Insurance Claim

Insurance applications are the first forms you’ll see when buying insurance. But if you’re not careful, that application could get your claim denied.

One of the first things that a claims adjuster will do when he receives your claim is ask the Underwriting Department to send him a copy of your application. Why? Because part of his investigation of your claim is to verify the information found on your application. Lots of times, adjusters find incorrect information on applications that allow the insurance company to deny the claim and even void the policy like it never occurred.

Let me give you a couple examples of denial that actually happened:

Example #1. A man bought car insurance in 2002. At the time their application was accepted, the only drivers were himself and his wife. They had a 10 year old daughter. In 2008, they had an automobile accident. The daughter is now 16 but does not drive. After the adjuster did his investigation, they received a letter from the insurance company that denied their claim. The letter said that the insured had failed to disclose a potential driver in the household. Even though they disclosed their daughters name and age in 2002, and the policy had renewed six times, the insurance company used a misinterpretation of policy language to deny a claim.

Example #2. A man applies for car insurance while married but separated. The application asks marital status, married or single. The man checks the box for “married.” He lists both himself and his wife as drivers. A few months later, he has an at-fault car wreck. His car is a total loss, he is being sued for negligence, and has medical bills of $5,000. The investigation finds that he was separated at the time of the acceptance of the application. The insurance company sends him a check for $525, which is his returned premium, and denies the claim, stating that the company would not have given the policyholder the “marriage discount” had they known he was separated.

So, how can you protect yourself from application errors? Here are six ways.

1. Fill out the application completely. Do not leave any boxes or lines blank

2. Do not sign the application until all of the information is completed.

3. Do not sign an application and allow the agent to complete it after you leave.

4. Once you sign the application, have the agent make you a copy of the application right then.

5. Once you receive your new policy, compare the information on your application with the terms and conditions of the policy.

6. Report changes in your policy promptly to your agent, like added drivers, deleted cars, or address changes.

If you will be very careful to do these six things, you can be confident that you will not have problems with your insurance company at claims time over your application.

More than half of the states in the USA require that the insurance company pay state sales tax when you replace your total loss vehicle. What those states do not mandate is that the insurance company has to tell you about the tax issue. You probably won’t get the sales tax unless you ask for it.

To find out if your state requires the extra sales tax payment, contact your state’s Department of Insurance.

No insurance company, whether it is your insurer, or another insurer who insures an at-fault driver, wants to pay you one dollar more than the lowest Actual Cash Value (ACV) that they can find. When the insurance company declares your car a total loss is when the strenuous negotiations begin.

Your mission...should you accept it...is to prove that your car is worth its absolute highest value.

State sales tax percentages vary widely from state to state. Here in Georgia, sales tax is calculated on a county-by-county basis. In Cobb County, where I live, the sales tax is 5%. However, just across the county line in Fulton County, the sales tax is 7%. But in the City of Atlanta, sales tax is 8%.

Look at the numbers on a $30,000 automobile. If you lived in Cobb County at 5%, the insurance company would owe you an additional $1,500.00. If you lived in Atlanta at 8%, the amount would be $2,400.00.

If you do not demand the extra sales tax payment, you're leaving thousands of dollars on the table that you are likely entitled to collect.

Don’t allow the insurance companies to mislead you. The Actual Cash Value of the car must include the state sales tax.

Insurance claims adjusters are, for the most part, very nice people in a tough job. They are caught in between the insurance company that wants them to control the claim settlement amount, and you, the policyholder or claimant, who wants the very highest settlement amount possible.

But I’m not nearly as concerned about them. If they don’t like their job, they can quit. Nobody is forcing them to be claims adjusters.

I’m mostly concerned about you, the policyholder.

The book that I wrote, “Insurance Claim Secrets REVEALED!” shows consumers all the ways that they can take control of their insurance claims, and add hundreds or even thousands more dollars to their claim settlements. Many of the strategies in the book are confrontational. But you can learn to confront honestly without unpleasantness.

Insurance companies have games and scams that they use to delay claims and minimize settlements. Policyholders and claimants are usually placed under financial hardship when they have an insured loss. Few of the people I’ve ever met who had a claim could afford to repair or replace their damaged goods out of their bank account. Most of the time, people depend upon the restitution they receive from the insurance company.

Insurance companies know this, and rely upon it. They know that delays will place pressure on policyholders and claimants, and that makes them more willing to accept lower settlements.

Back in September 2008 I wrote and posted an article about “Dealing with Adjusters.” It has been one of my most popular articles. Thousands of people have read it. But today I want to put a spin on that article and make an even more obvious point.

When you are dealing with claims adjusters, make sure that you are ALWAYS pleasant, well-mannered, and polite. You can’t control them, but you CAN control YOU.

You need to “nice them to death!” Make sure you are doing the following:

1. Speak calmly whether in person or by phone, no matter what your level of frustration may be.

2. Make your requests for payment, documents or any other requests politely, and make them in writing.

3. Be firm but respectful when you are using a claim strategy. Being demanding will only make the adjuster feel threatened, and he will want to resist your demand to prove he cannot be controlled by you.

4. When you write a letter, be sure that you are polite and respectful. Simply state what you want them to do and remember to say “please” and “thank you”...just like your mother taught you.

5. Do not, under any circumstances, lose your temper! Words said in anger are impossible to retract. You can apologize as much as you want, but better to say things for which you will not have to apologize. Be in control. If you feel like blowing up at your adjuster, end the meeting or phone conversation and come back another time to finish your business.

I promise you that you will never regret maintaining your composure when you are immersed in the claims process.

People regularly do stupid things that cause someone else an injury. Then the inevitable lawsuit gets filed, and then an insurance clam gets filed, too. But occasionally, the courts get it right in their decisions, and we get to make fun of the plaintiffs and defendants.

My friend Randy Maniloff is a genius attorney, a partner in the Business Insurance Practice Group at White & Williams in Philadelphia. He recently wrote an article that showcased these court decisions, and gave me permission to share them with you.

So, in order of dumbness (lowest to highest), here is the Top Ten Funniest Coverage Decisions of 2008:

10. A motivational speaker repeatedly urged a seminar participant to break a board with her bare hands. After she tried and was successful only in injuring her hand, she sued the speaker. In Reese v. Alea London Ltd., the Court decided that the speaker’s policy had a Professional Services exclusion that precluded coverage. I guess “mind over matter” doesn’t include lumber. I also guess you can be “board” to tears in this guy’s seminars.

9. The insured was playing around his backyard pool and tried to throw someone in the pool. However, he miscalculated the strength he’d need to complete the throw, and instead threw the victim onto the pool’s steps, seriously injuring the victim. State Farm denied coverage. In State Farm Fire & Casualty v. Superior Court, the Court decided that coverage was owed since the insured’s only intent was to get the victim wet. Note to the insured: next time you want to get a woman wet, take her out for dinner and dancing.

8. The insured got into a fight, and got his hand stuck in the glass of a sliding glass door. He shot the glass to free his hand and the bullet ricocheted into the chest of a woman inside the house. In Shelter Mutual Insurance v Wheat, the Court decided there was no coverage because the injury was not caused by an “accident.” In other news, Bob Vila will be hosting a memorial service for the door.

7. The insured business hired violent offenders to go door-to-door and sell magazines. Their aggressive sales tactics caused.injuries and at least one death. In Nautilus Insurance Company v. Reuter, the parties are waiting to see which way the Court interprets the policy term “occurrence” to figure out if there’s coverage. The Girl Scouts need to hire these guys for next year’s cookie drive.

6. A middle school student caused injuries to a teacher’s aide when, in the middle of a cafeteria food fight, he struck the aide with a garbage can. In Medrano v. State Farm Insurance Company, the Court decided that the insurer had to provide defense under the Homeowners policy because the Complaint implied that the injuries were unintentional. In the student’s defense, he couldn’t tell the difference in the garbage or school cafeteria food.

5. A karaoke singer was waving around an ice cream scoop (her microphone?) when it flew out of her hand and hit someone, causing injuries. In Nationwide Mutual Fire Insurance v. Kim, the Court decided that the insurance company had to provide defense for the singer under her Homeowners liability coverage, since the Court didn’t buy the argument that the injuries weren’t because of negligence. I wonder if she was singing “Tutti Fruiti” at the time of the incident.

4. An insured restaurant had a gas grille at a tailgate party at a Jimmy Buffet concert. The gas grille wouldn’t light, so they poured gasoline on it, and the explosion caused injuries. In United States Liability Insurance Co. v. Harbor Club, the Court denied coverage to the restaurant because the incident was not on the insured’s premises. Yummy...toasted Parrotheads. I wonder if the smoke from this explosion could be distinguished from the marijuana cloud at the concert.

3. The insured caused injuries to an old friend by saying hello with his “signature greeting,” which was putting the old friend in a headlock and squeezing his head while asking him how he was doing. In Sanford v. Century Surety Co., the Court denied coverage because the injury was not caused by an accident and the “assault and battery” exclusion applied. Imagine how the insured must greet those who are not his friends.

2. The homeowner caused injuries and one death to party guests when the host used gunpowder as a propellant to shoot his potato gun. In Kiser v. Coffee, coverage was denied because injury was reasonably expected from this intentional act. The potato in question is now in a low earth orbit, visible in a clear night sky.

And the Number One Funniest Coverage Decision of 2008 is....

1. The insured’s minor son injured his friend by kicking him twice in the groin after learning that his friend’s sister did not like him. In American National Property & Casualty v. Hanna, coverage was denied because the injury was not caused by an accident. Love hurts.....

A big “thank you” to Deborah Richards, Geri Lumsden and Jarrett Smith for their smart-assed assistance with the one-liners in this article.

Stay tuned. I’m sure there will be plenty of court cases in 2009 for our next Top Ten List!

America is going through a foreclosure meltdown which will only get worse in the short run. Tens of millions of loans are in default, and the lenders either have foreclosed or are in the process of foreclosure.

However, there are some very real issues that you need to deal with during a foreclosure. Failure to address these issues could result not only in you losing your house, but being caught uninsured at the time of a disastrous loss, like a house fire.

Stated another way...what would you do if you had a major fire, wind or water loss during a foreclosure? Are you sure you’re covered?

First, let’s look at homeowners insurance and your loan escrow account.

If your homeowners insurance is being paid by your lender through an escrow account, that’s fine. However, if your loan is in foreclosure, you cannot be sure that the premium is being paid by that lender. If you have stopped making loan payments, you have also stopped adding money to your escrow account. Your homeowners insurance could have lapsed for non-payment.

So, the lender will “force place” a policy covering your home, but only for the loan balance, and charging it against your loan amount. But that policy will only cover the dwelling, no contents or liability coverage. The lender is only interested in protecting their loan.

But, sometimes, lenders make errors and premiums don’t get paid. So, your strategy to protect yourself is to make sure that the premium on your homeowners insurance is paid, even during a foreclosure.

But I recommend that you keep the policy in place just a little while after the foreclosure has been completed. Why?

Because we’re now learning that many foreclosures are being done without proper documentation by the lenders. Some highly placed politicians have noticed this, and are starting to make waves.

Rep. Marcy Kaptur (D- Ohio) is the senior woman in the House of Representatives, and the longest serving Democratic woman in House history. Her district includes Toledo, which these days is looking more and more like a ghost town.

Kaptur has recently been seen on CNN, promoting the “Produce The Note” initiative. In a recent interview, she stated that many mortgages have been sold and re-sold numerous times by lenders. She said that a lender who is foreclosing may not even possess the original loan document with the borrower’s signature on it. The biggest problem is that because more than one lender has owned your loan, more than one lender could foreclose on you for the same loan. It’s already happened many times.

There’s a great website called Consumer Warning Network that shows borrowers how to fight back.

Go to: Consumer Warning Network

Don’t just willingly accept that your lender did the foreclosure correctly. Investigate and fight back! Your financial future could be at stake!

This week, State Farm Insurance Company, the largest private property insurer in the state, announced that they are pulling out of Florida after sustaining huge losses and being denied rate increases.

I am no fan of the games and scams of the insurance industry. Even though insurance makes our modern lives and way of life possible, it is fraught with problems. Insurance companies regularly mistreat their own customers. They delay, deny and minimize claims as standard operating procedure. But they also pay a lot of claims, too, and deserve to make a profit.

Into this environment come the insurance regulators of the 50 states. They try to protect the consumer. Their regulations swing from too much to too little, just like a pendulum. But, right now in Florida, the insurance regulators’ pendulum has swung to over-regulation. The regulators and state legislators have bungled the insurance marketplace in Florida, and consumers are going to get burned.

The Florida Department of Insurance has not produced evidence that the insurance market has failed, which might explain stiff price regulation in lieu of simply allowing competition in the marketplace to regulate premiums.

During the last 15-year period, Florida insurers have been unprofitable as a group. Dozens of insurers have stopped operating in the state. Simply denying rate increases does not benefit consumers. As insurers stop writing policies in Florida, reducing competition makes consumers worse off, with higher premiums and limited choices.

In response to insurance company exits since Hurricane Andrew, Florida legislators created Citizens Property Insurance Corporation (CPIC), an unprofitable state-run insurer that sells its policies below cost. This ridiculous pricing, paired with insurer exits, makes CPIC the insurer of over half of Florida's homeowners. Because CPIC is losing money, and owned by the state, these losses will eventually require taxpayers and consumers to bail out yet another insolvent corporation.

With State Farm’s departure from Florida, CPIC may end up insuring 80% of the homes in the state. CPIC is nearly insolvent right now. All it will take is one more major catastrophic hurricane to finish it off. However, it will be the Florida consumers and taxpayers that will be finished off when they are forced by the state legislature to bail out the state-run insurer.

The over-regulation of insurance companies was also recently shown in New Jersey. Just like in Florida, New Jersey lawmakers and regulators had over-regulated the car insurance marketplace to the point that insurance companies left the state in droves. New Jersey drivers found it nearly impossible to buy car insurance at any price. In 2003, the lawmakers and regulators regained their sanity and enacted reforms that brought back competitive pricing to car insurance. Rates are dropping and citizens can once again find affordable car insurance in New Jersey.

State regulators sometimes do more harm than good. Sometimes they get it right.

Hailstorms can happen anywhere that thunderstorms occur. Thunderstorms have the potential to produce hail the size of a BB or the size of a grapefruit. Severe hailstorms can cause more damage than tornadoes, simply because the area of a hailstorm can be much greater than that of a tornado. Hail can damage everything it strikes, whereas a tornado can flatten one dwelling while the house next door doesn’t lose a shingle.

We are just around the corner from Spring, when hailstorms begin to pop up with regularity. You can be ready by following the strategy in this article.

Nearly every time there is a big hailstorm that causes widespread damage to cars, homes and businesses, the issue of “matching” rears its ugly head. But there is a way that you can solve the “matching” disputes between you and your insurance company and get paid all you are entitled to collect.

Typically, when a hailstorm occurs, it strikes property at an angle. So, while one side of your roof might get pounded, the opposite side may have no damage at all. The hailstones might hit one slope of the roof really hard, while just skipping across the other slope. The same is true with exterior siding.

So, your insurance company adjuster may inspect your damage, and replace the damaged roofing or siding. But, that might cause an additional problem:

What if the new roofing or siding doesn’t match the old roofing or siding? Many times this occurs when the old material has been discontinued by the manufacturer. The new material might be of a different color or different dimension than the old material. For example, you might have 4” lap vinyl siding, but the manufacturer now produces 4” lap siding with a slightly different color or texture. It does not match.

You, the policyholder, now have an additional loss, which is the value of your home. If the siding or roofing doesn’t match, it diminishes the value of the home. But this part of the loss is indirect damage. The policy states that it only pays for direct damage to property. Many times, adjusters and insurers will rely on a strict interpretation of the policy wording, and state that they do not owe you any additional funds simply because of a matching problem.

However, there is a clause in the Homeowners policy that deals with indirect damage, and can be brought into a “matching” dispute to solve the problem

That clause is found in the Section I – Conditions – D. Loss to a Pair or Set. It says:

In case of loss to a pair or set we may elect to:

1. Repair or replace any part to restore the pair or set to its value before the loss; or

2. Pay the difference between actual cash value of the property before and after the loss.

Not only does this clause cover the direct loss of an item that is a part of a pair or set, but also covers the indirect loss sustained because of the diminished value of the remaining item(s) of the pair or set.

Your adjuster might disagree with this interpretation. He may tell you that this clause only pertains to personal property, such as when a person has one crystal candlestick stolen from a pair, or two plates from a rare set of 12 get broken.

But look carefully in your policy. NOWHERE in the policy does it say that the clause only applies to personal property.

For example, let’s use hail damage to siding. Two sides of the house sustain damage to 12” white aluminum siding with a textured finish. The manufacturer ceased making this siding and now only makes 8” aluminum siding without texture. It clearly does not match. The adjuster wrote an estimate to replace only the damaged siding for $10,000. But replacing all four sides of siding would cost $20,000. We are assuming a replacement cost policy, no depreciation applied.

The insured gets an appraisal of his dwelling, and finds that the dwelling’s pre-loss value was $100,000. After the storm, the dwelling appraises at $95,000. So you can see here that the “set” value of the undamaged siding decreased the home value by $5,000.

To be equitable to the insured, the insurance company should pay the $20,000 to replace all four sides of the home. That settlement process might take a little longer if you have to get an appraisal to prove the diminished value, but you’ll be properly compensated for your loss.

Finally, you the policyholder have legal precedent on your side. On October 12, 2000 in a Minnesota District Court, a judge ruled against American Family Mutual Insurance Company and ordered it to pay claims where there were matching disputes after a hailstorm. (see Min. Stat. {72A.201, Subd. 5(8) (1998)}).