After a major loss, most people experience many of the same emotions they would expect were it a death in the family instead. They feel a sense of disbelief, denial, fear, anger, resignation and depression. Yet in all their emotions, they never count on one thing that frequently happens; “psychological warfare” waged upon them by their insurance company.

The first thing I remind my clients of is that insurance companies are business entities. They are in business to make money. And they are most profitable when they collect premiums from people like you and me and are able to keep that money invested. They are least profitable when catastrophic claims occur and they are forced to pay the policy limits on those claims. So, quite naturally, they have become very good at avoiding the financial pain caused by paying more than they absolutely have to pay.

As a Tennessee public adjuster I advise my clients that their insurance company studies statistics on everything. Statistics on how long it takes someone to call after an auto accident to how likely a person is to die based on their personal habits. In other words, they study people’s behavior and then they use that knowledge to psychologically manage their response to each type of claim.

Did you know that your insurance company knows with statistical certainty, how likely you are to accept their first offer without question? A significant majority of insured’s accept what their insurance company initially offers them without argument. If only 20 percent of those who incur a loss are going to question or argue the size of their settlement, why would the insurance companies pay everything in the first check? They save a tremendous amount of money by paying 60 or 70 percent of what they should, knowing that only a minority of families are going to ask for more money.

One way that insurance companies are able to do this is by understanding human nature. Let’s assume you had a beautiful home and while you were out shopping your ten year old son, playing with fireworks in his bedroom, accidentally burns your house down. It’s unfortunate and it’s clearly accidental but know this: the objective of the adjuster assigned to your claim is to settle the claim to your satisfaction as cheaply as he/she can. It is not their job to volunteer any more than they have to in order to get your claim settled.

So, how does this adjuster save the insurance company money? He will interview you, your son and anyone else relevant to the loss. He will question you about possible motives you might have had to want a fire like that to happen. He will make sure you had no possible motive to want a fire like that to happen. It will feel a lot like you are being investigated for arson or insurance fraud. (Remember, his job is to first make sure that a claim is legitimate and I have no argument with that but there is a limit to that kind of approach). You also need to realize that even though your son didn’t do it on purpose you will, naturally, have a sense of remorse about the negligence that caused the accident. If the insurance adjuster can cause you to feel any insecurity or additional guilt about the claim, he has taken you one step closer to getting you to accept something less than a full settlement. Why? Because you are in a weakened state of mind and less able to resist this kind of tactic.

If I can offer you any advice in how to keep your insurance company from manipulating your emotions it would be this:
1. Insist that your insurance adjuster put everything in writing. Verbal offers are not binding and when it comes to claims, there is often a great deal of difference between what they will say and what they will put into writing.
2. Get the full benefits of what your premiums paid for. You’ve lived up to your end of the deal now it’s time for them to live up to theirs. So don’t allow any insurance adjuster to make you feel guilty about your loss. Get everything you’re entitled to and don’t allow them to psychologically intimidate or pressure you to accept anything less.

Scripture admonishes us in the book of Matthew “to not worry about tomorrow, for tomorrow will worry for itself. Each day has enough trouble of its own” (NIV). But try as we might to not concern ourselves with tomorrow (or next week, or next month etc…) we all seem to possess an innate desire to know what tomorrow holds for us. So, inevitably, whenever I meet an owner who’s suffered significant damage to their property they almost always get around to asking me, “What’s going to happen next?” (This is a reasonable and logical question in light of the fact that they most likely have never been down this road before). While I can’t tell them with certainty how their insurance company is going to treat them or how much of a settlement they will receive I believe that has an experienced Tennessee Public Adjuster I can give most people a general idea of what process their claim will go through in the next couple of weeks…a “lay of the land” if you will.

Let’s start with your structure and assume that the peril that inflicted the damage was a fire. Most insurance companies have a rule that the adjuster assigned the claim has to call you within two days of notification of the loss. In that phone conversation he or she will set up a time to meet you at the property so that they can assess the scope and severity of the damage. There is a good probability that part of that meeting will include you giving a recorded statement to the adjuster of the events leading up to, and just after, the fire. This is standard operating procedure and shouldn’t be a cause of worry (plus it’s a condition of the policy for you to have coverage). This meeting normally takes place within five days of the loss depending on the adjuster’s workload.

Once on site you can expect that the adjuster will take numerous pictures of the property both inside and out. If they are trained in estimating they may even decide to start taking measurements of the damaged areas. The adjuster will take the information he gathers at the site and go back to his office and begin inputting the data into the software program (they are probably using a program called Xactimate). The larger the fire the longer it will take for them to input the data. The last question you should ask the adjuster before he leaves is: “When can I expect to receive my estimate”. Write that date down and let them see you do it. (If they aren’t going to begin formally detailing and estimating the damage at that first meeting then they will normally return in a day or two do it OR they will schedule one of their estimators to come out on site to start the estimating process. Just get an idea as to when this will happen and make note of it).

Seldom do they get the estimate to you on the date they say they will. Some of the reasons are legitimate and some are very questionable but let’s first talk about the valid things that could delay them getting back to you with your estimate. I am not an apologist for insurance adjusters but in all fairness there are things that will cause the adjuster to take longer than expected and, as I am also a Kentucky Public Adjuster, I find this holds just as true for Kentucky residents as well as Tennessee property owners. Some of those things are:
1. Their manager unexpectedly added more claims files to their caseload.
2. A catastrophe, such as a tornado or hurricane, has hit the area and hundreds if not thousands of pieces of property have been damaged. Their claim files have now just increased by five or ten fold. Two thirds of the tornados in the south occur in March, April and May. If you have a fire loss during this period and a tornado occurs around the time of your loss you can expect it to take longer for them to come up with an estimate than in August, for example.
3. The adjuster is taking a vacation the week following their initial visit (which will put them even further behind because new claims will have been added to their workload while they were taking some time off). Adjusters have families too and they want to take their spouse and children on spring break and on summer vacations like many other families.
4. Thanksgiving, Christmas and New Years. From Thanksgiving through the beginning of the start of the New Year I always see the speed upon which a claim is processed drop by about 50%. The adjusters have vacation time that they have earned that if they don’t take by the end of the calendar year they lose. This 5-6 week stretch is a popular time for staff adjusters, estimators and claim reps (the people who work in the office and you talk to on the phone) to take time off that they are entitled to. This means your claim is not getting much attention. You will need to be patient during this stretch of time.
5. Winter. There are twice as many fires per month in December, January and February as there are in July, August and September (thus a greater workload for the adjuster). So if you have a fire or burst water lines in these months you can expect to wait longer for them to resolve your claim than most other months.

The fact that there are some legitimate reasons for why your claim is not being handled as expeditiously as it should doesn’t mean that you shouldn’t be actively engaged in regular communication and follow-up with your adjuster. The old adage, “the squeaky wheel gets the oil”, still holds true.

In my continuance of this blog (Part II) we’ll discuss what’s going on at the home office and if there are things there that could be holding things up.

Have you lost your home to a fire? Or, a tornado? Both are tragic events that can leave any homeowner reeling and wondering what to do. After calling in your loss to the claims department of your insurance company you can normally expect to hear from the adjuster assigned to your claim within 48 hrs, so let’s talk a little about that initial phone conversation.

The adjuster will be your key contact throughout the life of your claim. As a Tennessee Public Adjuster here are some questions I would recommend you consider asking in that first call with your adjuster:

1) “Mr. Adjuster, would you mind repeating your name for me and spelling it. I would also appreciate getting the following information from you such as your email address and the following numbers (office, fax and cell phone)”.

Make sure you get all this information on your first call. They might be hesitant but, trust me, you need all of this. Don’t let them talk you out of it. Why? Because communication is paramount and you do not want your adjuster finding any way to avoid talking to you. Claims always take longer than you hope for…and this is most certainly true if you cannot locate your adjuster.

2) “Mr. Adjuster…can you bring me a copy of my policy when we first meet over at the property? Oh, you can’t? Then please order me a complete copy right away. When can I expect it?”

Believe me when I say you need the whole policy. Within the policy is where you find out all of the information on the types of coverages and benefits you are entitled too. Many times after reading the policy I am able to reveal to homeowners that there are additional benefits within their policy that have for some reason not been mentioned by the adjuster to the property owner.

3) “Mr. Adjuster…can you please bring me a copy of my “declarations page” (or “dec” page as we in the industry call it)?”

The “dec” page is a one page summary of your basic coverages and it tells you the policy limits and types of coverage that are specific to your home, business and personal property. The limits on your policy increase a little bit every year so make sure you get a current “dec” page.

4) “What benefits are available to me and my family under the Additional Living Expense coverage of my policy?”

This coverage (which is frequently referred to as ALE) is designed to help you pay for any “new” expenses that you are, or will be, incurring due to the damage to your home. Some of these ALE expenses are for things like renting another house, staying at a motel, higher cell phone bills, longer distances to drive, etc). Ninety-nine percent of homeowners have this coverage. (I will make a list, in another blog, of many of the other items that fit into this category and should be paid for out of your policy).

5) “I understand that insurance companies frequently will give their policyholders an “advance” on their settlement. We are in need of clothes and other necessities so I would appreciate you bringing a check to help us through the first couple of weeks. How much do you normally advance people?”

This check is usually handed over to the policyholder on the first visit from the adjuster and is normally between $1,000 and $10,000. It goes to help you purchase some clothes, replace some lost medicines, pay for a hotel or purchase whatever else is now necessary. Keep in mind, this check can be spent on anything you choose but spend it wisely. This check is taken out of the coverage your policy has allotted for contents and will be deducted from the final settlement check on your personal property (except for those purchases directly related to Additional Living Expenses). So make sure you hold unto all receipts and keep good records and differentiate between the money you spend on new contents and the money you spend for Additional Living Expenses.

Well, there you have it. Not an exhaustive list of questions to ask your adjuster when you first visit over the phone but a good start. Here’s the secret: the more you can project to the adjuster that you have a working knowledge of the claims process the greater the probability that you will be treated fairly. Knowledge is power!

You may or may not like your adjuster but you should be ready to be the squeaky wheel with them. And it’s not grease you’re wanting but attention, assistance, good communication and, finally, a fair settlement.

With forty-four states providing for the licensing and regulation of public adjusters why has “The Cotton State” not allowed people in our profession to work as an Alabama Public Adjuster… and doesn’t this increase the potential for a bad insurance settlement for the citizens of Alabama? It’s a good question and a fair one at that.

While it may be unfortunate that a “public adjuster” cannot help someone with their claim it really does not matter. Why? Because every policy that I’ve read in Alabama includes a provision (written into the policy by the insurance company I might add) that provides a clearly defined process for resolving issues concerning “how much” the insurance company should pay for the repairs or reconstruction of a property they are insuring.

This process is called appraisal and is similar to mediation and arbitration in that it is an alternative dispute resolution format put in place to prevent expensive and time consuming lawsuits. The appraisal clause was inserted into policies years ago because no one thought it wise to leave filing a lawsuit as the only option for a policyholder who has received a low settlement offer.

Brian Goodman, Esq. and counsel for The National Association of Public Insurance Adjusters has been working with the powers-that-be in Alabama to come up with some legislation that would model the law that the National Association of Insurance Commissioners recommends for the licensing and regulation of public adjusting. This could all happen sooner rather than later but there is no definite timetable as of now.

But, again, whether public adjusting is allowed in Alabama or not the people of that fine state still have a very effective tool already built-in to their policies that can remedy the issues surrounding a low settlement offer… and it’s called appraisal.

Okay, what you thought would never happen, happened. A fire or tornado has damaged a substantial portion of your home or business and now you have an insurance claim on your hands. You didn’t ask for this but it’s the hand you’ve been dealt. So now what do you do? There’s a lot of work ahead of you but there’s no point in talking about what you need to be doing two or three weeks from now. Let’s keep you focused on the “present”. As a Tennessee Public Adjuster here are five things I would recommend that you do to help you get started off on the right foot and begin taking control of your claim.

1. Notify your agent as soon as possible that you have suffered a loss. They will either give you an “800” number to call or take all of your information and have someone from the claims department call you. Once you talk to someone from the claims department they will give you a claim number. Put it on a piece of paper that will always be with you. If your policy and/or declarations page was destroyed in the fire (or you simply can’t find them) ask them to send you a new one of each.
2. Get a seven-pocket file folder to help you keep organized. You can buy them for around $7 at Target or Wal-Mart (we give them out free to our clients) and it may well be the best $7 you will ever spend with regards to your claim. Put all of the receipts for the money you spend on eating out in one pocket, put all the documents the adjuster gives you in another, put the letters sent to you by anyone from the insurance company in another pocket and the personal property inventory list in another. (You’ll find plenty of other uses for the other pockets for things like business cards, estimates, homeowner’s policy etc…). Make copies of everything you give, or send, to the insurance company and keep them in the folder.
3. The insurance adjuster assigned to your claim will normally contact you within 48 hours. From the moment he touches base with you he will begin keeping a log on the date, time and substance of any conversation he has with you about the damage to your property. He will keep adding to his log until the claim is closed weeks or months from now. My advice: keep a log yourself. If he thinks it’s important enough to keep a journal then you should keep one too, so start doing so immediately.
4. Your policy requires that you take any necessary and reasonable steps to prevent additional damage to the property or theft of the contents. Pay someone as soon as possible to board up any busted out windows or doors and put a tarp over any holes in the roof. Your insurance company will reimburse you for these expenses so keep any receipts associated with this task.
5. Preserve the loss. How? First, take hundreds of digital pictures showing all the damage to the exterior and the interior of the property. And don’t forget to take close-ups of all the personal property that’s been damaged. There is no such thing as “to few” pictures. The old saying that “a picture is worth a thousand words” is most appropriate in the first few days after suffering a loss. While the insurance adjuster is also going to take hundreds of photos of the damage he will never make those copies available to you (even if he says he will, he won’t). This is your loss so take responsibility for documenting it thoroughly. And second, and most importantly, DO NOT start doing any “tear out” or demolition of the property. Preserve the damage just as it was until the claim has been settled.

I hope you find all of this helpful.  These tips apply for about any type of loss in about any state and particularly so for those states that don’t allow for public adjusters, like Alabama.

About a year ago I was talking on the phone to one of my closest friends, a guy named Wes. He had been having some difficulty with his back for some time and just recently his back problems had seemed to be impacting his ability to walk. He was telling me that he had noticed recently that he had found himself dragging his right leg behind him when he walked. As a consequence he told me he was going to see his primary care physician and asked me to keep him in my prayers.

A couple of days later I was following up with Wes and he told me that his doctor did some tests and based on the results he told Wes that he thought he was in the early stages of the disease called multiple sclerosis (MS). Being the man he is he was taking it pretty well. But I had to ask the obvious question, “What are you going to do”? His answer, looking back, was even more obvious then my question. He said, “Well I’m going to get a second opinion, of course”. Wes just didn’t get a second opinion from another physician he got a second opinion from a specialist, a neurologist to be exact.

What’s my point with all of this and how does this affect an insurance claim? As a licensed, bonded and insured Tennessee Public Adjuster it never ceases to amaze me that a property owner can have a catastrophic loss with tens of thousands (or hundreds of thousands) of dollars hanging in the balance and accept what just ONE person says is the estimated value of their loss. Bear in mind that that ONE individual works for the insurance company and furthermore, I think we can all agree, the insurance company does not want to pay anymore than they absolutely have to in order to settle the claim. That would appear to most people to be a clear conflict of interest.

It says in scriptures (Matt 26: 24) that we can’t serve two masters. We’ll either love one and hate the other or vice versa; but you can’t serve both of them equally well. The same principle applies in the way the adjuster handles the claim. The adjuster, as a trained and loyal employee of the insurance company, has a difficult job to do in when ascertaining how much his employer should pay someone for their loss. But try as he might he is going to be more pre-naturally disposed to looking out for his own company’s interest then a homeowner’s. I don’t blame him for that because, logically, that’s who “butters his bread”.

So, here is the one bit of advice I would give every property owner who lives in Alabama, Tennessee and Kentucky (I am licensed as a Kentucky Public Adjuster also) and has gone through a major fire, tornado or water loss: let someone with experience and knowledge of policy and estimates give them a “second opinion” on the estimate the insurance adjuster provides them. This is the only way someone can really know if they are being treated right and as a consequence eliminate the possibility of regrets from not taking a few prudent and patient steps on the front end.

Invariably when I talk to a property owner who has experienced a significant loss 7 out of 10 times they think the insurance company is going to give them the full amount of money (in one check) that they will need to replace all of the damaged contents lost in a fire. They believe that because they have “replacement cost coverage” that the insurance company owes them for the full value it would take to buy another item of like kind and quality whether they ever replace that item or not.  As a Tennessee and Kentucky public adjuster I hear this kind of thinking all of the time but they are inaccurate in their assumptions and expectations.

It’s normally not the agent or adjuster’s fault that they believe that… it just seems to make sense to most people that that is what “replacement cost” means. The fact of the matter is that the insurance carrier only owes the insured for the full value of a damaged item AFTER that item has been replaced.

Example: a homeowner had a living room couch that was completely destroyed in a fire. They bought it 10 years ago for $1,500. The insured goes to several furniture stores looking for a couch that is similar in brand, size and quality to the one that was lost and discover that the price tag for such an item is now $2,000. For the sake of argument let’s say the insurance company agrees with that price. Since the couch was ten years old the insurance company will take the position that the couch had lost some of its original value due to normal wear and tear and thus, in this example, will apply 40% depreciation ($800) to the replacement value of the new couch ($2,000 x 40% depreciation = $800). They will then deduct the $800 from the replacement cost value of $2,000 to arrive at the Actual Cash Value (ACV) of $1,200 for that couch.

Until the homeowner actually buys another couch to replace the couch lost in the fire the insurance company only owes the insured the Actual Cash Value of $1,200; and that’s all they will initially give the insured. But what normally happens is this: the homeowner (with $1200 in their bank) then goes to XYZ Furniture Store and, using their credit card, buys a new couch for $2,000. They take the receipt from that purchase and send it to the insurance company proving that they have replaced the couch. The insurance company will then send the homeowner a check for the $800 that was originally held out for depreciation. The policyholder has now received the full benefits of their replacement cost coverage for their couch as outlined in their policy.

Of course the insurance company doesn’t issue individual ACV checks for each item. They will issue one check for the entire Actual Cash Value of the loss for all of the contents and included within that sum is the amount for the couch ($1,200). This may not sound as simple as most people would like it to be but it is how it’s done. Hope this helps clear up some of the common misconceptions that policyholders have about replacement cost coverage.

People frequently ask me and my colleagues about the wisdom in using a contractor to rebuild their house that is recommended by the insurance company. I tell them that they are free to use whomever they want but to be very cautious if considering using someone from the insurance company’s preferred contractor list.

Of course that begs the question, “Why?” It’s pretty simple really: they get almost 100% of their business from the referrals of the insurance adjusters. With that being the case, who do you think they really want to keep happy, you or the adjuster?

Putting it another way: the damage you suffered to your home is probably the only time in your life that you will have a significant property loss claim. The odds are that this will be the one and only time you will need to use a general contractor to repair or work on your house. You are not going to be a source of repeat business to him or his company.
Am I saying that all preferred contractors are shills for the insurance companies?

Absolutely not, there are a couple in this area that I think do a good job and put the client first. But if more than 80% of their business comes from doing insurance work then they can’t help but be more compliant with the direction that the insurance adjuster wants to go on a particular claim. It’s just human nature. People are going to act in such a way as to protect their interests.

Additionally, I have seen many instances where the insurance company’s preferred contractor became the mouthpiece for the adjuster and the insurance carrier while trying to position themselves in the eyes of the property owner as being an independent party in this whole process. I think that is disingenuous at best and intellectually dishonest at worst.

Many insurance companies will elect to use one of their contractors to put together the detailed estimate for the insurance company. The insurance company is free to use anyone they want to come up with an estimate but you don’t have to use their contractor to restore your house. That decision is yours and yours alone.

If you do decide that you are going to use the contractor the adjuster introduced to you then, as a Tennessee Public Adjuster, I can only say “caveat emptor”… let the buyer beware.

A couple of weeks ago we picked up a new client who had some concerns about the way her claim was being handled. Her suspicions were accurate.

The adjuster for the insurance company told our client that she could, and should, remain living in the house after a fire to the master bedroom. He wanted the contractor to “seal off” the damaged room so she could live in the house while the work was being done to repair the damage. She works at nights so you can imagine how little sleep this poor lady would get if in fact she did stay in her house.

Besides that though, when you first walked into the house you could smell the smoke and soot in the air and “feel” the humidity from all the water that was poured onto this house by the fire department. It was no place for anyone to be living.

Most homeowner’s policy state that the insurance company will pay for any additional and reasonable living expenses that are incurred and necessary to maintain the policyholder’s normal standard of living. This lady lived in a well furnished 2,000 square foot house and was entitled to live in a house of a similar size and quality as to the one she was living in. That was her “normal standard of living”.

As a licensed and bonded Kentucky public adjuster, one of the biggest mistakes I see homeowners make when they have suffered a catastrophic loss is they allow themselves to be directed towards temporary housing that is roughly half the size of the dwelling that was damaged and usually an apartment. While that may seem perfectly suitable for a day or two, after a couple of weeks the walls begin to close in on people. I have seen more marriages and relationships damaged by inadequate living arrangements then anyone could possible imagine.

My advice is always the same: find some place roughly equivalent in size to your house, rent some furniture to fill the house up and make yourself comfortable. Settling a significant property loss can take several months and you don’t want to put you or your family in a situation that relationships are damaged beyond repair due to close quarters. And you certainly don’t want to weaken your negotiating position by being in a hurry to get back into your old house solely because of the poor accommodations you’re having to endure.

When I’m at social gatherings and meet people for the first time it’s always fascinating to watch their reaction when I tell them what I do for a living. Invariably, nine out of ten people have never heard of a Kentucky or Tennessee public adjuster and furthermore were never even aware that this industry existed. I think there are a couple of reasons for that. One, public adjusting firms don’t typically advertise on TV or radio so you never hear about them. Two, you will seldom if ever see a “human interest” story in a newspaper or magazine about how a public adjuster improved someone insurance settlement. And three, while most everyone has property insurance on their home or building, they never believe that they will be the one to suffer a significant catastrophic loss.

Fortunately, forty-four states and the District of Columbia have made provisions for their citizens and license and regulate the public adjusting profession (unfortunately one of our neighboring states doesn’t allow for someone to be an Alabama Public Adjuster). They all agree that the property owner ought to have someone on their side of the claim that is as knowledgeable about claims as the adjuster for the insurance company. And, of course, I feel that way too.