Insurance Claims - The Usual Suspects
Insurance claims - The Usual Suspects
Condominium Core Concepts Series - Module 4
After a loss event where your home or other property has sustained severe damage, there is going to be an overwhelming amount of noise. This noise will be from other homeowners, your management company, and of course, the numerous personalities that you will encounter in the insurance claim process. This post is an attempt to assist Board Members and Managers sort through the people they interact with more efficiently.
“A place for everything, and everything in its place.
Benjamin Franklin
Everyone has a purpose and intent. These may or may not be clear in your first interaction but you should always make an effort to ask a few questions.
What are you here to do?
Who are you working for?
How do you get compensated for your effort?
Depending on how these questions are answered, you are going to weigh the information provided to you differently. For example, we are all skeptical of the automobile mechanic that brings us a huge estimate for work because we know that they directly benefit from the work being recommended. That’s not to say that the information about the work required is entirely wrong, but it warrants scrutiny more scrutiny than an assessment from an independent expert.
Let’s start at the beginning - the insurance policy itself. A contract to provide financial assistance under the specified coverage for losses sustained to covered property. More often than not, you have purchased a policy using an Insurance Agent that helps communicate your requirements to an Insurance Carrier, the Insurer, in order to secure a policy that’s acceptable for you, the policyholder or Insured.
Once your policy period starts, you have insurance for your property under the terms of policy. One of the common provisions of a property insurance policy is the duty to mitigate further damage in the event of a loss. A Mitigation Contractor can be of extreme value in this situation, preventing a roof leak or other damage from allowing the elements to damage the interior or drying out an interior that’s affected by water intrusion, preventing the drywall from having to be fully replaced versus merely having direct contact portions removed. You may have a pre-loss contract with a mitigation contractor or after notification, the Insurer may recommend one to you. Preferred Contractors recommended by the Insurer opens more questions:
Why are they “preferred”? How does it this affect where their loyalty lies in bigger picture?
If they received a lot of business from the Insurer, does this diminish their focus on individual clients?
Are they doing the bare minimum to keep costs low for the Insurer or are they being as thorough as possible to best serve the Insured?
After tending to the immediate damage and fulfilling your obligations under the agreed upon conditions in your policy, you will want to start the dialogue with your Insurer on filing a claim and providing proof of loss. The Insurer will assign a staff or independent Adjuster to represent them and review the merits of your insurance claim. Do you have Covered Property that has been damaged by a Covered Peril? If the answer to that questions is yes, you will have to move to what the scope of damage is and what the property was worth or how much it costs to repair or replace it, depending on the type of policy you have. More than likely, an Estimator will be hired or assigned by the Insurer to review the damaged property and place a value next to it. You are encouraged to have your own estimator or Restoration Contractor provide an estimate for valuation and comparison. Restoration contractors specialize in restoring the property to its previous condition and they can be “preferred” vendors from the Insurer, which should lead to more questions discussed previously, or found by the Insured.
On the other side of the coin, you may decide that you need your own representation. The person most qualified and solely licensed to accomplish this is the Public Insurance Adjuster, or just Public Adjuster. The Public Adjuster is a fiduciary of the Insured and must conduct themselves in their best interests at all times in their representation. That does not mean you have to hire a Public Adjuster, but realize that all dialogue with the Insurer is “on the record” and the top reasons for insurance claim delays and denials stem from false/misleading statements, not-timely reporting, inaccurate/insufficient documentation of damage, or exclusions in the policy. An expert in packaging up the loss information and communicating it with the Insurer is what could speed the process along or open up more coverage than would normally be offered.
The other option for the Insured is to hire an Attorney to represent them. This is the most expensive option usually and if it goes to trial, it gets more expensive. Attorneys are useful and have the sole ability to practice law. They represent clients in legal proceedings such as lawsuits, drafting settlement documents, or in trials.
There is one last group that is the most vague but when required, very valuable: the many Experts on all aspects of building damage and restoration that exist. You may have roofing expert testify that the roof cannot be repaired and must be replaced based on the manufacturer’s guidelines of the material. These experts may be engineers, roofers, mold specialists, plumbers, etc. They can be paid for by the Insurer to support their position or by the Insured for the same purpose. The important part is that there are no conflicts with the expert. They need to be paid a fee and it cannot be contingent on the proceeds of the settlement, since that would create an incentive for their report and/or testimony, and thus, a conflict.
Whoever you decide to let into your circle in the course of your settling your insurance claim, do so with proper care and caution. Ask questions about their experience and ask questions about their goals. If they offer you free services, ask why it’s free. Above all, ensure that the professionals you are working with are legally allowed to provide the services they offer.
In Florida, interpreting law or drafting legal documents is exclusively within the realm of practicing law and is the business of an attorney. Representing the Insured in an insurance claim, advising them of their rights and coverages under their policy, and negotiating with the Insurer are services that a public adjuster provides. Be cautious of consultants, contractors, or others that offer to provide the services above as they may end up pushing you further from your rightful settlement.
