Three things you need to know before you file a storm damage claim
- If you must file a storm damage claim this year, you cannot expect it to be a pleasant experience.
- Except in rare instances, you will not deal with any trained, licensed insurance adjusters, only lesser skilled surrogates.
- You should expect your repairs to take a year or longer to complete, even for a simple hail damage claim.
Investors make demands for insurance companies to maintain profitability in a very competitive marketplace. This pressure, along with the lure of Technology-as-Solution, are the two things I blame for the misery many homeowners will encounter.
- “Loss mitigation” means you are an expense that needs to be controlled, not a customer to be served.
Perhaps you have had a property damage claim in the past. It may have been pleasant previously, but things have changed…a lot. If you’ve ever had a storm damage claim, you may have felt you were in “good hands” and that the folks charged with putting you back to normal were “like your neighbor,” a neighbor who has been “protecting your dream”… for a fee, of course. Nevertheless, things were cordial, efficient, and prompt. Until recently, you expected insurance companies to “pay what they owe.” Usually, they did so.
Supposedly, property damage insurance is a simple wager. If nothing terrible happens to your property, the insurance company keeps your premium payment. If something bad does happen, though, you “win the bet,” and your insurance company fixes the broken stuff. A damaging storm did or did not occur. That storm damaged your home or not. Frankly, homes do wear out over time, but storms do pretty obvious stuff to structures. It isn’t hard to tell the difference between storm damage and wear-and-tear. The true cost to repair any particular thing is easy to determine in most marketplaces. Consequently, an insurance adjuster’s word was always something you could depend upon. Their folks were trained to deliver prompt, fair adjustments.
After all, that is what all of their customers want, don’t they?
Almost all of their customers don’t file claims. Therefore, what those customers want are cheap premiums. For homeowners who spend money on insurance but never file a claim, that money was entirely wasted. Their “peace of mind” came from having no problems, not from haven given money to an insurance company. Therefore, the only folks who benefit from hassle-free claim handling are the small percentage of insurance customers who have damage and file a claim. If you’re a company leader, you invariably need to deal with reducing costs at some point. If you don’t, your competition will. Eventually, your company may fail. In the meantime, you have investors to please.
One large insurer’s mission to reduce payouts is detailed in a book entitled “From Good Hands to Boxing Gloves.” They developed systematic processes in claims handling that did what they needed to accomplish, drive down payouts on property claims. The book is out of print now but available if you search for it.
The critical thing to remember is this; your claim is a controllable expense. Expect to be controlled.
- “Where have all the adjusters gone?”
Technology can replace people, or can it? Insurance claim handlers are NOT adjusters most of the time.
Now consider being an insurance company manager. How do you reduce your labor costs?
Trained adjusters are expensive. They know a lot of things about buildings AND also about insurance law. You, the homeowner, probably know relatively little about either, putting you at a disadvantage when you need your insurance company’s services. Therefore, Adjusters must operate with the highest level of integrity. For starters, to do their job well, they need to see the damage. That means that expensive, rare people must be sent on road trips, complete with costs for travel, temporary housing, meals, and so on. People that can and will do this work are rare.
Why not gather adjusters into cubicles and send less trained (cheaper) folks to photo the damage and sort it out “back at the office”? Tech can do this, can’t it? (Maybe.)
Replacing adjusters with onsite data gatherers makes the the next cost-cutting step is natural.Why not train cubicle people to look at photos and then generate estimates? That is a lot cheaper than having adjusters do it.
These new job titles are “Estimators” and “Claim Representatives.” At this point, the company has eliminated adjusters onsite AND in the office. They must exist somewhere by law, but only in an oversight capacity. Minimizing the number and function of adjusters saves a ton of money. It won’t make your claim experience better, however.
The company’s needs are met, but are yours?
You, the customer, have gained nothing from this. Perhaps your premiums are somewhat lower. That’s nice if it’s true, but remember this: THE ONLY TIME AN INSURANCE COMPANY DELIVERS “CUSTOMER SERVICE” IS WHEN YOU HAVE A CLAIM. They deliver nothing else the rest of the time. If you are frustrated by your claim experience, what will you do? Shop elsewhere, of course. What if I told you it is cheaper to hire expensive Hollywood talent to make clever commercials than provide Five Star claim service on every claim? Only a small percentage of homeowners file claims. Only a portion of those get so frustrated they leave. All of them get replaced. In a business sense, there is little motivation to keep you happy. The “numbers don’t crunch” in your favor.
- The resultant endless back-and-forth is going to take time, yours or someone else’s.
If you had told me five years ago that I would have full-time people on staff that did nothing but submit corrections to insurance estimates of damage costs, I would have thought you were crazy. If you had also told me that straightforward 3 or 4 trade storm damage claims would take a year or longer to complete, I would have known you were deranged.
The first time I heard a customer say to me, “This sh*t shouldn’t take a year to get done,” was only about five years ago. I had lost track of time. She was right about the year timeframe. She was also right that there is no excuse for it taking that long…except for this. Insurance companies benefit from a slow process. Homeowner, if you don’t fix your home at all for whatever reason, they save money. If you give up partway through, trying to make an absurd budget work, they save money. If something is legitimately damaged that they don’t want to pay for and you quit the fight, they save money.
All of these things happen…every day. This nonsense is the new normal.
So what to do?
- Don’t ever file an illegitimate claim. Doing so feeds insurance carriers’ suspicions. Ultimately, science will prove them right if you’re faking it.
- Pre-select a Storm Damage contractor (AquaDuct, perhaps?) who is established and understands the insurance “Claim Game.” Do this BEFORE the storm if possible, but definitely before you file a claim.
- Be patient with the process. Calling your agent amid the struggle is a waste of breath since they have no authority anyway, and threatening to leave the company is something Claim Reps hear multiple times every day. It doesn’t faze them.
- Be prepared to hire professional claim handlers such as a Public Adjuster or Insurance Appraiser if necessary. (Their roles in this will be covered in another blog post. They are NOT contractors.)