16 Sep Insurance Talk — Working on Your Fire Loss Insurance Claim
Rex and Cheri have the answers. Listen here.
Insurance Talk — Working on Your Fire Loss Insurance Claim
Cheri Martinen – Welcome to Insurance Talk with Cheri Martinen and Rex Lesueur, we’re the father-daughter team from beautiful Bancorp Insurance in Central Oregon. And today we’re coming to you from a smoky town. Our beautiful state of Oregon has been on fire now for most of the week. And we’re here to talk to you about what that means for you, especially if you may be affected by the fires.
Oregon Wildfires 2020
Rex Lesueur – This is really a sad time for the whole state where I’ve been an Oregonian all my life, and I’ve never seen anything like this. 500,000 people evacuated for fire from their homes, that’s more than 10% of the population of the whole state. It is very scary.
CM – I think everybody knows somebody that’s been evacuated.
RL – And we’ve unfortunately had a couple of total losses from our customers already. So we want to talk about total loss and talk about what to do in the event that your home has been destroyed by fire. Typically, we have maybe one a year with all the people we insure, but now there are going to be thousands of them. I have been watching videos of Detroit Lake and down in Talent and Phoenix, and all over. It’s just amazingly devastating. But let’s talk about insurance with this, not to dwell on all of that, but let’s talk about what you’re going to need to do and how you go about working on a claim with an insurance company after you’ve had a massive fire.
CM – This is why you buy insurance.
Fire Loss Insurance Coverage
RL – Right, this is why you buy insurance. So let’s make sure you get the best and all you can out of your insurance policy. First thing’s first, one of the things that people don’t necessarily recognize when they think about insurance is that the insurance company is insuring the value of your house. Just the value of it. They’re going to provide you, should something happen to that house, with the funds to replace it. They are not going to show up with a crew, clean the mess up, build you a new house, and go buy you everything that’s in it. That is going to be your responsibility.
To get there, they have to provide you the money. For them to provide you the money, you’ve got to provide them with the proper documentation so that they can justify cutting you a check.
Let’s talk about just the home. If you have your home insured for $500,000 and it can be rebuilt for $400,000, the insurance company is not going to just cut you a check for $500,000. You have to be able to document what you have. And that’s why having pictures is good, and there are places to get records with square footage and stuff like that from the county. You may end up having to get all kinds of information for the insurance company.
The process basically is that you call the insurance company, or you call your agent and your agent turns it into the insurance company. You get a call from somebody in a call center somewhere. Most likely the first person you talk to is not going to be the person you’re going to talk to throughout the whole process. You are going to be talking to the claim intake person, and they are very nice and they’re going to be very sad for you. They’re going to tell you what to do and so on.
At that point, that’s when you need to start doing something that I recommend to everybody who’s having a major claim. I actually recommend it to anybody that has any kind of claim that’s more than just a fender bender. It’s simple: you need to start taking notes. You need to create a file, you need to get a notepad of some kind, and you start taking notes. When you call into the intake adjuster at the insurance company, you’re going to tell them your name and your insurance policy number. And by the way, you might not have that on you, they may have to find that on an alpha search.
Start Here — Take Notes, Document Everything
You’re going to want to start taking notes. You’re going to write that you’re talking to this individual, you called her at this time, take down the claim number that they give you. Ask things like, “Will you pay for my hotel room?” And the answer is yes, they will. So go get a hotel room, go start looking for a place to live. You’re responsible for finding this. They are in a situation, especially when there are hundreds of claims in a given area, where they don’t have the resources to be going out looking for apartments or hotel rooms. You’re going to have to do it. Just take it upon yourself to do it, and don’t be shy about asking them for an advance.
Not everybody walks around with a $5,000 or $6,000 credit limit on their Visa card. If they have one, how much money’s in the bank? You can actually say, “Hey, I’m in trouble here. I need some money.” They can and they will send you money. Ask them to transfer it to your account electronically so you don’t have to wait two weeks while a check gets processed at the insurance company.
I’ve been working with insurance companies for 40 years, I know that after the claims person makes the decision to go ahead and pay the claim, they put the process into the computer, they hit enter, and that goes to another person someplace who creates the check. That person then sends it to somebody else who prints the check. And it goes to another department where it’s put in an envelope and that takes three or four days. And then they put it in the mail and that takes three or four days to get to you.
CM – And then is it delivered to your home? If it is, then we don’t want it to go there.
RL – We don’t want it to go there because your home is not there. The mailbox that was on the front stoop isn’t there anymore. Where’s the post office going to deliver it? So no, definitely ask them to transfer the money to you directly.
CM – And then keep a record of how much or how long you were at that hotel. Or if you found an apartment to stay in for your family, keep track of all of those expenses. The rent, and maybe you had to buy new pillows, or you had to buy new shoes. You have to buy all that stuff.
Ask For Money Up Front
RL – So go out and buy it, keep your receipts, don’t be afraid to ask them for a nice amount of money up front to get that stuff set up so that you can get yourself nested, get yourself comfortable. And then you can start working on the rest of the process. Remember to keep notes, write it down, keep a running log.
After you talk to the first person at the company, they may send out an adjuster, they call them disaster adjusters. What would happen in this case is the insurance company would pull in. There are actual crews, there are people who do this as a part-time job. They’re usually experienced insurance adjusters. A lot of them are retired and they want to work part-time. When they get the call, they drag their motorhome to wherever the claim is, and then they start working for the company adjusting claims.
Their job, once it’s documented that your home is gone, is to start cutting you checks. They usually have checks in their possession and can start giving you money. So that’s the initial phase, getting yourself set up so that you can now start working on the rest of it. Remember, you’re going to still want to go to your job, hopefully your job did not disappear in this fire. Because if that happened, that’s a whole other story and that’s even scarier.
You’re going to start wanting to talk about the process of getting another home. If you don’t want to rebuild, the insurance company is only obligated to give you the actual cash value of the house, which means new less depreciation. If you’re going to rebuild, they’re going to give you the actual cash value. And when you get done rebuilding, they’re going to give you the rest. So you have to go out and find a contractor to clean up the mess.
CM – And that’s the very first step. I think that one, I’ve heard, can be more expensive than people realize.
RL – Oh yeah, it can cost $25,000 to have somebody show up with a half a dozen dumpsters. Even if we’re just talking about a concrete ring with ashes in it to scrape up the mess and get started. Then you have to go find a builder to build you a new home. And all of a sudden, all the builders are busy.
CM – And the builders have to be able to buy wood and other materials. And all those materials become more expensive because everyone’s wanting them.
RL – And fortunately, we live in a country where building materials are readily prevalent, and a thousand homes by the way is not a lot in builder’s terms. But the thing is, where are they? They’re busy already building new homes. And all of a sudden, there’s going to be an influx of people who are going to be wanting to build new homes. So you’re going to have to make the contract, you’re going to have to go find the people to do it.
They’re going to have to come out to your lot and they’re going to have to build it. They’re going to have to get engineered drawings, they’re going to have to get permits, there are going to be all kinds of things that are going to delay the construction of this home. Typically the insurance company is obligated to pay for your alternative living arrangement, the hotel or the apartment or rental house, for a year. And that’s it. So you need to be getting on this.
I know you’re going to be depressed, that you’re going to be upset, but there’s no time to waste. You’ve got to start calling around and start getting somebody to come out and do it. Meanwhile, you’re going to take notes from everybody.
CM – That small little folder is going to look like a big file.
Be Diligent With Your Note Taking
RL – It’s going to be a really big file real quick. What can happen is, not just with the insurance company, but let’s say the builder comes out and says, “Here’s my plan. Here’s my bid. I’ll build you a house for $500,000.” The next thing you know, he’s coming back to you and saying, “Well, we messed up, we didn’t add that, I have to add $20,000 to that.” But if you have notes and you have it in writing, you can say, “Sorry, you told me you’d build this house for this amount. And I’m not going to pay you extra for your error in estimating.”
The real key to making this work is diligence. Diligence with your notes, diligence with working with the contractors, and diligence just working on it every day. It’s going to be one of the hardest things you ever have done in your life.
My wife and I built a home almost 20 years ago. We were fortunate and we had a great lot and we wanted to build a nice home. We took the old home off and built a new home, had a contractor come out and contracted with it. It took us a year and the process was all-encompassing. We didn’t do anything else that summer. We didn’t go on vacation that summer because we needed to be there. We literally spent a whole weekend going from lighting store to lighting store to find the right light fixtures. We spent a day at a plumbing supply store picking plumbing fixtures.
These are the kinds of things that the contractors want you to do. If you don’t, they’re going to pick it and who knows what you’re going to get. So these are the kinds of things that just drive you and it will keep you going. And it is going to be very difficult, be prepared, steady yourself for it, and just keep working and being very diligent with it.
CM – Do you want to go into if business owners have had any losses?
Fire Losses For Business Owners
RL – Business owners, it’s pretty much the same thing. One of the things you need to do, if you’re a business owner, is you need to check to make sure your policy has business interruption because not every policy does.
But basically it’s the same thing: you have to make a list of everything you need that you had. When you’re a homeowner, if you didn’t get a chance to take pictures of everything you had as you were running out of the house because there was a cop outside, knocking on the door, telling you to go, and if you weren’t going I’m sure he’s going to ask you for the name of your dentist because they want to be able to identify the body. That’s what Deschutes County does.
You are going to have to make a list of everything that you had. Let’s talk about the junk drawer in the kitchen. Everybody has a junk drawer, and there are spatulas and whisks and big, long forks for barbecuing, and it’s full of stuff. As matter of fact, I think my wife has two of them because she’s kind of a gadget hound. We need to replace every one of those. They’re not just going to say, “Here’s $500 for the kitchen stuff.” You have to tell them what you have. So you’re going to have to go to the store and go through and say, I had one of those. It costs $12. And I had one of those, that costs $13. I had a set of salt shakers, that’s $7, and I had a butter dish that was $8.50. And you’re going to have to go through and do that and just pick everything and give them a list.
When it comes to your clothes, you have to give them a list: you had fourteen shirts, six pairs of pants, twelve pairs of shoes. I look at my closet and I think there’s some shoes in there I haven’t worn in years. Especially the ones that I wore when I was working in the city. I had to wear shiny black shoes and have them shined all the time when I wore a suit, but I still have them. And when there is a wedding, I pull them out. And I wear them maybe once a year. So those are the kinds of things that you’re going to forget.
If you don’t have an inventory or a video inventory of what you had, you have to go to the store and do that. Or you go to your friend’s house or your parents’ house and say I’m going to go open your drawers and look at what you have to remind myself of what I had. I had three sets of bowls, I had all these nice pictures, and so on. It can be very hard to replace the personal pictures of your family that are on the wall. That’s going to be really hard, but at least you can get all the other things that you had and replace them. A new couch and bed and carpets.
I was just thinking about the bathroom, it’s universal. You go into someone’s bathroom, we open a drawer, there’s an open box of bandaids. Everybody has one, and the insurance company should be replacing that for you. Here’s something people forget: you open a refrigerator and even if it’s the last day before you go to your weekly trip to the grocery store, there’s still $150-$200 worth of stuff in there. All the condiments, that nice bottle of balsamic vinegar that’s on the door that you only used once a month, the A1 sauce that we actually haven’t used since Grandpa died. He loved A1 sauce, no one else does and we probably should get rid of it. But those are the kinds of things that you don’t get on proofs of loss.
CM – And if you’re like our family, we shop at Costco so you’ll start looking in the pantry and you’re like, oh yeah, I have 25 rolls of toilet paper.
RL – Those are the kinds of things that you need to make sure get on the proof of loss. And that’s the list that you’re going to make. You’re going to keep your notepad and talk about every adjuster, every builder, and you want to probably even keep that if you have to have a conversation with the county. Replacing the septic tank, all of these things that need to be done in a new construction situation if it was not destroyed or it was not reusable because of its age, which, by the way, isn’t covered. Those are the kinds of things that you need to make sure you’re keeping notes on and being really on top of.
As far as business, it’s pretty much the same thing. When it comes to the business income, which is one of the hardest claims to settle in business insurance, you’re going to have to give them a P and L. Make sure your books are up to date, make sure that they’re kept online someplace or have someplace where you can get to them. You’re going to have to document it.
Business income is about the income that the business made. And the whole point of it is to replace the income while you’re rebuilding so you don’t go broke because you have no income while you’re rebuilding. So that’s one of the things that you need to be really on top of, make sure you have your books in order and make sure you can get a copy of them. You might just have to do it from your tax return, in which typically something your tax preparer would have.
Rely on Your Insurance Agent for Fire Loss Claims
The next thing is to rely on your agent. If you have questions, pick up the phone and call them. I know when we have these kinds of situations, we always get calls. We always have that time when the people don’t understand. Insurance is one of the most complicated products you ever buy. It’s more complicated than a car. From a financial point of view it’s far more complicated than a mortgage. A mortgage, it says if you pay, we won’t kick you out of your house. Insurance is incredibly complex and there are rules about just about everything.
If you do get into a dispute with an insurance company, remember everything that the insurance company tells you has to be backed up in the policy. They can’t say, “Well, we just don’t do that.” You’d say, “But the policy says this.” They have to go by the policy because the policy is the contract that they have to live by. If you do have a claim, a major claim, one of the first things you do is you ask the insurance company for a certified copy of your policy. Now, why do I say certify? Because that is a full and complete copy that can go to court.
CM – And it’s pages and pages, and you’re going to want to print it double-sided and highlight the areas of importance after you’ve read it. And it’s going to take you days because it is dry.
RL – It is incredibly dry and you don’t know what to do with it. So get a policy, get a certified copy of the policy and then refer to it. And if they tell you something, then ask them on what page of the policy is that provision. Especially if they’re trying not to pay something. If they can’t find it or won’t tell you, then it doesn’t exist. Especially in a case where there are lots of claims, catastrophe situations where people are just trying to get these things done quickly, and they’re just moving forward and they’re not being real careful or conscious. You’ve got to get them to tell you why it’s not covered if that’s what they’re telling you, and where it is in the policy.
There again, this is when keeping notes is incredibly important because you might have one adjuster tell you what’s covered and another one not. And you need to make sure that, if you talked to the first adjuster on Tuesday and you wrote down his name, phone number, and the time you called, and he said it’s covered, and then on Friday, someone else is saying it’s not, you can say, “The guy I talked to on Tuesday said this, why are you saying that?” Which one is lying? You need to be really on top of it, and then rely on your agent, give him a call, because not everything’s going to be covered. It’s not a perfect world. There will be things that won’t be covered.
The best thing you can do though is be really diligent with your note taking. Proof of loss, I need to explain the end of that. In order for the insurance company to make the final payment, you have to sign a note saying this is my loss. And then they can cut the final check. That is a document that they can take to court if they ever need to. If you have exaggerated something, you can’t say, “I’m sorry. I don’t know why you paid me for that. I didn’t have one of those,” they’d say, “Well, it’s on your list and you signed it saying it was there.” So make sure your proof of loss is very accurate and just make it long. It’s going to be pages. It will be hundreds of pages long, hundreds of lines long in an Excel spreadsheet if you use one. I recommend that you do use one so that you can get as much value out of that insurance policy as you possibly can. Other than that, give your agent a call.
We’re Thinking Of You, Stay Safe
CM – This one was really informative. Hopefully, it helps everyone out there that might be going through this right now or anyone in the future that has a fire loss like this.
RL – And take care out there. Our heart breaks for everybody who lost their home or their business, there have been deaths of loved ones. And so we’re thinking of you. Stay safe.