________
Contractors place, and repair and/or replace, homes.
Insurers, to properly indemnify a client / structure, use construction industry generated calculations for the calculated replacement cost of a given property, and necessarily include contractor overhead and profit in those calculations.
Their replacement cost calculations for the structure would, easily, not make sense otherwise.
Calculations of the replacement cost of a given property carry over into premiums.
__________
*\”– Indemnity is the basis and foundation of insurance coverage.
The objective is that the insured should neither reap economic gain nor incur a loss if adequately insured.
This objective requires that the insured receive a payment equal to that of the covered loss so that the insured will be restored to the same position after the loss as before the loss.
The calculation of this payment results in under-compensation if an insurer deducts prospective contractors’ overhead and profit and sales tax in determining the actual cash value under a replacement cost policy.
The value of contractor´s overhead and profit, as well as sales tax on building materials, has been included in the limit of liability for which the insured has paid premium.
If the insurer in determining actual cash value excludes costs that are included in the determination of liability limits, on which the insured´s premium is based, the insurer reaps an illegal windfall because the insurer receives premium on insurable values for which loss may never be paid.\”
*http://www.tdi.state.tx.us/bulletins/b-0045-8.html
__________
Receiving premium (dollars) equaling future loss values, and not returning those loss values to claimants, equals receiving premium on insurable values for which loss is never paid.
Over priced premiums, illegal windfall dollars gained, and illicit contingent profit potential, are by-products of synthetically undervalued loss claim estimations.
All of which can be \”hidden\” by year-end loss-ratio appearances, and \”proper\” profit margins not exceeding regulatory boundaries, and insufficient market conduct examination of carriers claim settlement practices.
Should the premium rates need adjusting downward, after the illegal scheme bears the profit desired, carrier compliance with regulators gives the whole process a veneer of legitimacy…
Every day specific examples of keeping those contractor overhead and profit loss values claimants are paying insurers for, and are entitled to honestly receive back, are being generated by Allstate, USAA, Safeco, Farmers, State Farm and the TWIA, in Texas.
Some insurers claim a primary – general (structure placement / replacement) contractor is \”needed\” for a loss, so as to include those contractor overhead and profit loss values in estimating the value of the loss.
Not so.
Again, \”The value of contractor´s overhead and profit, as well as sales tax on building materials, has been included in the limit of liability for which the insured has paid premium.
If the insurer in determining actual cash value EXCLUDES costs that are included in the determination of liability limits, on which the insured´s premium is based, the insurer reaps an ILLEGAL WINDFALL because the insurer receives premium on insurable values for which loss may never be paid.\”
Predetermined replacement loss values, knowingly collected, and knowingly not repaid, apples-for-apples, thus creating illegal windfall, is knowingly defrauding people…no?
Underwriter, If you would like specific hard copy evidence that this is so, for the past 4 years, please feel free to contact me.
Private client information will be excluded.
rogerpoegc@yahoo.com
4-19006
Mark,
With all due respect, I\’ve mentioned more than one insuers\’ conduct in my commentaries, which are based on, proof positive, on-going unfair claim settlement conduct…right under claimants noses.
I\’ve also repeatedly stated that honorable insurers and adjusters exist.
In all, consistent in-the-trenches claim data, tell very interesting stories…
rogerpoegc@yahoo.com
Roger wouldn\’t like it if we painted the entire construction industry as fraudulent by using an example of 1 contractor. If people weren\’t so greedy, no one would have any problems, and that goes both ways.
Plus this is Mississippi–the state with the most plaintiff friendly juries and judges in the country.
I hope that some jack-leg State Judge upholds Hood\’s silly lawsuit. Just watch the insurance companies leave Mississippi like a herd of Water Buffalo. Will the last insuror turn out the lights?
LS
We can afford to pay above the water line.
We will save thousands in premiums and
they will be broke.