BARRON & ASSOCIATES -- Risk Management - Insurance
Risk Management and Insurance
For effective Risk Management, we regularly assist our clients with reviewing their business practices
to minimize the risks associated with their businesses including ensuring that their business format
reduces the liability of its owner in the event of claims; preparing and reviewing their contracts so that
in the event of a claim clear guidelines and procedures are established in the event of a claim; guiding
the client through the mechanic's lien and stop notice process; and ensuring that they have proper
insurance in the event that there is a claim.
Our attorneys have extensive experience in providing clients with insurance analysis, risk
management, and loss prevention. We consult with agents, brokers and policyholders on the
adequacy and suitability of new insurance proposals as well as existing programs. In addition, we
regularly advise clients on risk management and provide claims analysis and support in all areas of
the construction industry.
Experienced California Insurance Law Attorneys
As experienced Construction Litigators, we routinely tender and communicate claims to insurance
companies, and are experienced in ensuring that insurance carriers properly respond to claims and
provide our clients with the coverages provided for in the policy. We provide clients with
knowledgeable advice regarding insurance issues, including:
For effective Risk Management, we regularly assist our clients with reviewing their business practices
to minimize the risks associated with their businesses including ensuring that their business format
reduces the liability of its owner in the event of claims; preparing and reviewing their contracts so that
in the event of a claim clear guidelines and procedures are established in the event of a claim; guiding
the client through the mechanic's lien and stop notice process; and ensuring that they have proper
insurance in the event that there is a claim.
Our attorneys have extensive experience in providing clients with insurance analysis, risk
management, and loss prevention. We consult with agents, brokers and policyholders on the
adequacy and suitability of new insurance proposals as well as existing programs. In addition, we
regularly advise clients on risk management and provide claims analysis and support in all areas of
the construction industry.
Experienced California Insurance Law Attorneys
As experienced Construction Litigators, we routinely tender and communicate claims to insurance
companies, and are experienced in ensuring that insurance carriers properly respond to claims and
provide our clients with the coverages provided for in the policy. We provide clients with
knowledgeable advice regarding insurance issues, including:
- Reviewing insurance policies - Insurance policies can be complicated, and oftentimes
insurance brokers do not provide clients with a proper understanding of the scope of
coverages and more importantly, exclusions, provided for in the policy, but instead want to sell
the client products that they do not necessarily need. - Tendering Claims to Carriers, and dealing with improper denials from the carriers.
- Insurance disputes - including coverage issues, insurance company bad faith claims for
unreasonably denying your claim, and resolving insurance issues when multiple parties or
insurance policies are involved - Monitoring claims and acting as Cumis Counsel - we regular monitor claim to ensure that
clients are being properly defended by carrier retained defense counsel, who oftentimes are
simply employees of the insurance company.
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BARRON & ASSOCIATES
1600 South Main Plaza, Suite 195
Walnut Creek, CA 94596
edb@barronlawoffice.com
P: (925) 937-4400
F: (925) 937-4450
1600 South Main Plaza, Suite 195
Walnut Creek, CA 94596
edb@barronlawoffice.com
P: (925) 937-4400
F: (925) 937-4450
These materials have been prepared by Barron & Associates for informational purposes only and are not legal advice. You should not act upon this information without seeking professional legal counsel. © Copyright 2011 Barron & Associates. All rights reserved. |
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AFTER THE FIRE: DEALING WITH YOUR INSURANCE COMPANY
Ten tips for homeowners who have been burned out
Wildfires are an increasing fear for homeowners in the West, particularly in California. People are
moving into risky areas and building homes on steep, brushy lots that are hard to protect. Ironically,
years of now-controversial fire management policy—which dictated that all fires were to be
suppressed—have resulted in a dangerous build-up of dead growth and underbrush, creating a
stack of fuel waiting for a spark. Add drought conditions, high winds, and low humidity, and all the
pieces are in place for a devastating catastrophe, like the fires in Southern California in October
2007.
Homeowners whose property has been damaged or destroyed will look to their insurance for relief.
Here are ten tips to keep in mind as you interact with your insurance company and its adjustors.
1. Get an Advance
If you were forced to evacuate, you might not have grabbed basic necessities—from a toothbrush to
clothes that you can wear to work. Your homeowner’s policy will cover the cost to replace these
items, but you don't have to file a claim and have it approved before heading to a department store to
purchase that suit you need for the office.
Instead, ask your company for an advance against your eventual claim. Ask a representative of the
company to bring a check to you wherever you’re staying, be it a hotel or a friend’s house. Save the
receipts for everything you buy, and be reasonable—if you lost khakis and a blazer, don’t head for
the Armani suits (you’ll end up paying the difference).
Check your policy -- even if you have "replacement" coverage (see Tip Six, below), you may have only
"actual cash value" for the contents of your home. A good agent will alert you to this and suggest
buying an endorsement so that your contents will be covered under a replacement policy, too.
2. Secure Your Property
Every policy requires you to take reasonable steps to minimize the harm to your property. In
legalese, this is known as your duty to “mitigate damages ,” and it includes such common-sense
steps as covering a section of your leaky roof with a plastic tarp until you can get it repaired, or
turning off the water when you discover a burst pipe. Depending on your situation, there may be
steps you can take after the fire is gone (your insurance company will pay these costs when you
make your claim):
Stop the smoldering. If the structure is still burning, contact the fire department to do what’s
necessary to prevent a flare-up.
Board it up. To prevent vandalism, board up your property and consider erecting a portable chain-
link fence to keep people away.
Be vigilant. Depending on the situation, you may need to keep a close eye on your property, checking
for new problems and making sure it hasn’t been disturbed.
3. File Your Claim Right Away
All policies require homeowners to report their loss as soon as is reasonably possible. You can
comply by calling your agent or sending an email. After that, you’ll be asked to submit a “proof of
loss claim,” in which you itemize your losses and list the value. If you delay notifying your company,
you may find yourself far down on the list when it comes time for the company to send an adjustor to
deal with your claim.
Get a Three-Ring Binder
When you deal with an insurance company over a major claim, you need to be organized. Calls,
emails, and letters can be crucial pieces of evidence if you and the company later differ as to who
said what to whom, and when. Take notes during every phone call, and organize your
communication in one section of the binder. Use other sections to store estimates, invoices, bills,
permits, and contracts for repairs. Never part with an original document; if your insurance company
wants to see an invoice or bid, make them a copy.
4. Make Sure the Insurance Company Acts Promptly
Fortunately, insurance companies are required to handle claims in a timely manner. In California,
they must send you a “notice of intentions” within 30 days of receiving your claim. If there’s no
dispute , you’re entitled to payment within that time, too. If you haven’t heard from your company and
you feel that they are unnecessarily dragging their heels, write to them (and sconsider sending a
copy to your state’s Department of Insurance). Insurance companies are less likely to string you
along when they’re in the midst of a disaster and know that all eyes are on them.
5. Keep Track of Your Living Expenses
Your policy will include a “loss of use” clause, which entitles you to reimbursement for living
expenses while you’re out of your home. However, you’re entitled only to additional living expenses—
that is, the difference between what it costs you to live on a daily basis at home and what it costs
now. For example, if you ate most meals at home before the fire and regularly spent $300 a week on
groceries, but are now spending $400 per week at restaurants, you can claim only $100.
When it comes to the motel bill, however, you can probably claim the whole thing. Even though you
can't live at home, you still have to pay your mortgage , taxes, and insurance. (See Tip Seven, below,
for more on paying your insurance premiums.)
Living With Friends or Family?
Many evacuees stay with friends or family, often on an extended basis. Even though you probably
aren't paying your hosts, you may be able to convince your insurance company to reimburse them
for the cost of putting you up. Ask your hosts to itemize the value of the room and services they’re
providing. Be reasonable and specific, and be prepared to negotiate with your insurance company
over this one. It might help to point out how much more the company would have had to shell out if
you chose to stay in a hotel and eat in a restaurant.
6. Get the Right Repair Estimates
Your homeowner’s policy will enable you to rebuild or repair your home. If you have an “actual cash
value” policy, you’re entitled to the amount of money it will take to return your home or its contents to
its market value before the fire. If you have “replacement” coverage, you’re entitled to the amount it
would take to replace the home or contents, regardless of the value of what you lost.
You Don’t Have to Rebuild
If you have replacement coverage, that doesn't mean you have to actually rebuild your home on the
same site. You can rebuild at a different location (if it costs more to build in Hawaii, you pay the
difference). If you decide to use the money for something else, such as starting your own business
or creating a retirement fund, your "replacement" policy will change to an "actual cash value" policy
(in broad terms, you'll get about 15% less).
For either type of coverage, you’ll need an estimate of the prior market value or the cost to replace
the damaged items or parts. Your insurance company will offer its own estimates, supplied by its
own adjustors. Because these adjustors work for the insurance company, it’s in their best interests
to get you to quickly accept a modest settlement. You’re under no obligation to accept these
numbers.
Instead, hire an independent estimator who will work for (and be paid by) you. Choose a contractor
who is experienced not only in building, but in how insurance companies respond to typical issues.
Be sure that you and the insurance company agree on the scope of work to be done if you’re
replacing or repairing. If you’re dealing with an actual cash value policy, don’t accept the insurance
company’s number unless you are satisfied that it’s a fair estimate of what a buyer would have paid
for your home just before the disaster.
7. Keep Paying Those Premiums
It may seem ridiculous to continue paying homeowner's insurance premiums to protect property that’
s severely damaged or gone, but stopping your payments can be a big mistake. Remember, your
homeowner’s policy includes liability protection for you and your household, including your pets.
This may come in handy if, for example, your stressed-out dog chews up an expensive Oriental rug
while you're camped out at your brother-in-law's house.
If you’ll be staying somewhere for a while, call your agent and ask for that address to be added as a
second location for purposes of liability coverage. If your home has been destroyed, ask your
insurance company to cut back on the part of the policy that covers the structure, and ask for a
corresponding reduction in premiums.
8. It’s Not Over Until You Say So
Your insurance company will want to close your claim as soon as possible. The longer it’s open, the
greater the chance that you’ll discover and file a claim for an additional loss. But homeowners often
discover losses that they initially overlooked, perhaps because of the stress of living through the
disaster. Protect against this possibility by waiting at least a few months before allowing your claim
to be closed.
Don’t be surprised if you receive a check from the insurance company saying that you’re accepting
the payment “in full release of” your claim. Don’t believe it, and don’t let it stand. Cross-out that
language (and initial it), then send a letter to the company, politely thanking them for the check and
telling them that you do not consider the matter to be closed.
9. Consider Hiring a Public Adjustor
Despite hiring your own estimator or contractor, you may not be able to reach an acceptable
settlement of your claim. In that event, consider hiring a “public adjustor": an independent, licensed
adjustor whom you pay to negotiate with the insurance company on your behalf. You’ll typically pay
the adjustor between nine and fifteen percent of what you recover from the insurance company, but
that can be well worth it if the adjustor succeeds in significantly increasing the settlement. To find a
public adjustor, start with the National Association of Public Insurance Adjusters, the national
organization that regulates public adjusters, at www.napia.com.
10. Don’t Worry About Losing Your Insurance
You probably know that drivers who rack up an accident or two might face higher car insurance
premiums or even lose their coverage. This isn’t a realistic fear for homeowners who file legitimate
damage claims following a disaster such as a fire. As long as you’re not what the industry calls a
“habitual claimant,” and there’s no proof of fraud in connection with your claim, you won’t see an
increase in your premiums or lose your coverage.
© 2008 Nolo
AFTER THE FIRE: DEALING WITH YOUR INSURANCE COMPANY
Ten tips for homeowners who have been burned out
Wildfires are an increasing fear for homeowners in the West, particularly in California. People are
moving into risky areas and building homes on steep, brushy lots that are hard to protect. Ironically,
years of now-controversial fire management policy—which dictated that all fires were to be
suppressed—have resulted in a dangerous build-up of dead growth and underbrush, creating a
stack of fuel waiting for a spark. Add drought conditions, high winds, and low humidity, and all the
pieces are in place for a devastating catastrophe, like the fires in Southern California in October
2007.
Homeowners whose property has been damaged or destroyed will look to their insurance for relief.
Here are ten tips to keep in mind as you interact with your insurance company and its adjustors.
1. Get an Advance
If you were forced to evacuate, you might not have grabbed basic necessities—from a toothbrush to
clothes that you can wear to work. Your homeowner’s policy will cover the cost to replace these
items, but you don't have to file a claim and have it approved before heading to a department store to
purchase that suit you need for the office.
Instead, ask your company for an advance against your eventual claim. Ask a representative of the
company to bring a check to you wherever you’re staying, be it a hotel or a friend’s house. Save the
receipts for everything you buy, and be reasonable—if you lost khakis and a blazer, don’t head for
the Armani suits (you’ll end up paying the difference).
Check your policy -- even if you have "replacement" coverage (see Tip Six, below), you may have only
"actual cash value" for the contents of your home. A good agent will alert you to this and suggest
buying an endorsement so that your contents will be covered under a replacement policy, too.
2. Secure Your Property
Every policy requires you to take reasonable steps to minimize the harm to your property. In
legalese, this is known as your duty to “mitigate damages ,” and it includes such common-sense
steps as covering a section of your leaky roof with a plastic tarp until you can get it repaired, or
turning off the water when you discover a burst pipe. Depending on your situation, there may be
steps you can take after the fire is gone (your insurance company will pay these costs when you
make your claim):
Stop the smoldering. If the structure is still burning, contact the fire department to do what’s
necessary to prevent a flare-up.
Board it up. To prevent vandalism, board up your property and consider erecting a portable chain-
link fence to keep people away.
Be vigilant. Depending on the situation, you may need to keep a close eye on your property, checking
for new problems and making sure it hasn’t been disturbed.
3. File Your Claim Right Away
All policies require homeowners to report their loss as soon as is reasonably possible. You can
comply by calling your agent or sending an email. After that, you’ll be asked to submit a “proof of
loss claim,” in which you itemize your losses and list the value. If you delay notifying your company,
you may find yourself far down on the list when it comes time for the company to send an adjustor to
deal with your claim.
Get a Three-Ring Binder
When you deal with an insurance company over a major claim, you need to be organized. Calls,
emails, and letters can be crucial pieces of evidence if you and the company later differ as to who
said what to whom, and when. Take notes during every phone call, and organize your
communication in one section of the binder. Use other sections to store estimates, invoices, bills,
permits, and contracts for repairs. Never part with an original document; if your insurance company
wants to see an invoice or bid, make them a copy.
4. Make Sure the Insurance Company Acts Promptly
Fortunately, insurance companies are required to handle claims in a timely manner. In California,
they must send you a “notice of intentions” within 30 days of receiving your claim. If there’s no
dispute , you’re entitled to payment within that time, too. If you haven’t heard from your company and
you feel that they are unnecessarily dragging their heels, write to them (and sconsider sending a
copy to your state’s Department of Insurance). Insurance companies are less likely to string you
along when they’re in the midst of a disaster and know that all eyes are on them.
5. Keep Track of Your Living Expenses
Your policy will include a “loss of use” clause, which entitles you to reimbursement for living
expenses while you’re out of your home. However, you’re entitled only to additional living expenses—
that is, the difference between what it costs you to live on a daily basis at home and what it costs
now. For example, if you ate most meals at home before the fire and regularly spent $300 a week on
groceries, but are now spending $400 per week at restaurants, you can claim only $100.
When it comes to the motel bill, however, you can probably claim the whole thing. Even though you
can't live at home, you still have to pay your mortgage , taxes, and insurance. (See Tip Seven, below,
for more on paying your insurance premiums.)
Living With Friends or Family?
Many evacuees stay with friends or family, often on an extended basis. Even though you probably
aren't paying your hosts, you may be able to convince your insurance company to reimburse them
for the cost of putting you up. Ask your hosts to itemize the value of the room and services they’re
providing. Be reasonable and specific, and be prepared to negotiate with your insurance company
over this one. It might help to point out how much more the company would have had to shell out if
you chose to stay in a hotel and eat in a restaurant.
6. Get the Right Repair Estimates
Your homeowner’s policy will enable you to rebuild or repair your home. If you have an “actual cash
value” policy, you’re entitled to the amount of money it will take to return your home or its contents to
its market value before the fire. If you have “replacement” coverage, you’re entitled to the amount it
would take to replace the home or contents, regardless of the value of what you lost.
You Don’t Have to Rebuild
If you have replacement coverage, that doesn't mean you have to actually rebuild your home on the
same site. You can rebuild at a different location (if it costs more to build in Hawaii, you pay the
difference). If you decide to use the money for something else, such as starting your own business
or creating a retirement fund, your "replacement" policy will change to an "actual cash value" policy
(in broad terms, you'll get about 15% less).
For either type of coverage, you’ll need an estimate of the prior market value or the cost to replace
the damaged items or parts. Your insurance company will offer its own estimates, supplied by its
own adjustors. Because these adjustors work for the insurance company, it’s in their best interests
to get you to quickly accept a modest settlement. You’re under no obligation to accept these
numbers.
Instead, hire an independent estimator who will work for (and be paid by) you. Choose a contractor
who is experienced not only in building, but in how insurance companies respond to typical issues.
Be sure that you and the insurance company agree on the scope of work to be done if you’re
replacing or repairing. If you’re dealing with an actual cash value policy, don’t accept the insurance
company’s number unless you are satisfied that it’s a fair estimate of what a buyer would have paid
for your home just before the disaster.
7. Keep Paying Those Premiums
It may seem ridiculous to continue paying homeowner's insurance premiums to protect property that’
s severely damaged or gone, but stopping your payments can be a big mistake. Remember, your
homeowner’s policy includes liability protection for you and your household, including your pets.
This may come in handy if, for example, your stressed-out dog chews up an expensive Oriental rug
while you're camped out at your brother-in-law's house.
If you’ll be staying somewhere for a while, call your agent and ask for that address to be added as a
second location for purposes of liability coverage. If your home has been destroyed, ask your
insurance company to cut back on the part of the policy that covers the structure, and ask for a
corresponding reduction in premiums.
8. It’s Not Over Until You Say So
Your insurance company will want to close your claim as soon as possible. The longer it’s open, the
greater the chance that you’ll discover and file a claim for an additional loss. But homeowners often
discover losses that they initially overlooked, perhaps because of the stress of living through the
disaster. Protect against this possibility by waiting at least a few months before allowing your claim
to be closed.
Don’t be surprised if you receive a check from the insurance company saying that you’re accepting
the payment “in full release of” your claim. Don’t believe it, and don’t let it stand. Cross-out that
language (and initial it), then send a letter to the company, politely thanking them for the check and
telling them that you do not consider the matter to be closed.
9. Consider Hiring a Public Adjustor
Despite hiring your own estimator or contractor, you may not be able to reach an acceptable
settlement of your claim. In that event, consider hiring a “public adjustor": an independent, licensed
adjustor whom you pay to negotiate with the insurance company on your behalf. You’ll typically pay
the adjustor between nine and fifteen percent of what you recover from the insurance company, but
that can be well worth it if the adjustor succeeds in significantly increasing the settlement. To find a
public adjustor, start with the National Association of Public Insurance Adjusters, the national
organization that regulates public adjusters, at www.napia.com.
10. Don’t Worry About Losing Your Insurance
You probably know that drivers who rack up an accident or two might face higher car insurance
premiums or even lose their coverage. This isn’t a realistic fear for homeowners who file legitimate
damage claims following a disaster such as a fire. As long as you’re not what the industry calls a
“habitual claimant,” and there’s no proof of fraud in connection with your claim, you won’t see an
increase in your premiums or lose your coverage.
© 2008 Nolo