News & Columns > Richard Kuritz > Perspective: Insurance Reality

Perspective: Insurance Reality

By Richard Kuritz
Thursday, October 29, 2009

Just before last Christmas, a valve failed, sending 35,604 gallons of water through a nearby house. An insurance claim followed. They sent a response team, re-assigned the claim to a senior adjuster, fired the first response team and hired another, hired an independent adjuster and fraud investigator and told the owner that company cost containment came before client damage control. In just 25 hours and 10 minutes, the company showed its colors. That was a foot-in-mouth record and a lucky break for the owner. When the equivalent of a swimming pool flooded the house, the insurance company reached for "cost containment" first, and made the serious error of saying so, even though their own experts said that delays could cause irreparable damage to the property. Cost containment was their code for "how can we reduce or deny this claim?"

The owner saw the red flag, and had the ability, willingness and time to let the company know that this was a legitimate claim, and that he was not a patsy. It's not over, but the fat lady is warming up. Unfortunately, this is not the typical result.

Few of us have not heard, or had, a horror story about an unfair or difficult insurance settlement. Most have no idea why, and so, there are still unresolved issues from the 2003 fires, with more to come from 2007.

We've seen the company banners in the burn areas, and we're overexposed to millions in daily ads warning of scams and fraud and lawsuits. Those insurance ads are paid by your premiums. But, did you see any ads about bad faith by insurance companies? Me either.

While insurance companies are the target of all sorts of scams, the fraud they lament cuts both ways. Insurance fraud takes place when someone tells a lie to get claim money, AND when they lie to avoid paying claim money. While not every claim is legitimate, neither is every denial. From a profit perspective, it is easier to talk honest claimants into taking a beating than to catch a real fraud.

Your insurance policy is a contract in which you paid a fee to transfer damage risks from you to your insurance company. But the dollar value of that damage is an open issue to be settled after the damage occurs.

Since legitimate claims are not predictable, you need to be as prepared to collect on your coverage, as you are to buy the coverage. Preparation requires that you understand the actual claim relationship with your insurance company.

An insurance claim is a negotiated agreement with an impersonal, profit-driven company, NOT a handout from a charitable benefactor. When there is a claim, their goal is to pay out as little as possible, period. Your job is to get the complete settlement that your policy states, period. Your time of need is their time of risk. Your emotional distress is their advantage.

Never, in the several- hundred year history of insurance, has any insurance company made any profit by paying any claim. There is simply an inherent conflict of interest. As such, you must be prepared, as well as insured.

1. Coverage: Got an insurance policy? Read it! Make sure of your coverage and your obligations. Your agent's sales pitch is not the contract. Know what you really have before you need it.

2. Documentation: Any claim for property loss or damage may have to be proven. Photograph your house, inside and out, as well as the contents to document they existed and their condition. Put the photos in a safety deposit box.

3. Claims: Making a claim? Document everything! Keep a journal of every call, person and conversation. Your documentation can only help your case. Carry an umbrella to prevent rain.

4. Baloney: Something sound out of line? Ask them to put it in writing! Be willing to call the CA Department of Insurance.

5. Options: Have a large claim that's dragging? Consult with an independent claim adjuster to help with or take over negotiating. Even with a fee, it's cheaper and faster to negotiate a settlement than to enforce an insurance contract through the courts.

6. Values and Costs: Property damage? Get independent opinions of repair and replacement costs.

7. Caution: Do not make snap decisions. Ever.

If you want a fair settlement of your property damage, your insurance company needs to know, by your conduct, that you are on top of things. Knowledge is power and the good hands are never far from your wallet.

This article was first published on Thursday, October 29, 2009 at 9:52 am. This article has been viewed 373 times.

Rich Kuritz was born in NYC, grew up on Long Island where he met and married his High school steady in 1969. He has been a Californian for over 30 years, has 3 grown children, three grandchildren and a dog named Maggie. About 7 years ago, Rich and his older son discovered Arrowbear, where they rebuilt their adjoining homes. His academic training is in Political Science and Economics, and his business background includes finance, investment, business development and construction.

Rich presently serves as Chairman of the Economic Development Committee of the Running Springs Area Chamber of Commerce, and was recently elected as a Director to the Arrowbear Park Municipal Water District. His present interests include community development, consulting and writing.

The views expressed in this article do not necessarily reflect those of RIMOFTHEWORLD.net. This column is copyrighted by Richard Kuritz.