Shareholders or Policyholders? Who matters most?

Photo by Polina Tankilevitch on Pexels.com

     

Shareholders or policyholders.  Who matters most?  Take this quiz:

The Board of Directors of my insurance company has a lawful duty to protect:

a.  the financial interests of the policyholders.

b. the financial interest of the stockholders.

c.  both of the above.

d.  none of the above.

The answer is (b).  The Board of Directors of an insurance company’s first (or fiduciary) duty is to the shareholders that elected them. 

This means that the financial interests of the shareholders come before those of the insured policyholder when that corporation is an insurance provider.  Profits come to a business from paying out less than what they take in.  Shareholders demand this in return for their investment.  Insurance companies comply.   Know this as you shop. 

The National Law Review has published a list of the “eleven worst insurance companies” and I encourage you to read it.  Before you take too much comfort in finding that your home insurance provider did not make the list, you should consider that many that made the list are providers of health insurance.  The factors that were used for the home and business insurers that made the list, however, are not unique to them but are commonly shared among smaller companies that would have at least made “dishonorable mention” if the list did not include other types of insurers.

     What this list should teach those of us who buy insurance is the need for us to carefully select an insurance provider based on something other than cute or funny television commercials.  Sweet talking lizards that collect your insurance premium can quickly become vicious and vexatious crocodiles defending the company against your valid claim.  If you can learn this before you become vulnerable as a result of catastrophic loss, the better off you will be.     

The Missouri Department of Insurance publishes a complaint index to help Missouri consumers determine how likely they may find displeasure with an insurance company’s claim handling process.  Considering how few unsatisfied policyholders will actually go through the red tape to file a complaint with the State government , when an insurance company exceeds the normal rate of complaints under such circumstances – it really says something.

Caveat emptor.

Consider Risk Management Strategies When Buying a Home

 

Real estate markets in many parts of the country are heating up, with prices rising at a good clip. In many areas, it is a true seller’s market. So buyers should take heed of the various risks inherent in buying a home and should use sound risk management strategies before taking the plunge on an asset of such size. Here are some risk management and insurance tips to consider for your clients who are shopping for a home.

  • Consider the financial risks by not overextending yourself when buying a home. A good rule of thumb is not to buy a home that costs over 2.5 times your annual salary. Many online calculators can assist you in determining the maximum price for a home you can afford.
  • Consider the property and casualty risks. What are the key loss exposures to the home? For example, is the home in a flood zone? How far is it from the nearest fire department? Is it in an earthquake seismic zone 3 or 4?
  • What is the condition of the home? If it is apparent the home has not been properly cared for by viewing surface level deficiencies, there is a good chance that deeper problems may eventually manifest themselves. Thus, the value of a good home inspector cannot be overemphasized. If it is an older home, when were the various systems upgraded?
  • What types of losses have appeared on the Comprehensive Loss Underwriting Exchange report during the past 5 years? For example, a pattern of water losses may be a warning sign.
  • What type of loss control features does the home have? For example, is there a central station burglar and fire alarm system or a sprinkler system? If the home is in a hurricane-prone area, what windstorm protection devices are in place?

Get more personal lines insurance and risk management tips and ideas from IRMI.

Copyright 2013
International Risk Management Institute, Inc.

 

Home Insurance Claim Highlights – 2013

As a very busy summer draws to a close, here are some of the highlights from the season’s most interesting claims.

1. The insurance company had delayed a response to a fire claim for six months. The home owner called me and soon after received an initial payment of $111,000.00 which, upon further review, was underpaid. We recovered an additional $14,000.00 a few weeks later.

2. The insurance company denied the church’s claim for storm damage to its steeple and interior. Their roofing contractor referred them to me and we soon recovered the full amount to repair the steeple, repair the damage to the interior of the church and to replace a section of the roof.

Damaged by 100 mph wind, this steeple was allowing water to flow into the church.

Damaged by 100 mph wind, this steeple was allowing water to flow into the church.

3. The insurance company denied a claim for damages to a home caused by a dishonest contractor. His financial advisor referred his client to me and we turned that “no” into a check for $10,000.00 and a waived $5,000 deductible (total value, $15,000.00).

4. The insurance company denied a claim for hail damage to his roof and my client’s roofing contractor referred him to me. We turned that “no” into a new roof.

5. The insurance company had refused to address the storm damage to her home and my client was referred to me by a friend. In a matter of weeks, we turned that “no” into a several thousands of dollars and a new roof.

6. The insurance company had said “no” and denied coverage to a storm damaged deck. My client was referred to me by a real estate agent. We turned that “no” into $16,400 for a rebuilt second story deck.

7. The insurance company had denied his roof claim stating that the storm with golf ball sized hail did not damage his roof. My client called me after finding me on the internet. We turned that “no” into over $21,000.00 for a new roof and gutter.

We did well on many other storm, theft and fire claims, as well. I’m looking forward to Autumn.

 

Copyright 2013 James H. Bushart

Missouri Home Owner’s Policy – Changes to Your Deductible

Many insured Missouri home owners are caught off-guard, at the time they file a claim and can afford it the least, when they discover that their “deductible” has increased to several thousands of dollars.  (The policy’s “deductible” is a dollar amount that is automatically subtracted by the insurance company from any amount that is owed, per occurrence, to the insured as a result of damage or loss to the home.)

When many home owners first insured their homes, their policies originally had a $500.00 deductible that eventually changed to $1,000.  Now, with recent renewals, insurance companies have begun to assign a deductible amount that represents a percentage of the total value of the policy.  By this, if a home is insured for $300,000, a 1% deductible allows for each claim to carry a deductible amount of $3,000.  This means that a claim against the policy for a $7,000 to repair will result in a payment of $4,000.

A recent Missouri client was surprised and upset to learn that his deductible had increased from its original $1000 to over $5,000 when he filed what was his very first claim after decades of coverage.  While we were able to successfully negotiate an agreement with his insurer to waive this deductible amount for his claim, this was an exception to the rule that is not always available – as was the case of another client who discovered too late that she had a significant $2,300 amount to be deducted from her settlement of $6,400.

These increases in the deductible amounts are reported to the home owner at policy renewal on the “Declarations” page that is sent at the time of each renewal.  Unfortunately, many home owners will simply file this important page with their policies without reading and noting the change.

Take the time, today, to read your most recent declarations page to see if your deductible has changed.  It is possible to negotiate a lower deductible with your insurance company, in some cases, with a slight increase in your premium … but this must be done and in effect PRIOR to the date of any loss or damage.

Copyright 2013 James H. Bushart

What is a Missouri Public Adjuster?

Mississippi River Scenic Byway in Missouri

Mississippi River Scenic Byway in Missouri (Photo credit: Doug Wallick)

By James H. Bushartwww.publicadjustermissouri.comAside from attorneys, public adjusters licensed by the Missouri Department of Insurance are the only type of claims adjuster that can legally represent the rights of an insured during a first party insurance claim process in the State of Missouri.

Upon notification of a claim for property loss or damage, the insurance company will send an adjuster employed by them or an “independent adjuster” contracted by them to investigate the claim.  These adjusters work for the insurance company and only represent the financial interests of the insurance company.  The Missouri Public Adjuster, on the other hand, levels the playing field by representing only the interests of the insured policy holder who has suffered the loss or damage to a business or home located in Missouri.

The Missouri Public Adjuster’s main responsibilities are to:

  • Evaluate existing insurance policies in order to determine what coverage may be applicable to a claim
  • Research, detail, and substantiate damage to buildings and contents and any additional expenses
  • Evaluate business interruption losses and extra expense claims for businesses
  • Determine values for settling covered damages
  • Prepare, document and support the claim on behalf of the insured
  • Negotiate a settlement with the insurance company on behalf of an insured
  • Re-open a claim and negotiate for more money if a discrepancy is found after the claim has been settled

For more information about the Missouri Public Adjuster or to request a free, no obligation consultation regarding a particular claim, contact me by writing jbushart@publicadjustermissouri.com or call me at 314-803-2167.

Copyright 2013 James H. Bushart

Property Depreciation – Age Should NOT Be The Only Factor

By James H. Bushart

 

Most insurance policies will define the terms by which the insurer will calculate ACV (“actual cash value”) in determining how much to pay and, usually, the factor of “age” is not one of those conditions. Still, the age of the property is often used as the primary determining factor when depreciating or subtracting from the replacement costs of an item of property that is being adjusted for settlement.

While it is true that an object’s age can correspond closely to its extent of physical wear and tear – it is not true in every circumstance. Age alone should not cause an object to lose a large percentage of its value and if the object is functionally sound, it should retain most of its value.

I have helped clients recover higher settlements from insurers who had initially calculated depreciation as high as 75% for perfectly working and maintained fireplaces that happened to be original to older homes. Plaster on the wall that was lost to fire was depreciated by more than 65% even though it was fully intact and functional prior to the fire and the insured home owner was entitled to a higher adjusted settlement. Countless other items and systems in the home have been grossly over-depreciated – at a great expense to the insured – for no other reason than their age.

In some cases, the age of the item may be incorrectly calculated and higher rates of depreciation can be mistakenly applied.  One recent case highlighted certain items as being subject to excessive depreciation due to what the adjuster determined to be advanced age when, in fact, the same insurance company had actually paid for their replacement less than a year prior when vandals had damaged the home.

Property owners should know and understand that an object’s amount of depreciation is identical to the amount of how much better, or more valuable, a new object is compared to the older object. This is what is actually being determined. Age is not always an appropriate measure of this and arbitrary deductions from replacement values that are simply based on age should be challenged by the insured. The adjuster must carefully listen to the insured’s arguments and negotiate in good faith.

If you feel that your property was unfairly depreciated and that your insurance company’s offer of settlement is unreasonable and unfair, contact me (if you live in Missouri) or a public adjuster licensed to represent you in your state.

[Update – 3/12/13 –  My client had a home damaged by a fire that needed extensive repair, as mentioned above.  The insurance company underpaid him … claiming a depreciation of 67% on the interior walls based totally upon their age.  After reopening the claim and further discussion with me,  they issued him an additional check for $11,438.00.]

 

Copyright 2013 James H.Bushart

Before You Renew Your Insurance Policy … Read This!

Two small teddy bears

Two small teddy bears (Photo credit: Wikipedia)

Some people will carry insurance with the same company for years without ever having the need to file a claim … and then only at their greatest time of need, following a serious property loss, find that their insurer is NOT the “safety net” that they had expected.

Low rates, teddy bears, lizards with British accents, good hands and good neighbors … they all mean very little when disaster strikes your home and you experience improper claim denials and delays that add to your burden and interfere with your recovery.

Before renewing your next policy, check out (by clicking HERE) your insurance company with the Missouri Department of Insurance to see how they have measured up where it really matters … customer satisfaction in processing their claims. 

 

Copyright 2012 James H. Bushart

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