Monthly Archives: October 2016

After A Disaster – How To Make A Claim On Your Insurance

By   October 27, 2016

The following really helpful resource article first appeared on the US Insurance Adjusters website in 2001.

After A Disaster – How To Make A Claim On Your Insurance

Somers house fire 03-05-10

What you need to know about

  • how to file a claim
  • how the claim process works
  • what’s covered and what’s not

First Steps

Contact your agent or company immediately. Find out:

  • Whether the damage is covered under the terms of your policy
  • how long you have to file a claim
  • whether your claim exceeds your deductible (the amount of loss you agree to pay before insurance kicks in)
  • how long it will take to process the claim
  • whether you’ll need estimates for repairs

Make temporary repairs: Take reasonable steps to protect your property from further damage. Save receipts for what you spend and submit them to your insurance company for reimbursement. Remember that payments for temporary repairs are part of the total settlement. So if you pay a contractor a large sum for a temporary repair job, you may not have enough money for permanent repairs. Beware of contractors who ask for a large amount of money up front and contractors whose bids are very low — they might cut corners and do shabby work. Don’t make extensive permanent repairs until the claims adjuster has assessed the damage.If you need to relocate, keep your receipts: If you need to find other accommodations while your home is being repaired, keep records of your expenses. Homeowners insurance policies provide coverage for the cost of additional living expenses if your home is damaged by an insured disaster.

Prepare for the adjuster’s visits: Your insurance company may send you a proof of loss form to complete or an adjuster may visit your home first. (An adjuster is a person professionally trained to assess the damage.) In either case, the more information you have about your damaged possessions — a description of the item, approximate date of purchase and what it would cost to replace or repair — the faster your claim generally can be settled.

  • To substantiate your loss, prepare an inventory of damaged or destroyed items and give a copy to the adjuster along with copies of any receipts. Don’t throw out damaged items until the adjuster has visited. You should also consider photographing or videotaping the damage. If your property was destroyed or you no longer have any records, work from memory.
  • Identify structural damage to your home and other structures such as a garage, tool shed or in-ground swimming pool. Make a list of everything you want to show the adjuster, for example, cracks in the walls and missing roof tiles. You should also get the electrical system checked. Most insurance companies pay for these inspections.
  • Get written bids from licensed contractors. The bids should include details of the materials to be used and prices on a line-by-line basis. This makes adjusting the claim faster and simpler.
  • Keep copies of the lists and other documents you submit to your insurance company. Also keep copies of whatever paperwork your insurance company gives you and record the names and phone numbers of everyone you speak to.

Flood damage is excluded under standard homeowners and renters insurance policies. Flood coverage, however, is available as a separate policy from the federal government’s National Flood Insurance Program (NFIP) and from a few private insurers. The NFIP provides coverage up to $250,000 for the structure of the home and $100,000 for personal possessions. Flood insurance claims should be filed with your homeowners insurance company.

Factors That Determine The Amount Of Settlement You Get

Type of Policy

Replacement Cost and Actual Cash Value: Replacement cost policies provides you with the dollar amount needed to replace a damaged item with one of similar kind and quality without deducting for depreciation (the decrease in value due to age, wear and tear, and other factors). Actual cash value policies pay the amount needed to replace the item minus depreciation.

Suppose, for example, a tree fell through the roof onto your eight-year-old washing machine. With a replacement cost policy, the insurance company would pay to replace the old machine with a new one. If you had an actual cash value policy, the company would pay only a part of the cost of a new washing machine because a machine that has been used for eight years is worth less than its original cost.

Extended and Guaranteed Replacement Cost: If your home is damaged beyond repair, a typical homeowners policy will pay to replace it up to the limits of the policy. If the value of your insurance policy has kept up with increases in local building costs, a similar dwelling can generally be built for an amount within the policy limits.

With an extended replacement cost policy your insurer will pay a certain percentage over the limit to rebuild your home — 20 percent or more, depending on the insurer — so that if building costs go up unexpectedly, you will have extra funds to cover the bill. A few insurance companies offer a guaranteed replacement cost policy that pays whatever it costs to rebuild your home as it was before the disaster. But neither type of policy will pay for more expensive materials than those that were used in the structure that was destroyed.

Mobile Home, Stated Amount: If you own a mobile home, you may have a stated amount policy. With this policy, the maximum amount you receive if your home is destroyed is the sum you agreed to when the policy was issued. If you opt for the stated amount, update your policy annually to make sure that the amount will cover the cost of replacing your mobile home. Check with local mobile home dealers to find out what similar homes now sell for.

Policy limits

Most insurance policies provide adequate coverage because they include an inflation-guard clause to keep up with increases in local building costs. If you have replacement cost coverage, your insurance company will pay the full cost of repairing or replacing the damaged structure with a building of “like kind and quality.” In other words, if you were adequately insured and lived in a three-bedroom ranch before the disaster, your insurance company would pay to build a similar three-bedroom ranch.

Most insurance companies recommend that a dwelling be insured for 100 percent of replacement cost so that you have enough money to rebuild if your home is totally destroyed.

You may not be fully covered, however, if you have made significant improvements on your house, such as enclosing a porch to create another room or expanding your kitchen, without informing your insurance company of the changes at the time.

Temporary living expenses

If you can’t live in your home because of the damage, your insurance company will advance you money to pay for reasonable additional living expenses. The amount available to pay for such expenses is generally equal to 20 percent of the insurance on your home. This amount is in addition to the money for repairs or to rebuild your home. Some insurance companies pay more than 20 percent. Others limit additional living expenses to the amount spent during a certain period of time.

Among the items typically covered are eating out, rent, telephone or utility installation costs in a temporary residence, and extra transportation costs. Insurance policies often discuss additional living expenses under the heading loss of use.

Rebuilding and making repairs

If your home was destroyed, you have several options.

  • You can rebuild a new home on the same site.
  • Depending on state law, you can sell the land and build or buy a house in a different place, even another state.
  • You can decide that you would rather rent.

If you decide not to rebuild, the settlement amount depends on state law, what the courts have said about this matter and the kind of policy you have. Find out from your insurance agent or company representative what the settlement amount will be based on.

Concerning repairs, if you downgrade, for example, replace an expensive wood floor with one using a cheaper product, you are not entitled to the difference in cash.

Other factors

Compliance with current building codes: Building codes require structures to be built to certain minimum standards. In areas likely to be hit by hurricanes, for example, buildings must be able to withstand high winds. If your home was damaged and it was not in compliance with current local building codes, you may have to rebuild the damaged sections according to current codes.

In some cases, complying with the code may require a change in design or building materials and may cost more. Generally, homeowners insurance policies won’t pay for these extra costs, but insurance companies offer an endorsement that pays a specified amount toward such changes. (An endorsement is an addition to an insurance policy that changes what the policy covers.) Information concerning this coverage is found under ordinance or law in the Section I exclusion part of your policy.

The use of public adjusters: Your insurance company provides an adjuster at no charge. You also may be contacted by adjusters who have no relationship with your insurance company and charge a fee for their services. They are known as public adjusters. If you decide to use a public adjuster to help you in settling your claim, this service could cost you as much as 15 percent of the total value of your settlement. Sometimes after a disaster, the percentage that public adjusters may charge is set by the insurance department. If you do decide to use a public adjuster, first check references and qualifications by contacting the Better Business Bureau and your state insurance department (See back cover for contact information). Also contact the National Association of Independent Insurance Adjusters (

Compensation for Damage

Vehicles: If your car was damaged and you have comprehensive coverage in your auto insurance policy, contact your auto insurance company. If your car has been so badly damaged that it’s not worth repairing, you will receive a check for the car’s actual cash value — what it would have been worth if it had been sold just before the disaster. Kelley Blue Book ( or other such publications can give you an idea of what your car was worth.

Trees and shrubbery: Most insurance companies will pay up to $500 for the removal of trees or shrubs that have fallen on your home. They will also pay for damage caused to insured structures and their contents up to policy limits, but they won’t pay to remove trees that have fallen causing a mess in your yard.

Water: While homeowners policies don’t cover flood damage, they cover other kinds of water damage. For example, they will generally pay for damage from rain coming through a hole in the roof or a broken window as long as the hole was caused by a hurricane or other disaster covered by the policy. If there is water damage, check with your agent or insurance company representative as to whether it is covered.

The Payment Process

Disasters can make enormous demands on insurance company personnel. Sometimes after a major disaster, state officials ask insurance company adjusters to see everyone who has filed a claim before a certain date. When there are a huge number of claims, the deadline may force some to make a rough first estimate. If the first evaluation is not complete, set up an appointment for a second visit. The first check you get from your insurance company is often an advance. If you’re offered an on-the-spot settlement, you can accept the check right away. Later on, if you find other damage, you can “reopen” the claim and file for an additional amount.

Most policies require claims to be filed within one year from the date of the disaster.

Some insurance companies may require you to fill out and sign a proof of loss form. This formal statement provides details of your losses and the amount of money you’re claiming and acts as a legal record. Some companies waive this requirement after a disaster if you’ve met with the adjuster, especially if your claim is not complicated.

The choice of repair firms is yours. If your home was adequately insured, you won’t have to settle for anything less than you had before the disaster. Be sure the contractor is giving you the same quality materials. Don’t get permanent repairs done until after the adjuster has approved the price. If you’ve received bids, show them to the adjuster. If the adjuster agrees with one of your bids, then the repair process can begin. If the bids are too high, ask the adjuster to negotiate a better price with the contractor. Adjusters may also recommend firms that they have worked with before. Some insurance companies even guarantee the work of firms they recommend, but such programs are not available everywhere. Make sure contactors get the proper building permits.

If you can’t reach an agreement with your insurance company: If you and the insurer’s adjuster can’t agree on a settlement amount, contact your agent or your insurance company’s claim department manager. Make sure you have figures to back up your claim for more money. If you and your insurance company still disagree, your policy allows for an independent appraisal of the loss. In this case, both you and your insurance company hire independent appraisers who choose a mediator. The decision of any two of these three people is binding. You and your insurance company each pay for your appraiser and share the other costs. However, disputes rarely get to this stage.

Some insurance companies may offer a slightly different way of settling a dispute called arbitration. When settlement differences are arbitrated, a neutral arbiter hears the arguments of both sides and then makes a final decision.

How you receive the money: When both the dwelling and the contents of your home are damaged, you generally get two separate checks from your insurance company. If your home is mortgaged, the check for home repairs will generally be made out to you and the mortgage lender. As a condition of granting a mortgage, lenders usually require that they are named in the homeowners policy and that they are a party to any insurance payments related to the structure. The lender gets equal rights to the insurance check to ensure that the necessary repairs are made to the property in which it has a significant financial interest. This means that the mortgage company or bank will have to endorse the check. Lenders generally put the money in an escrow account and pay for the repairs as the work is completed.

You should show the mortgage lender your contractor’s bid and say how much the contractor wants up front to start the job. Your mortgage company may want to inspect the finished job before releasing the funds for payment. If you don’t get a separate check from your insurance company for the contents of your home and other expenses, the lender should release the insurance payments that don’t relate to the dwelling. It should also release funds that exceed the balance of the mortgage. State bank regulators often publish guidelines for banks to follow after a major disaster. Contact state regulatory offices to find out what these guidelines are.

Some construction firms want you to sign a direction to pay form that allows your insurance company to pay the firm directly. The firm then will bill your insurance company directly and attach the form you signed. Make certain that you’re completely satisfied with the repair work and that the job has been completed before signing any forms.

If you have a replacement cost policy for your personal possessions, you normally need to replace the damaged items before your insurance company will pay. If you decide not to replace some items, you will be paid their actual cash value. Your insurance company will generally allow you several months from the date of the cash value payment to replace the items and collect full replacement cost. Find out how many months you are allowed. Some insurance companies supply lists of vendors that can help replace your property. Some companies may supply some replacement items themselves.

After your claim has been settled and the repair work is underway: Take the time to re-evaluate your homeowners insurance coverage. For example, was your home adequately insured? Did you have replacement cost coverage for your personal property? Talk to your insurance agent or company representative about possible changes.

Consider taking a home inventory to make the claims process easier in the future. The Insurance Information Institute offers the free Know Your Stuff Home Inventory Tool. To learn more, visit

The Roles of the Insurance Claims Specialists

By   October 6, 2016

The Role of the Insurance Claim Specialists In Commercial Property Claims

The following article reproduced from provides some really helpful insight into the commercial insurance claims process.

Both insurers and insureds call on claims adjusters, accountants, and attorneys for help with claims. Generally speaking, however, the claims adjusters, accountants, and attorneys that offer their services to insurers are distinct from those that offer their services to insureds. The majority of claims specialists offer their services exclusively to either insurers or insureds, rather than to both. The discussion that follows briefly describes these experts, outlines the services that they can provide, and identifies the situations in which insureds and insurers typically elect to use their services. (For a listing of claims specialists, visit the claims section of the Resource Directory.)

Specialists Used by the Insurer

Insurers virtually always use at least one type of claims specialist in the handling of every claim: claims adjusters. Depending on the particulars of each claim, the insurer may also elect to use insurance claims accountants and attorneys.

Staff and Independent Adjusters

Insurers use two different types of adjusters to investigate and settle claims: staff adjusters and independent adjusters. Staff adjusters are employees of the insurer; they adjust claims only for the insurer that employs them. Independent adjusters, on the other hand, are separate business firms that offer claims-adjusting services to insurers for a fee. Staff adjusters receive a salary from the insurer, whereas independent adjusters usually charge insurers for their services on a time-and-expense basis.

Insurers vary with respect to their use of staff versus independent adjusters. Some use staff adjusters exclusively, while others use independent adjusters exclusively. Still others use both, depending on such factors as the location of the loss and the type of claims expertise needed. An insurer may engage an independent adjuster on a case-by-case basis, to handle particular claims, or may designate an independent adjuster to settle all claims of a certain type or size or all claims under a particular policy. There are a number of large, well-known independent adjusting firms. There are also a number of small independent adjusting firms, many of which are operated by former employees of the very large firms.

Regardless of whether the insurer uses a staff adjuster or an independent adjuster to handle a given claim, the role of the insurer’s adjuster is to determine the following.

  • The cause of the loss
  • Whether the policy provides coverage for the loss
  • The extent of property damage
  • Which items should be repaired, which items should be replaced, and what should be done with the damaged property
  • The cost to repair or replace the property
  • The amount that the insurer should pay the insured

The insurer’s adjuster can also advise the insured on what steps to take to prevent further damage and to minimize the loss, and, if requested, direct the insured to firms that can provide the necessary cleanup and repair services. In performing all of these tasks, the adjuster involves experts from other fields, if necessary.

Insurance Claims Accountants

For large, complex claims, especially those involving business interruption and extra expense losses, insurers often hire accounting firms to calculate the estimated loss and to evaluate the insured’s calculations. Typically, the accounting firms that insurers use are “boutique” accounting firms that are devoted entirely to insurance claims accounting for insurers. These firms, sometimes referred to as forensic accounting firms, do not do other types of accounting work, and they do not make their services available to insureds.


Of course, insurers sometimes also involve attorneys in property claims. Insurers typically involve attorneys in property claims when there is some question as to whether the loss is covered, to provide guidance as to whether the claim should be paid or denied, and to prepare for a court battle if one is expected. If arson or some other type of fraud is suspected, it is advantageous for the insurer to have the attorney direct the investigation, because the information gathered is then protected by attorney-client privilege. The same is true of property losses that may have been caused by a third party. In such cases, the insurer may involve an attorney in anticipation of a later subrogation action against the third party. The insurer may elect to use a staff attorney, particularly for coverage opinions. Often, however, an outside firm is engaged. Although there are exceptions, most attorneys that make their services available to insurers do not make them available to insureds (and vice versa). Attorneys usually charge insurers for their services on a time-and-expense basis, although graduated percentage-of-recovery fee schedules are sometimes used in connection with sizeable subrogation actions.

Specialists Used by Insureds

Although it is not required, the insured may also elect to engage claims specialists to assist in settling a commercial property claim. Reasons often cited for an insured’s decision to hire a claims specialist include the following.

In a claims situation, the insurer and the insured have naturally opposing interests. The insurer’s interests are generally best served by making payment of the least possible amount, whereas the insured’s interests are generally best served by receiving payment of the greatest possible amount.

Loss Assessors & Other Names

US Insurance Adjusters

Claims specialists are known by different names in different parts of the world. For instance claims assessors, insurance adjusters, claims adjusters, loss assessors Manchester, loss adjusters, insurance claims specialists, insurance claims adjusters and so on. Whatever the title they go by, they essentially perform the same function ie to help clients obtain a comprehensive and complete settlement of their insurance claim which covers all losses and all remedial work required for property renovation.

Since the insurer has a claims specialist representing its interests, the insured needs a claims specialist representing its interests to be on equal footing with the insurer.

Hiring a claims specialist allows the insured’s personnel to continue to focus on business operations, rather than spending their time on achieving a satisfactory insurance settlement.

Agents and Brokers

Agencies and brokerage firms of all sizes usually can be counted on for help in resolving coverage disputes for their clients, since they specialize in arranging coverage. The availability of other types of help depends largely on whether the insured’s agent or broker has someone with extensive claims handling experience on staff. The major national brokerage firms generally have experienced claims specialists on staff to assist their clients with claims. Many of these specialists have the expertise to guide the insured through the recovery process and to help the firm’s management determine and then achieve their post-loss priorities, even when there is no disaster recovery plan to follow. (One such seasoned professional describes this part of his job as “creating the client’s contingency plan after the fact.”)

Claims specialists of this caliber can also guide the insured’s staff in preparing a thorough and effective proof of loss for the claim. The classification of a given expense can make a difference in the amount paid by the insurer, so this kind of expert claims assistance is extremely valuable. For instance, the cost of providing pizza and soft drinks to employees working nearly around the clock to hasten the insured’s recovery will probably be reimbursed as a loss mitigation expense—but only if the documents submitted to the insurer explain how incurring this cost contributed to the loss recovery. Note, however, that even when the agent or broker can provide truly expert claims assistance, the responsibility for actually preparing the documentation required for loss payment normally rests with the insured.

Many agencies simply are not large enough to have an experienced claims specialist on staff. In that case, the agent’s usual role is to notify the insurer of the loss, put the insured in touch with the insurer’s claims representatives, stay in touch with both the insurer and the insured to ensure a smooth process, and attempt to intervene on the insured’s behalf if it appears that the client’s claim may be unjustifiably denied.

As a rule, there is no separate, identifiable charge for claims assistance that the agent or broker provides. It is considered a normal account service and is contemplated in the agent’s fee or commission.

Insurance Claims Accountants

Sometimes insureds turn to accounting experts for assistance with a claim, just as insurers do. Some insurance claims accounting firms offer a full range of claims adjusting services, as follows.

  • Investigating the cause and extent of damage
  • Determining what repairs are needed
  • Obtaining estimates on the cost of repairs
  • Assembling any documents needed to prepare a proof of loss
  • Preparing the insured’s proof of loss
  • Negotiating with the insurer on the settlement

In practice, however, these specialists are seldom involved in straightforward, direct-damage-only losses. Their specialty is handling very complex claims, particularly those that involve business interruption and extra expense losses, because of the need to quantify and document the financial loss suffered by the insured. Accordingly, insureds often elect to use an insurance claims accountant to handle the business interruption and extra expense portion of the loss only. In these instances, there may or may not be other claims specialists involved in other aspects of the claim.

Whether the involvement of an insurance claims accountant is warranted depends on several factors.

  • The complexity of the claim and the degree of difficulty in quantifying the insured’s loss
  • The availability of a claims specialist on the agent’s or broker’s staff to instruct the insured’s accounting staff in preparing the documentation required for a complex business interruption claim
  • The qualifications of the insured’s accounting staff
  • The amount of time the insured is willing to have these individuals spend on preparing the insurance claim

Whereas insurers use “boutique” insurance claims accounting firms that provide services only to insurers, insureds use either the business insurance division of a public accounting firm or a “boutique” insurance claims accounting firm that provides services exclusively to insureds. There are relatively few “boutique” accounting firms that offer their services to insureds. Insurance claims accountants typically charge for their services on a time-and-expense basis.


In connection with commercial property claims, insureds typically hire attorneys to contest the denial of a claim or a settlement offer that is deemed unacceptable. Attorneys may also be involved when there are injuries in connection with the property damage or when there is damage to property of others. Finally, the insured may elect to hire an attorney to handle a commercial property claim that involves a pollutant release or some other potential violation of regulatory rule or law. In such situations, it may be advantageous to have the attorney hire investigators to gather the facts, because the information is then protected by attorney-client privilege. As previously mentioned, most attorneys that make their services available to insurers do not make them available to insureds (and vice versa). Although percentage-of-recovery fees are sometimes encountered, attorneys working on commercial property claims usually charge insureds on a time-and-expense basis.

Public Adjusters

Public adjusting firms offer claims-adjusting services exclusively to insureds, rather than to insurers. Once engaged, public adjusters usually handle the insured’s claim from start to finish. They investigate the cause and extent of damage, determine what repairs are needed, get estimates on the cost of repairs, assemble any documents needed to prepare a proof of loss, prepare the insured’s proof of loss, and negotiate with the insurer on the settlement. Public adjusters usually receive a stipulated percentage of the insured’s loss recovery (up to 10 percent) as compensation for their services. In marketing their services, public adjusters generally assert that the increased loss recovery that they can secure for the insured will more than cover their fees.

Public adjusters are known for their zealous efforts to secure the most favorable loss settlement possible for the insured. Unfortunately, however, there have been incidents of fraudulent conduct on the part of some public adjusters. Consequently, public adjusters as a group do not enjoy a favorable reputation. Insurers generally scrutinize claims submitted by public adjusters much more carefully than others. Also, an insured that elects to hire a public adjuster may find that the agent’s or broker’s claims representative is unwilling to be involved in the claim.