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When Mother Nature hands you a catastrophic insurance claim

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“Over the past two years, Mother Nature has revealed her fury, resulting in loss of property of terrifying historic amounts,” observes veteran of some of the most destructive fires in the western United States, San Advocate. Francisco Dan Veroff, adding:

“And many insurance companies – trustworthy to help rebuild families – does exactly the opposite, with adjusters who massively underpay valid claims. Unfortunately, the lack of knowledge of businesses and owners about the claims process and the actions they should take before the loss – amplified the evil.

He described “the worst mistakes a claimant can make when facing what we call a CAT – catastrophic insurance claim.”

Consequences: They could distort your rights under your insurance policy.

Insurance companies bring in an army of CAT “storm chasers” who almost always come from out of state. These adjusters seldom have any specialized knowledge or training in creating accurate repair cost estimates, or the state law as it applies to your loss.

They often tell claimants that they have less insurance coverage than their policy provides.

Please, don’t act on what they tell you without consulting a lawyer! (More on what kind of lawyer in a moment, and for my readers, this is really important!)

Consequences: You will be underpaid!

In a typical case, a CAT adjuster pulls out an estimator that is in the pocket of the insurance company. They write a “quick and dirty estimate” in their car and write you a check to cover temporary rebuilding and living expenses.

This is where things get sticky.

Usually an insured will meet with a contractor who will prepare a quote for the repairs, but it can take months for it to arrive and will almost always be much higher than what the expert has already paid.

If you had a rebuild estimate before the loss, you could have reviewed it with the claims adjuster. Now you are starting from scratch and your limited payment for temporary housing has gone down even further. Additionally, your claim has likely been reassigned to a second or third adjuster, as CAT adjusters are typically only deployed for a short time.

You need to quickly learn what the claim is really worth. Never rely on the insurance company to do this and always expect the initial estimate to be well below what it should be. You have a duty to yourself to question what the CAT claims adjuster and those who follow are telling you on the scene.

Under extreme pressure and worry, accepting what the expert tells you can be a costly mistake.

Consequences: You will be at the mercy of an expert who will likely undervalue the claim.

After disasters, it’s not uncommon for homeowners to want to make changes to their home’s original design during the rebuilding process. The carrier is obligated to pay the cost of rebuilding your house as it was before the loss and not a different house. Yes, you can rebuild something different, but the rebuild cost sets your maximum insurance budget. Only get proof of the house you want to build now – with modifications and upgrades and not what you had before – helps the expert to stick to his low estimate, to dispute your figures and thus to underpay the debt.

So you have to answer this question, “How much will it cost to replace or rebuild the house we had, not the house we would like to build now?”

If you get that estimate from a contractor ahead of time – before a potential loss occurs – you’ll be ahead. You can also use the estimate to make sure you have adequate insurance coverage. After a disaster, it is important to get a good estimate of replacement costs as soon as possible. At the same time as you get the replacement quote, ask the contractor to prepare a quote for the house you would like. As to build. As long as the cost matches the amount of your insurance coverage, you should be fine.

Consequences: Unless you do this well in advance of a potential loss, you will need to create it from memory, from photos you might be able to find, receipts, discussions with family members. Who can remember all the books, the dresses and costumes, the details? Without proof, you will not be paid.

Also, building up this inventory in advance makes it possible to increase the amount of guarantees for movable property so as not to be underinsured. Save the list to the cloud.

Consequences: Failure of key deadlines and loss of your rights. Getting involved in litigation for years when it could have taken months. Let the matter turn badly.

Insurance law is unique. If a lawyer says to you, “Oh, I know about personal injury, divorce, taxes – whatever – so I can handle your insurance claim,” RUN! Lawyers inexperienced in property insurance law lose cases because of their lack of knowledge.

So, look for a lawyer who focuses primarily on property insurance work.

Consequences: In some states, if the company can prove that you lied, they can deny the entire claim. Lie about a dollar and you lose everything!

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