I receive many telephone calls and email inquiries from insurance policyholders living in Northwest Arkansas who are seeking assistance with improperly denied or underpaid insurance claims. Sadly, I must turn them away.
Thanks to their elected officials and the lobbyists from the insurance industry who help to fund their reelections, Arkansas home and business owners who file claims and are improperly denied coverage or underpaid by their insurance companies have fewer options than most other Americans.
If you own property in Arkansas, your insurance adjuster’s word is final. What he offers is all you get unless you hire an attorney and sue.
The Department of Insurance in Arkansas, in a very unusual way, actually considers their restrictions that limit the options for their citizens to be fully indemnified under their insurance policy as a service to them. The folks who I have spoken to do not agree.
Every politician in Arkansas holds their office with the permission of the people they serve. When enough politicians in that state decide it to be more profitable to serve their constituents than lobbyists, good things might come to the good people of Northwest Arkansas. Until that happens, your home and financial status rest totally in the hands of your insurance adjuster and the insurance company he is paid to serve.
Did you pay $200,000 for a house and insure it for $200,000 thinking that you are fully covered if your home is destroyed? Many do. Many are wrong.
The resale value of your home or the amount that you borrowed to buy it is NOT what you should insure. Why? The first reason is that the policy itself excludes coverage for “loss of value”. A reduction in the value of your house is not covered under your policy. The second reason is that, should the home be totally destroyed, the cost to rebuild it will depend upon the inflated values of building materials and labor at the time you rebuild it which is likely to far exceed the amount that you paid for it.
Since the Spring of 2020, the costs of construction materials have increased from 15% to 75%, with lumber leading the way. The cost of building and reconstructing similarly sized homes has increased by many tens of thousands of dollars in only the last year. That number will continue to rise for some time to come.
Your mortgage lender will insist that their interest in the home be covered. Thus, at a minimum, your lender will require your home to be insured for the amount they loaned you. That covers and protects THEIR financial interest in the home, but what about yours? If the loss is not a total loss, will the amount of your total insurance be enough to cover today’s costs for lumber and other material while you rebuild and keep up on your house payments during the reconstruction process?
Seek the advice of a reputable builder in your area as to the cost per square foot of building a new home similar to the style of your home. Multiply that figure by the size of your home in square feet. That figure will closely represent the dollar amount for which your home should be insured.
Not everything that is unethical is illegal. There are ways of stepping right up to the line without crossing it and no one can do it better than some insurance companies with their vast financial resources and lobby power at the state government level.
375.1007. Any of the following acts by an insurer, if committed in violation of section 375.1005, constitutes an improper claims practice:
(1) Misrepresenting to claimants and insureds relevant facts or policy provisions relating to coverages at issue;
(2) Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies;
(3) Failing to adopt and implement reasonable standards for the prompt investigation and settlement of claims arising under its policies;
(4) Not attempting in good faith to effectuate prompt, fair and equitable settlement of claims submitted in which liability has become reasonably clear;
(5) Compelling insureds or beneficiaries to institute suits to recover amounts due under its policies by offering substantially less than the amounts ultimately recovered in suits brought by them;
(6) Refusing to pay claims without conducting a reasonable investigation;
(7) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed and communicated to the insurer;
(8) Attempting to settle a claim for less than the amount to which a reasonable person would believe the insured or beneficiary was entitled by reference to written or printed advertising material accompanying or made part of an application;
(9) Attempting to settle claims on the basis of an application which was materially altered without notice to, or knowledge or consent of, the insured;
(10) Making a claims payment to an insured or beneficiary without indicating the coverage under which each payment is being made;
(11) Unreasonably delaying the investigation or payment of claims by requiring both a formal proof of loss form and subsequent verification that would result in duplication of information and verification appearing in the formal proof of loss form;
(12) Failing in the case of claims denial or offers of a compromise settlement to promptly provide a reasonable and accurate explanation of the basis for such actions;
(13) Failing to provide forms necessary to present claims within fifteen calendar days of a request with reasonable explanations regarding their use;
(14) Failing to adopt and implement reasonable standards to assure that the repairs of a repairer owned by or required to be used by the insurer are performed in a workmanlike manner;
(15) Failing to promptly settle claims where liability has become reasonably clear under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.
I recently read a touching and inspiring tribute written by an attorney who advocates for policyholders and who had recently lost a valuable partner and fellow advocate to cancer. Together, they would fight the good fight. There are not enough fighters like them in this arena, and in his tribute to his partner, he described her drive and enthusiasm for battling with insurance companies on behalf of their clients.
Being one who shares in the same fight (though not at such grand of a scale), I felt a great sense of personal loss. Even though I did not know her, personally, I know her heart and I have shared similar pain with the clients who had purchased insurance for peace of mind but found, when disaster came to their door, that this peace was only a temporary illusion.
Though Missouri law tasks an insurance company to provide prompt and fair assistance to its policyholders in exchange for payment of premiums, minimizing risk, and filing a claim only upon sustaining damage – some insurance companies, to protect their own financial interest, inflict more stress and financial harm upon their policyholders than the destructive event that prompted their claim, and at a time when the policyholder is most vulnerable with the least financial reserve. Instead of providing the warm professional care and assistance projected by their televised mascots, the policyholder is frequently met with fierce opposition and obstruction intended to exasperate, wear down, and break the resolve of the most committed policyholder defending his own rights under the very insurance policy he bought for “peace of mind”.
Fighting through a barrage of tactics used by insurance companies to delay, deny, and defend against the policyholder is certainly not an enjoyable experience for either the policyholder or his advocate. It is, however, something that must be done in order to receive a dollar-for-dollar payment for the incurred loss. That is the reality that is not shown on friendly and warm television commercials.