Discrimination Based on Occupation

Prior to the beginning of Premier's Blog series on how California Claimants can protect themselves during a property insurance claim from both actual acts or attempted acts of bad faith from insurers, as well as from the more unexpected threats involving other "claimants" to the same claim, there is a related item which needs to be brought to this state's regulators' and to the legislature's attention: Discrimination based on occupation in insurance claims.

While it may seem like an unnecessary subject, in as much as most California consumers and others likely expect there already to be in place laws or regulations protecting the rights of others regardless of their occupation, consider the following minimum standard for insurers licensed to handle claims in this state from the California Fair Claims Settlement Practices Regulations ("CA Regulations"):

Section 2695.7. Standards for Prompt, Fair and Equitable Settlements

(a) No insurer shall discriminate in its claims settlement practices based upon the claimant's age, race, gender, income, religion, language, sexual orientation, ancestry, national origin, or physical disability, or upon the territory of the property or person insured.

In view of the continuous mistreatment of public insurance adjusters in this state and in other states, evidenced in part by my recent article, "Are Public Adjusters Still Being Demonized?", while the items listed above are very important and should never be used as the basis for any discrimination, missing from the above CA Regulation is the expressed prohibition against discrimination based on "occupation."

The above quoted CA Regulation is intended to "promote the good faith, prompt, efficient and equitable settlement of claims on cost effective basis" (CA Regulations, section 2695.1[a][1][2]). Yet, how can such a process take place if the insured's public insurance adjuster is discriminated against by insurers or, worse, by other claimants such as so-called "bad faith" attorneys who often rely entirely on the public adjuster's work product, and who usually come in near the end of a claim, that is, once the facts of the loss and the claim adjustment have in large part already been documented by the public adjuster? 

It is possible, but my over 16 years of experience in the adjusting industry in California shows that public adjusters have been and we still are being discriminated against by some insurers' claim adjusters,  claim supervisors, and claim managers, as well as by (surprisingly) the very bad faith attorneys recommended and/or brought to the insured for assistance with insurers, but who then discriminate against other claimants by their words and by their actions against public insurance adjusters.

Though in 2004 the 1997 version of CA Regulations section 2695.7(a) was modified to include a prohibition against discrimination based on a person's "age," no other description has since been added, though clearly "occupation" should also be added to the list of  prohibited types of discrimination, particularly in view of the apparent and ongoing discrimination against public insurance adjusters because of their occupation. Yet, the occupation itself gives no good cause for discrimination.  Indeed, consider the following selections from this state's "Public Adjuster's Act," from the California Insurance Code, sections 15007 and 15011(d), respectively (with added underlining):

15007.  A public insurance adjuster within the meaning of this chapter is a person who, for compensation, acts on behalf of or aids in any manner, an insured in negotiating for or effecting the settlement of a claim or claims for loss or damage under any policy of insurance covering real or personal property or any person who advertises, solicits business, or holds himself or herself out to the public as an adjuster of those claims and any person who, for compensation, investigates, settles, adjusts, advises, or assists an insured with reference to claims for those losses on behalf of any public insurance adjuster.

150011(d) [A public insurance adjuster shall] have had sufficient experience, or special education or training, or both, in the handling of loss claims under insurance contracts as determined by regulations adopted by the commissioner, and is competent to transact business and discharge the responsibilities of a public insurance adjuster in such a manner as to safeguard the interests of the public.

Far from being undesirable, the public adjusting profession should be promoted in this state rather than looked down upon either by insurers or by attorneys, who often speak of public adjusting as "the Dark Side" of the claim adjusting industry. 

Clearly, then, "occupation" should be added to the list of items not to be discriminated against in this state in an insurance claim. Otherwise, not only will public adjusting continue to suffer by having to endure and to deal with what others in our industry have without partiality (namely, Bruce Hillman) called the 'demonizing' of public adjusters. As it turns out, in this case the "demons" just might be figurative "angels," or surely a Godsend, that is, when it comes to adjusting claims with some insurers and with some of their claim agents in this state.

California Claimants

Recently I wrote in part about the importance of recognizing the rights of "claimants" in this state when it comes to insurance companies' view and, at times, treatment of "claimants" in property insurance claims. Now, however, California has another unexpected and very surprising problem involving the abuse of the claims process by "bad faith" attorneys who claim to represent the interests of both insureds and other claimants when retained for necessary legal services.

In this light, consider again the definition of "claimant" according to the California Fair Claims Settlement Practices Regulations ("CA Regulations"):

"Claimant" means a first or third party claimant as defined in these regulations, any person who asserts a right of recovery under a surety bond, an attorney, any person authorized by operation of law to represent the claimant, or any of the following persons properly designated by the claimant in the manner specified in subsection 2695.5(c): an insurance adjuster, a public adjuster, or any member of the claimant's family [CA Regulations, "Definitions," section 2695.2(c); underlining added].

The above makes plain the fact that when there is a property insurance claim in California several individuals or entities may be considered "claimants," including the insured, his or her attorney, as well as members of the insured's family and public insurance adjusters who have been "designated by the claimant in the manner specified in subsection 2695.5(c)." This last section of the CA Regulations referenced reads as follows:

The designation specified in subsection 2695.2(c) shall be in writing, signed and dated by the claimant, and shall indicate that the designated person is authorized to handle the claim. All designations shall be transmitted to the insurer and shall be valid from the date of execution until the claim is settled or the designation is revoked. A designation may be revoked by a writing transmitted to the insurer, signed and dated by the claimant, indicating that the designation is to be revoked and the effective date of the revocation. [CA Regulations, "Definitions," section 2695.2(c); underlining added].

Suppose, however, that the insured hires both a public insurance adjuster who never does 'revoke' his or her designation or contract, as well as an attorney recommended by the public adjuster to also help represent the insured due to the disposition of the insurer. Further suppose that after the proper contract or written notice is provided to the insurance company, advising the carrier of who is "authorized to handle the claim," one or more of the authorized agents for the insured attempts to settle the claim with the insurer's legal counsel in secret, with the intention of keeping the agreement secret from other claimants so that one or more will never know the settlement amounts accepted and paid out by the insurer.

While you may not think that insurance company counsel would stoop to such depths of collusion and deceit with plaintiff counsel, the evidence from recent claims shows they are not only doing it but that plaintiff counsel, or some bad faith attorneys in this state, attorneys who are supposed to be on the side of the public, are also susceptible to such collusion and "bad faith" against other claimants.

Indeed, due to the severe nature of this recently discovered problem, Premier Claim Consultants is going to dedicate a Blog series to the discussion of what needs to be done to protect the rights of claimants, not only from some insurance companies but also, surprisingly, from bad faith attorneys in this state who are themselves operating in bad faith against California claimants, in spite of being retained to assist them in reaching the same goal.

Prior to the beginning of the series which will highlight selections from the claims in question, claims in which some very strange and alarming activities and events have occurred,  here I wanted to restate the definition of "claimant" in this state and to also provide an initial introduction to the issue as it pertains to the unexpected abuse of claimants by claimants, namely, in this case or in the cases to follow, by attorneys who were brought in to help the insured and the public adjuster, not to block them or, worse, join up with the other side to the settlement negotiations in order to cause financial and professional harm to public adjusters (or at least to one) in this state.

With this done, I will now provide further insight into the very real and present dangers facing California "claimants," from California "claimants," in order to help protect the interests of California "claimants" as public adjusters are required to do (see CA Regulations, section 15011[d]).

Are Public Adjusters Still Being "Demonized"?

It is not for no reason that 8 years ago Bruce Hillman titled his brief but insightful article (with my underlining), "Public adjusters shouldn't be demonized" (The FC&S Answer, National Underwriter Property & Casualty-Risk & Benefits Management [online version], March 4, 2002).

What about today?

"Demonized" is at times used pejoratively by one opposing "side" for another. However, in this instance it comes from Hillman when reviewing a "tentative program" for a Claims Magazine-related industry conference! Hillman's reaction shows that the problem of unfairly characterizing public adjusters is real, and that it has been going on for some time, at least since Hillman wrote his article in early 2002, as I will here further show.

While either side to a negotiable settlement may at times fail to have the best representation, when it comes to organized group consideration involving a negative view of public adjusters where there is the potential for unfairly defaming an entire industry, it can mean big trouble for that industry. Worse,  in this case it can also spell trouble for California consumers, whose public adjusters are the targets of this kind of 'demonizing.'

The importance of quality public adjusting representation can be seen in the role and work of public claim agents as defined in this state's "Public Adjuster's Act," from the California Insurance Code (CIC):

1) Public adjusters act on behalf of "an insured in negotiating for or effecting the settlement of a claim or claims for loss or damage" (CIC, section 15007); 

2) Public adjusters work as "the agent of the insured" (CIC, section 15011[d]); 

3) Public adjusters are required to transact business "in such a manner as to safeguard the interests of the public" (CIC, section 15011[d]).

These are important responsibilities. Public adjusting is, therefore, an important profession. California consumers' property, their standard of living, and their business operations are critical to restore, to replace, or to maintain after a claim occurs. That is why consumers purchase insurance in the first place, not so in the event of a claim the insurer can 'demonize' or otherwise mistreat or misrepresent the consumer's retained claim agent.

In spite of the fact that public adjusters have such an important role in the claim adjusting process, not much has changed in the past 8 years since Hillman's article. For example, consider what I was recently told in writing by an experienced (in terms of years on the job) company adjuster handling a large residential fire, this after the fire had displaced the insured and her family, and after I was forced to send numerous requests over a 6 month period just to get a complete status on the claim (bracketed comments are mine):

We don't have a duty to you [the public adjuster], 
but to [the insured].—Company adjuster, April, 2010.

The concern here is obvious: The adjuster believes and/or was trained to be comfortable enough with the idea to express to me in writing that her employer (the insurance company) 'does not have a duty to me,' the retained public adjuster!

See below for why the adjuster's position is not in compliance with existing minimum standards for insurers in this state. But note yet another, very similar written response I received the year before, in 2009, this time in response to my request for an explanation from an insurer about what its claim agents had accomplished in the first 6 months since the fire occurred. This was from the insurer's "national  property supervisor":

We do not believe it is our duty to explain to you what we have accomplished.— Company Supervisor, April, 2010.

The fact is, insurers and their claim agents do have a duty (many, actually) both to retained public adjusters and to California consumers of insurance who file property claims. Consider the definition of "claimant" according to the California Fair Claims Settlement Practices Regulations (CA Regulations), here from the "Definitions" section 2695.2(c):

"Claimant" means a first or third party claimant as defined in these regulations, any person who asserts a right of recovery under a surety bond, an attorney, any person authorized by operation of law to represent the claimant, or any of the following persons properly designated by the claimant in the manner specified in subsection 2695.5(c): an insurance adjuster, a public adjuster, or any member of the claimant's family.

Returning to the example responses from the carrier adjuster and from the national supervisor (for different insurers), it should never have been a question in the first place whether they have a duty to respond to me, that is, if the proper training had been given by the insurance company according to the standards for training already in place in this state.

One such training standard requires insurance companies to "provide training to the insurance adjusters" regarding the CA Regulations (section 2695.6[6][3]). Regularly educating insurance adjusters concerning applicable regulations in this state will help adjusters work with and think better of public adjusters, who also look to the CA Regulations when adjusting claims. Lack of such training leads to lack of knowledge of the Regulations, and lack of regulatory knowledge leads to a failure to apply or to follow existing "minimum standards."—Compare section 2695.1(a)(1)(2)(b).

Let me give another recent example of how public adjusters are being treated in this state. One day after a large commercial fire involving a community outreach center, an insurance company received my company's adjusting contract (provided to show the retention of a public adjuster by a consumer after a claim) and responded with:

We are curious as to the fact your contract states you specialize in litigation support. Are you an attorney or wish to represent yourself as one? ... Please outline your ultimate intentions.

I never opened the discussion to any of these lines of questioning. Premier's contract header simply mentions some of Premier's other services, including litigation support (for claims that have already gone very wrong). But this has nothing to do with the insurance company unless, of course, the carrier wanted to hire Premier for such services (which was not the insurer's intention in this case).  Why, then, without ever having met with or spoken to me is the insurer's national supervisor expressly and rather suspiciously questioning my (the public adjuster's) "ultimate intentions," one day after getting my adjusting contract?

While I suppose it is possible there are companies or individuals who might conceivably want to take advantage of an insurance company, I have never met an insured after a claim and gotten that impression. Further, I would not expect a California consumer to hire a public adjuster with some latent or hidden 'intention' that is not a part of our expressly defined, professional role.

Public adjusters adjust claims. Consumers never want to have a claim occur, and when they do occur consumers want resolution as quickly as possible. However, when the insurance company's national supervisor starts out the process with such suspicion and comments questioning a public adjuster's "ultimate intentions," it makes the entire process more difficult and it creates unnecessary barriers to effective communication right from the start. This may have something to do with the wrongful 'demonizing' of our industry, which Hillman felt and wrote about 8 years ago.

Public adjusters have been and are still being 'demonized' by insurance companies and by many of their claim agents, or at least we are still being treated as "demons" by some. But we're people, humans. Perhaps it's time the rest of our industry started treating us like we are, this so we can more effectively adjust and close claims for California consumers without continuously getting distracted by questions easily answerable or resolvable through adherence to the minimum standards for insurers delineated in the CA Regulations.

Getting past the false but still present specter of  public adjusters as 'demons' or of being "on the dark side" will take effort, in large part by insurers to educate their claim agents to respect our role as agents of their insureds. Hopefully, then we can move on to a point where both public and company adjusters (and independents) work more effectively together to assist the insured. This is what is at the heart of Hillman's thoughtful piece: 

It is true that there is essentially a different focus in the two types of claims professionals--the public adjuster strongly advocating for the insured in the way a personal injury lawyer advocates for the injured party and the company adjuster essentially representing the interests of his or her employer, which is the insurance company. However, at base, they are after the same result--the right one. [Hillman, "Public adjusters shouldn't be demonized," The FC&S Answer (March 4, 2002), online version.]

Which "one" is "right" is not always clear, but it becomes more clear the more each party to a claim works with the other in order to arrive at a joint determination, if possible. This can be done by following the California Fair Claims Settlement Practices Regulations as they relate to effective and consistent communication and training, along with other requirements for insurers when investigating, adjusting, and ultimately settling claims in California.

"Demonizing" public adjusters will only make it more difficult for claims to be effectively and promptly settled. Since a fair and prompt investigation and claim settlement should be both the insurance company's and the public adjuster's "ultimate intentions," we do not need to start out a claim with either side questioning the other in such ways.

We know what we are each supposed to do in order to best service or assist California consumers with their insurance claims. Therefore, as Hillman writes, "Do good, by being good at what you do."

ALE Emergency

While "911" may be the first three numbers you think of after an emergency, if it's a theft, a fire, or a large water loss to your property, then "ALE" may be the three most important letters you need to remember.

In property insurance claims "ALE" stands for "Additional Living Expense." At times this coverage is referred to also as "LOU" (= "Loss Of Use"). These two (ALE / LOU) represent readily available insurance coverages which California consumers can use to continue the same standard of living they enjoyed prior to a severe property loss, if the loss renders their home uninhabitable. Consider this policy sample's description of ALE coverage (also called "Coverage D," below), adapted for linear-style presentation here from what is known as ISO's "Homeowners 3-Special Form" (HO 00 03 04 91, H 115 [4/91], page 3):

Though "incurred" is a term used in the above quote and in other policy representations of ALE benefits, it is not a term defined in most insurance policies. It does not, therefore, appear reasonable on its face to interpret "incurred" here as requiring displaced California homeowners to first pay thousands if not tens of thousands of dollars out of their own pocket before their insurance carrier will pay an ALE claim. Yet, that is what some California insurers are requiring of California consumers.

Indeed, through my direct experience with insurance claims in California for over sixteen years, it has become increasingly and alarmingly clear that some insurers are becoming more and more resistive to the release of needed, documented, claimed, but not-yet-paid-for ALE expenses. In fact, this resistance often comes to the payment of those ALE costs urgently needed and which also happen to cost the most amounts of money, namely, finding and renting temporary housing and temporary furnishings. 

While California consumers can in some instances pay out of pocket for smaller, additional but necessary expenses such as for extra fuel or additional meals, it is unreasonable to expect many if not most of us to pay thousands if not tens of thousands of dollars out of pocket after a major loss before victims of a covered loss are paid ALE out of their policy.

For this reason, Insurance Commissioner Steve Poizner issued the following as a part of an August 29, 2009 Press Release (underlining added):

Commissioner Poizner Reminds Mandatory Day, Gloria & Station Fire Evacuees that Insurance May Cover Living Expenses

Insurance Commissioner Steve Poizner reminded residents who have been evacuated due to the Day Fire (Lassen County), Gloria Fire (Monterey County) and Station Fire (Los Angeles County) that they may be eligible for reimbursement for additional living expenses due to mandatory evacuations. Commissioner Poizner also encouraged all Californians to make sure their insurance policies are updated and to conduct a home inventory today.

"Facing the loss of a home due to wildfire is one of the most frightening and stressful experiences someone can go through," said Commissioner Poizner. "I urge everyone who has been evacuated from their home to check their homeowners insurance policies because many cover additional living expenses incurred as a result of a mandatory evacuation. Coming up with extra money for room, board and other additional living costs are the last thing fire evacuees should have to worry about. Check your policy, and if you have any insurance questions, call the Department of Insurance at 800-927-HELP."

See also Poizner's July 2, 2008, Press Release, which contains nearly the exact same wording and reminders, as well as Poizner's October 14, 2008, Press Release and Poizner's October 6, 2009, Press Release. All three Press Releases contain the following paragraph concerning ALE policy benefits in the state of California (with my underlining):

Many residential homeowners insurance policies cover what is known as ALE, or additional living expenses. This permits homeowners to maintain their normal standard of living by covering the increased living expenses incurred as a result of damage caused by the fire or a mandatory evacuation. ALE coverage typically includes extra food costs, increased housing costs, furniture rental, relocation and storage costs, telephone installation and extra transportation costs to and from school or work, after the deductible is reached.

As noted earlier, insurance companies at times interpret "incurred" only in the sense of 'having already paid for' something, this as opposed to interpreting "incurred" in favor of the insured, that is, as advancing money to an insurance loss victim under the ALE coverage. This is a very problematic approach to the application of ALE coverage in this state, because it protects only the insurance company's financial interest in the claim: The insurer interprets the coverage needed most (ALE) as if it's only obligation to pay is if a California loss victim can and does pay first!

Clearly, that is not the practical intent or expectation of ALE coverage which California consumers are prepared for in the event of a severe property loss. If it is, then it strikes out against the expressed, reasonable concern of Commissioner Poizner, namely, "Coming up with extra money" (as quoted  above from the August 29, 2009, Press Release). Further in relation to this point, the California Department of Insurance's web site also contains the following recommendations relative to ALE (with underlining added):

Additional Living Expenses
If your property is not safe for occupancy, keep receipts for all expenses associated with your relocation, such as emergency shelter, clothing, and food. These extra costs may be covered under the "loss-of-use" portion of your policy. You will be required to account for any covered expenses, so be sure to keep all of your bills and receipts. Any advance payments received will be counted toward your final claim settlement. Additional living expenses include items such as food and housing costs, and telephone or utility installation costs in a temporary residence. Also, extra transportation costs to and from work or school, relocation and storage expenses, and furniture rental for temporary residence are eligible under additional living expense coverage. Your insurance company usually advances you money for these extra costs. [Underlining added.]

If an insured has receipts which show the actual paid-for cost, then that is what they should provide to their public insurance adjuster or to their insurance company. This is, in fact, often done for some ALE costs, such as for extra meal expenses, extra fuel, or for some smaller extra utilities "incurred" by actual payment during a claim. That is because such expenses are much more manageable for a California consumer who has suffered a severe property loss than it would be for us to pay thousands if not tens of thousands of dollars for temporary housing and furnishings, for pet relocation, or for any other significant "Additional" utilities costs.

In spite of this obvious difference in manageable, claim-related ALE costs, some California licensed insurers are resisting the release of necessary, in fact, urgently needed policy benefits prior to the actual payment by consumers of substantial amounts of money, amounts which most consumers of insurance in this state cannot possibly, reasonably be expected to pay first, that is, before they can expect any payment for the same through their ALE policy benefits. That is why I do not consider this a minor issue. I have seen its effects on displaced California consumers. This is a true "ALE Emergency."

"Cooperate With and Assist the ... "

If you have ever had a California property insurance claim, then likely you completed the above title with, "insurance company," also known as an "insurer" or an insurance "carrier." This is because certain residential or "homeowners" insurance policies contain the following or similar-type wording (from the 1st Ed., June, 2006, Farmers Next Generation Homeowners Policy):

While it is true that in such policies California consumers must cooperate with what must also be a "diligent," "thorough," "fair," and "objective investigation" (California Fair Claims Settlement Practices Regulations, section 2695.7[d]), a California consumer of insurance is known as an "insured." It is, in fact, "insured" which completes the above title. The entire  sentence can be seen in its complete context here, also according the California Fair Claims Settlement Practices Regulations (hereafter, "CA Regulations") with underlining added:

Section 2695.4. Representation of Policy Provisions and Benefits

(a) Every insurer shall disclose to a first party claimant or beneficiary, all benefits, coverage, time limits or other provisions of any insurance policy issued by that insurer that may apply to the claim presented by the claimant. When additional benefits might reasonably be payable under an insured's policy upon receipt of additional proofs of claim, the insurer shall immediately communicate this fact to the insured and cooperate with and assist the insured in determining the extent of the insurer's additional liability.

In the above quoted CA Regulation the cooperation and assistance mentioned are linked with the most important parts of a residential or homeowners claim in California: 1) Coverage and 2) "the extent of the insurer's additional liability."

Clearly, then, insurance companies must not only "disclose" all policy benefits "which may apply" at the onset or earlier part of a claim, but also at any point during the process when "additional benefits might reasonably be payable under an insured's policy." This could be for the same claim, that is, for any continuing or additional damages which are discovered, or of course for any new claim which must then be investigated.—Compare CA Regulations, section 2695.5(e)(1)(2)(3).

However, in my experience in insurance claims I can say that the requirement for insurance companies to "cooperate with and assist the insured" is regularly overlooked by insurance companies. In fact, it is not simply "overlooked." More and more I am finding out personally and through other public adjusters and insurance attorneys that California licensed insurance companies are resisting 'cooperating with and assisting insureds.' This includes cooperating with and assisting their claims agents, who if they are licensed public adjusters then they are also "claimants" under these same CA Regulations.—See "Definitions," section 2695.2(c); see also California Insurance Code, section 15027.5, which describes a retained public adjuster as the "agent" of the insured.

Given the consistent and growing resistance by insurance companies to prompt and to fair claim settlements in this state by, for three examples, 1) delays associated with third-party estimates or reports, 2) by the use of attorneys who are not adjusters early on in the claim process in place of actual company or independent adjusters, or by 3) the seemingly never ending attempts to "low-ball" claim settlements, I am compelled to write here to remind insurance companies, to remind California licensed public adjusters, and most especially to alert California consumers that insurance companies licensed to handle claims must "cooperate with and assist the insured" (the one who suffers most during a property claim), according to the "minimum standards for the settlement of claims" in the state of California.—CA Regulations, sections 2695.1(a)(1), 2695.1(g), section 2695.7(g); California Insurance Code sections 790.03(h) and 15027(v)(1)(2)(3).

Applications, Declarations, Policy Coverages, and Limits

Ready for an insurance claim? 

Few of us are, really. At least that is the case according to my over 16 years in the insurance industry. The reason is clear: We all hope never to have to file a claim for a loss to anything. So when it happens, even though we are (hopefully) insured with sufficient coverages and limits, there is a great deal to do in evaluating, defining, and settling your claim.

But what about what happens before the claim occurs? If the application you submitted for your policy is not accurate in certain critical respects then your claim could be delayed, or denied altogether. If your Declarations (or "Amended Declarations") does not have the right person, entity, or location listed or described accurately, your claim could be delayed or denied altogether. If you do not have sufficient coverages or adequate limits, what you expected would occur in the event of a claim may have been compromised before the claim ever even happened.

Unless you, your broker, or your agent are insurance claim or coverage experts, with substantial knowledge of various commercial operations and homeowner standards of living, including building loss repair and/or replacement cost experience, you are taking a huge risk. In fact, it's a risk that could end up costing you thousands if not millions of dollars, depending on your exposure(s). This does not include the incalculable aggravation and uncertainty that you, your family, or your business will assuredly, unfortunately, experience if after a claim you have any of the problems described above. 

True, in this state and in many others there are qualified brokers and agents who write policies for insurance companies. Many of these professionals have a good understanding of insurance coverages , as well as of the insurance companies who provide them and for what premiums they charge in return.

Yet, in my experience in claims, working both for insurers and for consumers, when it comes to having an up-to-date, broad yet detailed understanding of the values and coverages regularly applied to some of the most commonly faced insurance claims in California, the best option is a public insurance adjuster.

Consider these descriptive definitions for "public insurance adjuster" according to the "Public Adjusters Act" in this state (from sections 15007, 15011[d], and 15027.5, respectively): 

A public insurance adjuster ... is a person who, for compensation, acts on behalf of or aids in any manner, an insured in negotiating for or effecting the settlement of a claim or claims for loss or damage under any policy of insurance covering real or personal property or any person who advertises, solicits business, or holds himself or herself out to the public as an adjuster of those claims and any person who, for compensation, investigates, settles, adjusts, advises, or assists an insured with reference to claims for those losses on behalf of any public insurance adjuster.

[A public insurance adjuster shall] have had sufficient experience, or special education or training, or both, in the handling of loss claims under insurance contracts as determined by regulations adopted by the commissioner, and is competent to transact business and discharge the responsibilities of a public insurance adjuster in such a manner as to safeguard the interests of the public. [Underlining added.]

Any person acting as a public adjuster who has executed a contract ... is the agent of the insured.

Public adjusters know claims. Otherwise we should not be representing ourselves as claim agents to the public. So why not use us! We can not only use our claim handling, coverage, regulatory, and valuation knowledge after the claim but, more important, I believe a qualified public adjuster can assist brokers, agents, and insurers by also helping the consumer before a claim occurs. 

Whatever you do, consider further verifying the information on your insurance application so that you minimize any "surprises" (the kind you don't want). Make sure also that you and your property are sufficiently and accurately described and listed on your Declarations. When it comes to limits for your property, you must have these set according to what you will likely need in the event of a claim, not just according to a square-foot or some other non-claim-related building cost calculation.

For good reasons I believe the best option for providing you with this information, or for reviewing the coverages you already have, is a public insurance adjuster or some other claim professional with a similar extent and type of experience.

For more information about insurance claims in California, as well as consumer rights in the event of a property insurance claim, visit Premier Claim Consultants or contact me directly.

Are California's "Minimum Standards" for Property Insurers Too High?

With all of the talk about additional regulations in health care, it's a good time for me to ask and to help answer a similar question involving property insurers' "minimum standards" in California, namely, are the existing standards too high?

By "too high" I mean to ask, are the minimum standards such that insurers cannot truly, consistently meet them? The minimum standards in place for property insurers in this state protect consumers of insurance. Yet, if the lowest standards to which an insurer in this state must rise in its investigation and settlement of first-party property or auto claims are, in fact, too high, then regardless of their benefit insurers will not be able to truly and consistently meet even the lowest ("minimum") standard level for claim handling, thereby actually giving California consumers of insurance the benefits of the existing minimum standards. 

Californians could simply review the California Fair Claims Settlement Practices Regulations (hereafter, "CA Regulations"), or you could check with a licensed and otherwise qualified public adjuster or property insurance attorney on how the CA Regulations are often applied to claims in this state. But let me instead ask you the following five questions, if you are a California consumer of personal or of business (commercial) insurance:

1. After filing an insurance claim, how long do you as a California consumer expect it should take for your insurance company to begin (start) any necessary investigation of your claim?

a. 5 days.
b. 10 days.
c. 15 days.

The answer is c., 15 days (source: CA Regulations, section 2695.5[e][3]).

Though this seems like far more than any consumer in this state would think it should take for their insurance company to begin any necessary investigation, in my experience insurers take much longer, often without providing good reasons for doing so.

2. After sending a letter or other communication to your insurance company, to which one could reasonably say you (the consumer) expect an answer, how long do you believe it should take your insurance company to give you a complete response?

a. 5 days.
b. 10 days.
c. 15 days.

The answer, again, is c., 15 days (source: CA Regulations, section 2695.5[b]). 

Consider if you were depending on a response to sensitive claim documents, including invoices, estimates, or other proof of your claim's loss or magnitude. After a claim occurs, you usually have a limited amount of time or coverage available to use in rebuilding or replacing your damaged property, or to resume your business' operations. If insurance companies in this state are not required to respond to you within 15 calendar days, then your coverage or claim options may be severely impacted, limited, or lost entirely.

3. After you or your business suffers a property or a business income loss, which of the following would you expect to characterize the insurance company's response to and investigation of your claim in this state:

a. Thorough.
b. Fair.
c. Prompt.

If you believe that all three of the above should characterize the nature of any property insurance claim in California, then you believe the same things which are expressed in protection of California consumers' rights according to existing, applicable CA Regulations (source: CA Regulations, section 2695.1[a][1][2] and section 2695.7[d]).

4. As a California consumer of insurance, which of the following do you believe should be the minimum standard for insurers licensed to handle claims in this state:

a. Insurers should be required to disclose some of the policy benefits which may apply to your claim.
b. Insurers should be required to disclose all of the policy benefits which may apply to your claim.
c. Insurers should be required to disclose none of the policy benefits which may apply to your claim.

If you believe that your insurance company should be required to disclose to you all of the benefits in your policy which may apply to your claim, then you again agree with what is in this state a 'minimum standard' for California insurers licensed to handle your claim (source: CA Regulations, section 2695.4[a]).

5. Finally, as a California consumer of insurance how many days do you believe are reasonably sufficient for your insurance company to accept or deny your claim, in whole or in part, after the insurer obtains proof of claim showing the magnitude of your loss:

a. 20 days.
b. 30 days.
c. 40 days.

The CA Regulations' answer is c. 40 days. So an insurance company in California has well over an entire month to review your claim and to accept or reject it, in whole or in part. Thereafter, the insurance company can even request continuous 30-day extensions in which to make these determinations, that is, if the insurer advises the consumer of its need for additional time and also provides to you a written notice specifying "any additional information the insurer requires in order to make a determination and state any continuing reasons for the insurer's inability to make a determination," as well as provide you with "an estimate as to when the determination can be made" (source: CA Regulations 2695.7[b][1][c][1]).

The above represents only a sampling of some of the CA Regulations which currently exist and which may, therefore, apply to a property insurance claim in this state. But those CA Regulations chosen for my brief review here are some of those which most often do apply to claims in this state, and so in reviewing them here you can see for yourself, as I also have good reasons to believe, that the existing "minimum standards" for insurers licensed to handle claims in this state are not "too high." In fact, in some areas they may be too low.

"Minimum Standards" for Health Care and for Property Insurance

I have no political affiliation at this time, but I try to do good wherever possible and to help further discussions of important issues related to my work and to my personal and to my professional interests.

I was raised around the Watchtower Bible and Tract Society. As a result, in large part I have never been very politically active, though I often discuss political issues with friends and with my family. So what I write here or elsewhere is not done with any political interest, that is, apart from my wanting to help those in any party or group, wherever possible, and however I may be able to do so.

With this in mind, as many of you know on February 25, 2010, President Barrack Obama hosted a live "Health Care Summit." According to the CBS News online article, and as I myself heard during the live presentation, President Obama said, "We should set up minimum standards ... at least solid enough that if your kid got sick, they're actually going to be treated. The issue here is... how much should government set a baseline versus just letting people decide, 'I can't really get decent insurance, but maybe this is better than nothing'" (underlining added).

Where it concerns health care in this country, based on those most in need (namely, those with preexisting conditions) it would seem that, at the very least, a 'minimum standard' for health care could be federal funding for those with demonstrably preexisting conditions. Which political party, which corporation, indeed, which person would rise up and speak out against helping only those most in need of health care coverage, namely (again), those who cannot get it because of preexisting conditions?

However, when this most fundamental of health care objectives gets lost into a shuffle and debate over so many other moving parts to a bill no one can seem to fully resolve, then nothing gets done when something needs to get done for those with preexisting conditions, those who cannot get insurance without federal support. Now let me bring this over to the property insurance side of the industry, and to the "minimum standards" which are in place for the adjustment of claims in California by insurers who are licensed to handle claims.

I am a licensed public insurance adjuster in the state of California, and so I can tell you that in property insurance there are "minimum standards" in place for insurers licensed to handle claims in this state. Yet, in spite of their clarity and their expressed reasonableness, and in spite of the fact that these California "minimum standards" are derived from section 790.03(h) of the California Insurance Code, in my experience working for insurers and for consumers as a claim adjuster and as a team supervisor, insurance companies do not regularly or even frequently follow these "minimum standards." Insurance companies set up their own standards which often have little or nothing at all to do with the actual standards which they are to follow, at least in California, in the event of a first-party property insurance claim.

Indeed, there is at times not only a failure and even a refusal to follow existing standards, on the part of some insurers but there is even evidence to show resistance improvements to these California "minimum standards," resistance to the point of litigation against California Department of Insurance's then-Commissioner John Garamendi in 2003. Garamendi attempted to improve the California Fair Claims Settlement Practices Regulations by delineating additional "minimum standards" to the existing California Fair Claims Regulations, additional "minimum standards" which were intended by the Commissioner to prevent  insurers in this state from depreciating labor as part of their claim settlement offers. Though labor is not "depreciable" as are actual building materials which can wear through use, over time, California insurers for years applied depreciation to labor costs in their estimates for repairing or replacing structures. This allowed insurers to hold onto more claim money, longer. The effect on insureds was less money sooner, if at all, to do the repairs until the repairs are completed at the insured's expense, not having the full amount of money to which they are entitled under a "replacement cost" policy.

In either case, before the new regulations took effect in 2007, the benefits of depreciating labor were only realized by the insurance companies, not by any insured. The insurance companies' reasoning for opposing "minimum standards" which would have prevented carriers from withholding more claim money for something which does not depreciate (labor) was, in part, that "insurers will be subjected to unreasonably burdensome, and in some instances impossible, standards that will prove extraordinarily expensive to insurers and ultimately to consumers" (PISC, et al. v. Garamendi, LASC, case number BC298284, "Complaint for Declaratory and Injunctive Relief," page 3, filed July 1, 2003).

Yet, no such burdens have expressly come forth as a result of insurers not being able to hold onto or keep entirely money that was previously withheld from consumer claim settlements for no good reasons. On the other hand, it is not hard to show the 'unreasonable burden' insurers placed on insureds for years by not providing them with the full amount of initial claim money needed to rebuild their property, or to relocate. It is a fact: Allowing insureds to have more of their claim money upfront for their use in rebuilding or in relocating is a tremendous benefit. Otherwise, by not paying insureds what they are owed, then insurers' claim settlement practices could "prove extraordinarily expensive ... to consumers."

Click here and you can read the Press Release by the California Department of Insurance concerning the upholding of the ruling which permitted these new property "minimum standards" to take effect in this state. These new Regulations require insurance companies to provide details pertaining to their structure estimate deductions, showing exactly where and how they determined the “measurable difference in market value attributable to the condition and age of the property" in question (California Fair Claims Regulations, section 2695.9[f][1]). Insurance companies are now precluded from depreciating any labor listed separately or as it exists as a part of a unit cost in a construction repair estimate, which estimates often serve as the basis for initial property claim payments made to consumers by insurers (compare the California Fair Claims Regulations, section 2695.9[d][1][2][3]).

Moving this back over to the health care debate which is ongoing in the United States, again, it seems that if the idea is to get help for those who are most in need of coverage (namely, those with preexisting conditions) then why not make that the 'minimum standard'? Yet, as reasonable and as helpful as such a standard may seem in health care, "minimum standards" in other areas of insurance (property insurance, for example) have similarly been put forth to help consumers, only to be resisted in the courts for years by insurers. Fortunately, in the case of California Fair Claims Regulations, insurers lost their approximately four-year long legal battle to keep more of the claim money they owe California insureds, with the result that now consumers in this state can rebuild lost structures or permanently relocate more easily, having more of their claim money upfront in order to do so.

As for health care and any "minimum standards" which may result from the current debate, one cannot solve all problems, at once. But if nationalizing health care in any further sense truly makes sense, perhaps a "test vehicle" which actually helps those most in need (those with preexisting conditions) is the right place to start. Not only that, perhaps that is also the right place to end the debate, at least for now, and see who will truly stand up for the rights of those most in need of our support.

Greg Stafford is a California licensed public insurance adjuster (license #2E44966) and the President and CEO of Premier Claim Consultants. For over ten years Stafford worked as a property claim adjuster and as a property claim supervisor for several of the nation's largest property and casualty insurers. Since 2004 Stafford has worked as a public insurance adjuster and as property claim consultant. To learn more about the differences between public, company, and independent adjusters read the article, "Should You Hire A Public Adjuster?" You can also learn more about public adjusting in Stafford's book, Property Claims Adjusting: A Complete Guidebook for the Consumer, California Homeowners Edition (Murrieta, CA: Premier Claim Consultants, 2007). 

Click here to email Greg Stafford. For more information about insurance claims, insurance adjusters, and about how you can get assistance in the event of an insurance claim, visit our website at http://www.premier-claim-consultants.com.

Overage Adjustments: It's (Almost) Never Too Late!

So you decided to try and negotiate your property insurance claim by yourself. Surprisingly, most people do. Though the option of hiring your own licensed, experienced public insurance adjuster is something many homeowners and business owners do not know much about, even after learning about them most insureds choose to go it alone. Why? And what if after first attempting to get a satisfying and complete settlement you decide you could use some professional assistance after all? Is it too late? Our new Blog answers all of these questions and might give you some good perspective on how to get help, at any time, with your property insurance claim.

"Public Adjusters Do What?"

If you were thinking of selling your home, you would likely first contact a real estate agent. If you were looking to buy insurance for your home or business, you would no doubt contact an insurance agent. Yet, when people suffer a loss to their property or business income and they are preparing to file a claim with their insurance company, how many stop and consider hiring a claim agent? You didn't know there was such a thing as a "claim agent"? Well, there is. They are known as public insurance adjusters.

But the truth is, as noted above, though public insurance adjusting is a licensed profession in the State of California and in many other states, most people have never heard of it. I've written before about how public adjusters are the "best kept secret" (see Chapter 4 of my Property Claims Adjusting: A Complete Guidebook for the Consumer, California Homeowners Edition [Murrieta, CA: Premier Claim Consultants, 2007]). I have also written here on this Blog about the differences between public, company, and "independent" adjusters. But the reality is an insured who has suffered a loss to his or to her property is often presented with a dilemma: Go with your insurance company and let their adjusters determine how much to pay you, or hire your own professional claim adjuster to prepare and settle your claim. Many insureds choose to go with their insurance company because the idea of paying someone to do what they believe their insurance should do (that is, settle their claim the way it should be settled) sometimes just doesn't seem right. Often, however, that feeling changes as the claim progresses.

It is a fact: Insurance company and their "independent" adjusters cannot legally represent your interests during a claim settlement. Only public insurance adjusters can represent you, and so only public insurance adjusters truly have the same interest as you in the outcome of your claim. Of course, it may be that you were not presented with the right public adjusting company at the onset of your claim or, again, you simply chose to see what your insurance company would do. Whatever the case, if you chose not to hire a public insurance adjuster before, but now after your insurance company has effectively settled your claim you think you could use some help, what can a public adjuster do at this point?

"Overage" Claim Adjustments

Your claim settlement is not final until you say it is, or until you sign a release that effectively ends the claim adjustment process. But in California you are not required to sign a release to get your insurance claim settlement. In fact, current California Regulations include the following requirement for insurance companies:

Section 2695.7. Standards for Prompt, Fair and Equitable Settlements

(i) No insurer shall inform a claimant that his or her rights may be impaired if a form or release is not completed within a specified time period unless the information is given for the purpose of notifying the claimant of any applicable statute of limitations or policy provision or the time limitation within which claims are required to be brought against state or local entities.

In simpler terms, an insurance company cannot offer you a settlement that is contingent upon a release. That would, in effect, be impairing your rights to a fair settlement. But the truth is, many insurance companies use this tactic behind the scenes with their insureds. I know, because I witnessed it used several times in claim negotiations during the recent October, 2007, San Diego wildfires, and over the course of my 14 years in the claim adjusting industry, 10 of which were spent on the insurance company side. Don't be pressured into signing a release. You don't have to sign one to get a settlement.

Assuming you have not signed a release, and if in fact the offer presented by the insurance company is insufficient to settle your claim, you can always hire a public adjuster to take over from this point forward. Though I believe the sooner the better as far as hiring your own claim agent is concerned, it's (almost) never too late. The qualified public adjuster can concentrate on valuing and negotiating the remaining items or disputed costs. His or her fee should (legally) only attach to the amount that is negotiated above and beyond what the insurance company has already presented to you in settlement of your claim. So you have only to gain and really nothing to lose.

Now, because the public adjuster may have to spend a great deal of time going through the claim file and examine all of the documents generated to date, review estimates previously prepared and submitted, and then prepare or obtain another estimate for use in negotiating the overage settlement, the adjusting fee may be higher than what you would have paid had you hired the public adjuster from the start. But since the amount in dispute is only that which in excess of the insurance company's offer, you will likely still end up paying less even if the public adjuster's fee percentage is higher than it otherwise would have been. Let me show you how it works.

How "Overages" Work

Let's say you have a residential dwelling that was severely damaged and the insurance company offers you a settlement with a Replacement Cost Value (RCV) of $100,000.00, with 40% in withheld depreciation for the age and condition of the property in its used state (= .40 x 100,000 or $40,000.00), for a total Actual Cash Value of $60,000.00. But you and your General Building Contractor believe that the value of the covered damages is really $150,000.00, and that only 20% of this value should be withheld for depreciation. You advise the insurance company that you believe they have undervalued the claim, but its adjuster tells you that the insurance company is standing by their values. Since the contractor whom you are going to use for the repairs is usually not licensed to adjust a claim, you need a public insurance adjuster.

Under these conditions, since the insurance company has already valued the claim and offered you a settlement, the public adjuster will charge you a fee on the amount that is negotiated above what he insurance company has already offered you. If the public adjuster succeeds in getting you more than the $100,000 initially offered by the insurance company, then the public adjuster would only be paid a percentage of this "overage" amount. Consider the following calculation:

Insurance Company Settlement Offer: $100,000.00
Public Adjuster Overage Negotiation: $50,000.00
Less 15% Overage Adjusting Fee: ($7,500.00)
________________________________________________
Final Total: $142,500.00

In the above scenario (which is quite plausible), your public adjuster has succeeded in negotiating another $50,000.00 for use by your contractor in restoring your dwelling or building to its pre-loss condition. The net effect is actually $42,500.00, however, since the public adjuster does not work for free! As the California Insurance Code (section 15027[v][1]) clearly states:

Public adjusters means the insurance adjusters who do not work for your insurance company. They work for you, the insured, to assist in the preparation, presentation, and settlement of your claim. You hire them by signing a contract and agreeing to pay them a fee or commission based on a percentage of the settlement, or other method of compensation. Public adjusters are required to be licensed, bonded, and tested by the State of California to represent your interest only.

And who can meaningfully argue with the results? The public adjuster did not charge you a fee on the amount that was negotiated prior to his or her involvement, and even after the deduction of the public adjuster's fee you come away with .85 on every one of the $50,000 additional dollars negotiated! Additionally, if the public adjuster succeeds in reducing the withheld depreciation from 45% to, say, 25%, then the ACV payment will be an additional $52,500.00 (= new $150,000 [RCV] less $37,500 [25%] less original ACV payment of $60,000 [insurance company's first ACV offer]). But of this $52,500 you only pay the public adjuster's fee on the additional $12,500.00 that is above the $100,000 RCV agreed to previously by the insurance company (which amounts to $1,875.00).

Only after the work is complete and the remaining $37,500.00 is issued by the insurance company is the public adjuster's fee due on the amount withheld for depreciation, in this case the remaining $37,500.00. This way you and your contractor are not required to give up too much money before the work is completed, which will allow the repair entity to have more money available to finish your project, which can sometimes be an issue.

Overage claims make sense. If you have a property insurance claim, a qualified public insurance adjuster can make a difference at the start, in the middle, and even if you think you're at the end of the claim. Remember, it's never too late to hire your own claim agent!

For more information about the different kinds of adjustments a public adjuster can provide, including more about "overage" adjustments, see Chapter 5 of my book Property Claims Adjusting: A Complete Guidebook for the Consumer. For more information about public, company, and "independent" adjusters, your property claim rights, and how Premier Claim Consultants can assist you, visit my website at http://www.premier-claim-consultants.com.

It's Not True

If you've filed an insurance claim and the adjuster assigned by your insurance company tells you that he or she represents your interests and works for you, it's not true. That does not mean the adjuster cannot put your interests on an equal footing with theirs, as if they were the insurer's own interests, in fact. But they cannot technically represent your interests, because the adjuster works for the other party to the policy contract—the insurance company.

In California, there are three types of property claim adjusters that may be involved in your claim. They are company, "independent," or public adjusters. Of these three, only public insurance adjusters are legally allowed to represent you during a claim adjustment or negotiation. Only public insurance adjusters work for you in the settlement of your claim. Consider the following definitions from the California Insurance Code for all three of these types of adjusters:

1. 
   
   
   
   
   Company Adjusters: "Company adjusters means the insurance adjusters who are employees of your insurance company. They represent your insurance company and are paid by your insurance company. They will not charge you a fee and are not individually licensed or tested by the State of California." [California Insurance Code, section 15027(v).]
2. 
   
   
   
   
   Independent Adjusters: "Independent adjusters means the insurance adjusters who are hired on a contract basis by your insurance company to represent the company in the settlement of the claim. They are paid by your insurance company. They will not charge you a fee." [California Insurance Code, section 15027(v)(3).]
3. 
   
   
   
   
   Public Adjusters: "Public adjusters means the insurance adjusters who do not work for your insurance company. They work for you, the insured, to assist in the preparation, presentation, and settlement of your claim. You hire them by signing a contract and agreeing to pay them a fee or commission based on a percentage of the settlement, or other method of compensation. Public adjusters are required to be licensed, bonded, and tested by the State of California to represent your interest only." [California Insurance Code, section 15027(v)(1).]

The above definitions make clear what I said at the start: Only public adjusters can represent you or work for you as your claims adjuster. Further, they are the only adjusters who are required to be tested and individually licensed after one year of serving as an interim public adjuster. You pay them, and they adjust your claim and negotiate a settlement for all of your covered losses and damages. This saves you both time and energy by releasing you from the difficult processes of inventorying, evaluating, and valuing your damaged or destroyed dwelling, buildings, other structures, and personal or business property.

"Independent" adjusters are not independent in the sense that they are "neutral," that is, impartial adjusters working for both you and your insurance company. They are only "independent" in that they work on a "contract basis" with your insurance company. But make no mistake about it: "Independent" adjusters, like company adjusters, work exclusively for insurance companies. They cannot legally represent or work for you.

Why, then, do many insurance companies and their claims adjusters present themselves as "your" adjuster, or one that works for you or on your behalf? The reason is clear: Though it is not true that they work for or represent you, they may tell you that they do in order to dissuade you from hiring your own adjuster, a public adjuster. If insurance companies and their adjusters can keep you from hiring a public adjuster, and if you are made to believe that the insurance company or its adjusters are indeed "on your side" by being your representative and by working for you, then you will be completely reliant on them to settle your claim. If the insurance company is not only the party paying your claim but also the sole entity responsible for how much you should be paid, then the financial benefits to the insurance company are extraordinary. Further, if they alone are left to investigate your claim, then the full extent of investigation into coverage and value rests with them.

Having worked for insurance companies for ten years and having been a licensed public insurance adjuster for about three and half years, I can tell you that if you have a property insurance claim and if you do not consider hiring your own adjuster (a public adjuster), then you are taking an extreme and unnecessary risk with your claim settlement. I will also tell you that it's in your best interest to consult with a licensed and qualified public insurance adjuster for any property claim you file. Finally, I will say again that if any insurance company or "independent" adjuster tells you that he or she represents or works for you, it's not true.

For more information about public, company, and "independent" adjusters, your property claim rights, and how Premier Claim Consultants can assist you, visit my website at http://www.premier-claim-consultants.com/.