Posted On: April 18, 2006, 5:22 pm CDT

Posted By: Underwriter

Let me preface with this -- I do work for a major insurance carrier. I am not in claims, but as an underwriter I see policies and their respective claims every single day.

Insurance companies aren't out there actively screwing customers. They aren't looking for ways to avoid paying claims. The mantra is "pay what you owe -- not a penny more and not a penny less." Customers pay for coverages. War is not covered (ever). Nuclear stuff is not covered (ever). Floods are not covered (ever). Folks who didn't buy flood coverage are victims of their own stupidity or cheapness. They are not victims of evil insurance companies.

Read your contract. Some things are paid at ACV (actual cash value), which means (for example) if your 25 year old vacuum cleaner is destroyed, you don't get money to buy a brand new vacuum. You are indemnified, which means you get the cash equivalent of a 25 year old vacuum. This is usually the source of the "insurers wouldn't pay me what they owe me" complaints. Folks simply don't read the contract to understand what they're getting.

If you didn't pay for the coverage (i.e. it's not listed on your coverages doc and/or in the contract) you don't have coverage for it. All the screaming in the world won't get you the coverage, unless your independent agent has a great relationship with his/her underwriter (we do make exceptions on things...all you have to do is ask).

I've heard a lot of rumors about documents being forged or altered or companies just not paying out claims. However, I haven't seen a single shred of evidence. Most of the howling is from political types looking for re-election or some free air-time. You'll see indivudals say they were screwed this way or that way, but if you saw the other side of the coin (i.e. what I see every day), you'd probably find there is a good reason they didn't get what they thought they should get. For example, I saw a one of our customers complaining online that my company had refused to pay for a substantial claim. He included his name, so I looked him up, just in case he was right.

What I found in the claim file was that he couldn't provde he'd owned any of the property he claimed. He couldn't find anyone to substantiate his claims. He had lied about the circumstances of the loss. He had contradicted himself in at least 8 different parts of his statement. We denied his claim, and rightfully so. With that said, the last letter that went to him said, "If you can provide the requested evidence to substantiate your claim, we would be happy to re-open your claim and pay for your loss."

I can tell you, in absolute and total honesty, that I have never seen a claim where the adjuster underpaid a claim. I see hundreds of claims per year across all P&C product lines (home, auto, fire, umbrella, rec vehicle, motorcycle and watercraft); it has been my experience that adjusters tend to pay more than what is due.

Adjusters are human (despite popluar belief). I've consoled them after they've had to deal with a particularly disturbing claim. They generally get into the claims business (and believe me, not everyone can adjust claims) because they have a genuine desire to work with people (and after all the nastiness they get from the public, there's a high turnover rate) and to do good things.

Things I can tell you about the different companies. You get what you pay for -- i.e. if you're the type of person who shops for the lowest possible price, you're going to get budget service as well. Go to an independent agent and ask them about the type of relationship they have with their companies. You'll probably hear about three kinds.

1 - regional carriers (tend to be smaller). Pros - they know well the areas they service, so premiums tend to start off lower. They also often offer the best service because of the "we're small/hometown" relationship. Cons - they don't have deep pockets, so large losses like Katrina will send them into a nose-dive. They're more likely to have knee-jerk rate increases and non-renewal actions to preserve profitability.

2 - Large national carriers (these are the folks you see commercials for all the time. Pros - they have deep pockets and wide exposures, which means they are less likely to jack up your rates every time there is a hail storm. Cons - you won't necessarily get very good service from them, because your policy doesn't mean as much to them.

3 - Other carriers that are different for whatever reason. There are some large carriers that provide great service. There are some regionals that won't give you the time of day if there's a claim. There are some carriers you can't get with unless you below to an organization (government employees, military etc,).

I'd recommend that you shop based upon service, instead of price. Find yourself an excellent local, independent agent and make yourself a valuable customer. If you constantly shop your insurance, hop from company to company, you have little (and what I mean by little is zero) bargaining power.

Sorry for the long post, but I get so very tired of the "insurers are Nazi's" stuff. It isn't a conspiracy. Cooperate with your adjuster, provide what you're asked for (i.e. proof of ownership) and you'll be indemnified for what you're owed.