Claims Do’s and Don’ts

If you never have an auto or homeowner’s claim, you’re a lucky person. If you aren’t that lucky and have a claim, it’s likely to be stressful and might even be hard to think straight. 

In this newsletter I share some thoughts on claims so you’ll be better prepared if you have one. Keep in mind that actual insurance coverage is always determined by the policy contract…this newsletter is for educational purposes only.

I think about the claims process as three steps: stabilize, decide and proceed.

Auto Incident

Stabilize

  • If possible, move your vehicle to a safe location
  • Call police
  • Get information from the other driver (take photo of license and insurance card)
  • Don’t discuss the incident with the other driver. Don’t admit fault or disclose your policy limits.
  • Take photos of the scene, damage and other vehicle license plates
  • Later, get a copy of your police report

Decide

  • If the damage is above your deductible, or if there are other parties involved, you should file a claim with your carrier
  • If you’re not sure you should file a claim, call me

Proceed

  • If filing a claim, call the insurance carrier
  • Secure a rental car if desired
  • Find and engage a body shop (carrier will recommend some they stand behind, or you can choose one recommended by your dealer)
  • The body shop will bill your carrier

Homeowner’s Incident

Stabilize

  • Mitigate damage (e.g. call fire department, turn off water, arrange temporary repairs, stop things from getting worse)
  • Determine extent of damage…get a professional repair estimate

Decide

  • If the damage is below the deductible or it’s not covered, don’t file a claim.  In general, sudden/accidental damage is covered but wear/tear is not.
  • If you’re not sure if you should file a claim, call me. What is covered can be tricky, like a sudden leak from an old roof where interior water damage is covered but the old roof itself is not.

Proceed

  • If filing a claim, call your insurance carrier
  • Make alternative living arrangements if necessary
  • Find and engage a contractor for repairs
  • Your carrier claims adjuster will coordinate payment

Your insurance carrier is equipped to walk you through the claims process step by step. 

Don’t Join This Club

If you have a large, legitimate claim, insurance carriers try to be helpful, pay the claim  and move on…that’s their business. But if you file multiple claims, or frivolous claims, even if they are not paid, the carrier could asterisk you as a problem client and either cancel or non-renew your insurance.

Here are some ways to get that problem client asterisk nobody wants:

  • Multiple or frivolous claims
  • Live in a high risk wildfire zone
  • Consistently pay premiums late
  • Fail to take risk management steps required by your carrier
  • Be rude or threatening to your carrier or agent employees

Now carriers can’t cancel your insurance for just anything. In California there’s a one year temporary reprieve from cancellation due to fire zone. Also in California carriers aren’t supposed to use credit rating for underwriting. And in any state it’s hard to be cancelled just for being rude. But you can get the asterisk for any of the things on the above list. Then later, when you make a payment one day past the grace period, they can and will cancel you for non-payment and will not reinstate you like they might a typical client.

All the carriers I choose to represent have good to excellent reputations for resolving claims. But disputes occasionally occur. The reality is in a claims dispute you have limited leverage because  carriers aren’t  sad to see disputing claimants leave. And  captive agents have limited leverage to help because they take orders from the carrier.  But an independent agent like myself has leverage to help you as claims advocate because carriers want me to continue supporting their products over their competition.

Now you might think if you’re non-renewed, you’ll just go with a different carrier. Not so simple. Insurance companies share information. And insurance applications include a question that reads “has your insurance ever been cancelled or non-renewed?” If that question is answered yes alarms go off and you will be paying higher rates, sometimes much higher. If that question is answered no when the real answer is yes that would be considered a “material misrepresentation” and future claims may be denied.

So remember that insurance is about sweating the big stuff. Insurance carriers pay big claims every day. But it doesn’t pay to push the envelope with questionable little claims then get into a fight with your insurance carrier. If you feel you’re not being treated fairly on a legitimate claim, call me and we’ll work together to get you what you deserve.

Fires and Floods: 2017 Year in Review

2017 wasn’t very happy for the insurance industry thanks to three nasty grinches named Harvey (in Texas), Irma (in Florida) and Maria (in Puerto Rico). Because coastal development has been so strong over recent decades, these hurricanes could result in total losses of $100 billion! Despite that massive number insurance carriers are not forecast to be overly stressed because only 18-20% Florida and Texas residents have flood insurance, and carriers have their own insurance (called reinsurance) to cover excessive loss.

Still, homeowner rates in Florida and Texas are expected to rise. Rates in Florida are already twice as high as the national average and after 2017 will likely increase more.

The news isn’t much better on the automotive side. The recent increase in miles driven was the most in 25 years. And everybody loves their cell phones: more than 400,000 people were injured in distracted driving incidents last year. Then when they are in accidents, new technology makes cars more expensive to repair. A study showed minor front-end damage to an Acura ILX that cost $1,844 to fix in 2014 cost $3,551 in 2016. It all adds up to pressure for auto rate increases nationwide.

Here in California we had devastating summer fires in the north and surprising winter fires in the south resulting in nearly $10 billion in insurance claims. Claims are high because of coastal development, questionable land management practices and the high cost of homes, particularly in Southern California. And unlike flood, fire is covered by all standard homeowners policies.

What does that all mean for you? Because many areas previously thought safe were proven to be dangerous, carriers will be taking a hard look at how they define “fire prone area”, particularly for new business. So if you live in or even near a fire prone area it’s important to keep your insurance paid up because if you let it lapse for even one day it may be non-renewed. If you buy a new house in a fire prone area and can’t get insurance from your existing carrier don’t be alarmed… at Desert Insurance Solutions we have multiple carrier options for each situation, but you can expect new policies in fire prone areas to be more expensive.