As the smoke now simmers and smolders, we're starting to figure out how to address this mess created by seven days of hellish fires in Southern California. This post covers ten tips on dealing with insurance companies on catastrophic claims and how to learn from the lessons people suffered through in the aftermath of the Katrina disaster as a result of the ways insurance companies handled those claims.
So let's get right to it. Here's the top ten tips to deal with insurance companies on catastrophic claims:
(1) Lawyers call it RTC: Read The Contract. Your insurance policy is a contract between you and your insurance company. It spells out what you're supposed to submit for your claim and what the insurance company is required to provide in response. You're going to find three relevant coverages: Building, Contents and Living expenses/business interruption. If you've lost your home or business, then you'll be submitting claims under all three. If you don't have a copy of your policy, then ask your agent for one or send a letter to your carrier asking for a certified copy.
(2) Gather evidence of your claims and submit it to your carriers now. NOW. Don't wait. Take pictures and video and send it in. Send in samples of the ash if they don't believe you. Tell them you'll submit more later, but get the process started now. Get the additional living expenses / business interruption coverage payments coming your way. Keep a copy of what you submit, what you receive back from your insurance carrier and every other piece of paper associated with your claim. Your carrier has 40 days to respond to your claim under California's Fair Claims Practices Act, so get started now. Did I say NOW enough?
(3) Submit your claim to state and local governments. FEMA may provide reimbursement, as well as several California state agencies. The Small Business Administration will help businesses get back on their feet. Check out the Helping Handbook for other resources.
(4) Reconstruct your house and its contents in your mind and write it down. Check your iPod to see if it has any photos of your house or anything inside it. Ask your friends if they have photos. When you create your list of contents, systematically go through each room in your house and write everything down. Estimate the value to replace your items and list each one individually. Create a spreadsheet.
(5) Deal with the insurance company's adjuster, but consider hiring your own "public adjuster" or obtaining an independent valuation of your list. Remember, the carrier wants to minimize its payments to you, and will try to negotiate you down on each point. Use your agent to pressure the insurance company. Don't cave to unreasonable offers.
(6) Use your head. As you rebuild your home, make sure you engage a licensed contractor. Make sure you have an agreement with your insurance company about who's going to pay that contractor and when.
(7) Wait until everything's been replaced and your home has been rebuilt until you sign a release of your insurance carrier's liability to you. Otherwise, the carrier is no longer on the hook to you. Keep your claim open as long as you can and submit additional items lost as you remember them.
(8) Talk to your CPA. Most fire losses are deductible. You'll want to have records and information to enable you to obtain these deductions. Small consolation, but everything helps. Your carrier cannot take advantage of these deductions to offset your claim.
(9) Refuse to take less than it will cost to replace your contents and rebuild your home (assuming you have replacement cost coverage, not actual cash value coverage). You paid for the coverage, you're entitled to the benefit of your bargain. If you have problems, then report your insurance carrier to the California Insurance Commissioner.
(10) Hire an attorney to litigate your claim with your carrier only as a last resort. While some attorneys will handle insurance cases on a contingency matter (they take a third or more of your recovery), you may want to limit the contingency to the punitive or bad faith portion of the recovery to ensure you recover the money you need to replace your contents and rebuild your house. Otherwise, consider hiring the attorney on an hourly basis.
In the aftermath of the Katrina disaster, people waited to submit claims to their insurance carriers and the government. Some as long as two months. Don't wait. Get started now.
Louisianans hired unlicensed contractors and got scammed. California law does not allow anyone other than you to swing a hammer to drive a nail to rebuild your house if they're not licensed. In this state, you don't have to pay a contractor if he/she is not licensed - no matter how much work they've done. In fact, if the contractor's license lapses during the job, you don't have to pay for any part of the job.
Stay on top of the process. Lawsuits arising from the way insurance companies handled claims after Katrina are just coming to trial now, some four years later. In California, courts are required by the state legislature to get the majority of cases handled with a year, and in most cases no longer than 18 months. What happened in Louisiana shouldn't happen here, but there are lessons there we may repeat if we're not careful.
No one will get your claim resolved faster than you, especially if you push. But remember, honey is much sweeter than vinegar. A little kindness goes a long way, and human nature requires us to help those who are nice.
But if you can't get it handled to your satisfaction, then you can likely find the lawyer you're looking for on Avvo. Or call me at 949-833-3088. I know a few lawyers in California.