As public adjusters, we run into situations where the insurance company moves quickly to clean up a damaged house or office after an event such as a fire or a flood. The insurance company adjuster thinks it's helpful to go in and immediately remove all the damaged furniture and personal belongings – even the fixtures.
This is NOT helpful to your claim. And in the overall scheme of the claim process, it will slow things down considerably.
First of all, you will want a complete inspection “take-off” of the building damage and inventory of the personal property. If the insurance company adjuster hires a remediation team to strip out the fixtures “full gut”, you will lose all evidence of those custom countertops, the hand-crafted trim, and the grasscloth wallpaper that was specially ordered by your interior designer.
The same rule applies to your personal property. Don’t throw away that sofa – it was purchased from a high-end decorator and was made with imported fabric. If you don’t get a scope and price agreement with the insurance company for this unique piece of furniture, you may recover only the value of a department store model.
Think about it this way: after a fender-bender, you don’t take the dents out of your car until you know how much money you’re getting.
Preserve the evidence and get quotes for EVERYTHING. Only then should you make decisions about what gets tossed in the dumpster.
If you have a public adjuster – and you should – let them prioritize the buckets of coverage you will use. Do you have enough insurance to pay a restoration company to “gut” the entire house and then rebuild? They might charge two to three times the amount another contractor will charge. That payment gets taken out of your coverage, which is a limited pool of funds. If a huge chunk gets gobbled up by remediation – or worse, to send old and unwanted clothing to the dry cleaners – it can’t be used in other aspects of the process. After your coverage runs out, you’re personally on the hook for related expenses. These are issues where you’ll want to get advice from your public adjuster as one wrong decision could be detrimental to the claim.
You’re not properly managing the claim process unless you know – and endorse – everything. Every single activity and cost associated with your policy needs to be understood and signed off on by you.
If you’re not effectively managing your claim, then your claim is managing you. Don’t let the process run things for you – slow it down. Halt all activity until you have a moment to get informed about everything that’s happening. Get bids and make informed decisions. Once you have pulled in the reins, you can quickly choose the steps you want to take.
Here are some tips to help you manage the claim process the right way:
Know Your Coverage Limits – Remember: this is a zero-sum game. The coverage limits in your policy may look adequate, but they can add up very quickly. You are personally responsible for all costs in excess of that amount. And keep in mind that every dollar you spend on one item leaves one dollar less for another, perhaps more helpful, ancillary service.
Do Your Due Diligence – Talk to your entire professional services team for guidance on what you need and how to proceed. This team includes your personal attorney, your insurance agent, and your accountant – anyone who has a professional interest in your well-being. Get recommendations on what services you need and who to hire. This is a good time to get a list of qualified public adjusters, and to start vetting them to determine the right fit for you.
Understand the Costs – Before anyone else starts spending your money, ask questions about the services they’re providing. Insurance agents and their adjusters often contract with remediation services to clean house very early on in the process. This expedites the claim for them but can run counter to your own claim interests. Remediation services can be very expensive – did the insurance adjuster compare multiple bids? The remediation team isn’t worried about making a list of customized cabinets and high-end furniture, which you will need to optimize your own claim. They just want to gut the house and move on to their next job. Before you know it, your entire coverage limit has been gobbled up by an expensive remediation company. And only after the fact are you realizing that they have undermined your ability to itemize lost personal property.
Itemize and Inventory – We touched on this above. Don’t let anybody take anything out of your property until you have compiled a comprehensive list of all personal property. This is where a public adjuster can be invaluable. If you spent $10K on a designer couch, you want to be able to demonstrate that in your claim. You can’t do that if it hits the dumpster before you arrive (at which point the insurance company will offer you $2k for it). Do you have custom cabinets? You must itemize them or risk losing out on the claim. Granite countertops are pricier than Formica – that needs to be accounted for before they are hauled to the dump.
Mitigate and Protect as Warranted – As the insured, you do have a responsibility to mitigate and protect your property. So, don’t let your “slow it down” mantra result in a 6-month work freeze. We warned you against runaway clean ups, but sometimes it’s appropriate for remediation and other construction specialists to do demolition right away. If an area won’t dry on its own, that area should receive priority demo attention before it buckles or collapses. As long as the remediation team runs it past you and your public adjuster, it’s ok to let them proceed with demo that mitigates against further damage.
Recognize a “Dead Loss” – Sometimes a property is a total loss and a full demo is in order. You still need to protect your interests in this case. You or your public adjuster can get bids to demo the entire property if this is necessary.
If your house or business has a fire or some other catastrophe befalls it, you will be cast into a claims system that can rapidly spin beyond your control. Managing your claim the right way means slowing down the process to carefully choose the steps you want to take. This will allow you and your public adjuster to document and strategically use the insurance funds coming your way. By understanding the process and all related costs, you are more likely to get the best return for your coverage.
And remember: If you’re not properly managing your claim, then your claim is managing you.