Jeff Diamond is a very good insurance lawyer. I was in the audience of the Georgia Association of Public Insurance Adjusters (GAPIA) yesterday when Diamond gave a speech about how public adjusters can set a tone and attitude for avoiding claims disagreements which lead to lawsuits.
Diamond started off with some reasons property insurance claims turn into lawsuits:
· Breakdown in Communication
· Conflicting Agendas Between Insurer and Insured
· Breakdown in Trust
He also warned of and listed some consequences of a lawsuit and why they often should be avoided:
· Lack of Control–third parties will decide issues.
When talking about how to avoid lawsuits, Jeff coined a phrase I will certainly copy in my future speeches—"Attitude is Altitude." I thought it was a catchy phrase but did not understand what he meant. So, I raised my hand and asked him what he meant. He explained that it meant that a public adjuster should ‘have a winning attitude so the public adjuster obtains a fair settlement for the amount owed without going to a lawsuit. Public adjusters have to ethically and professionally interact with insurance company adjusters to obtain this recovery and work with rather than against them to obtain it. I agree.
To do this, Jeff explained that public adjusters should constantly be building a working relationship with insurance company adjusters. To do this, the public adjuster should establish open lines of communication, including:
- Methods of Communication. The “tone" of each communication is a significant determinative factor.
- Timeline of Expectations in Exchange of Information. Unreasonable time demands make for negative relationships. This can be demands by public adjusters or insurers. Similarly, sometimes carriers ask for numerous things and their demands are unreasonable as well.
- Avoid the "escalation cycle of demands and time constraints."
He emphasized that escalation of tension leading to breakdowns and then lawsuits are usually seen when:
· Tactics shift from light to heavy
· Issues proliferate
· Stereotyping and demonizing
· Good intentions give away to bad
· More parties get brought into the fray
In a "put yourself in the shoes of the person you are dealing with" comment, Diamond suggested that public adjusters should always remember that the insurance company adjuster is overworked, usually underpaid and often not respected enough for the work they do. They often work in a stressful and performance based environment reporting to supervisors with their own performance goals.
He stressed that public adjusters often may not get the "true story" from the client during the inventory process and have to work diligently to get all the facts accurately if the claim is to run smoothly. The critical aspect is thorough and accurate exhibiting and describing of the damaged property. He warns that the insurance adjusters are often taught to look for "gotchas" in the inventory.
It is very important to produce requested documents because if you do not, insurance adjusters often think you are hiding something. Today, insurance companies are increasingly asking for:
· Financial Documents
· Tax Returns
· Credit Card Statements
· Cell Phone Records
· Computer Hardware
Providing documents avoids lawsuits and withholding generates lawsuits. Providing wrong information invites a lawsuit. The advice was to be accurate and produce documents to the extent they exist if you want to avoid lawsuits.
On the other hand, policyholders will normally get upset about turning over everything private. They will ask the public adjuster if and why they have to turn these things over. Diamond suggested that public adjusters should call and discuss the issues with attorneys and not provide a legal opinion. Some of these requests are becoming much more broad and some insurers do not want to explain the relevancy. Getting a legal opinion seems like the safest thing to do if the public adjuster is asked by the policyholder about what to do.
Sworn Statement in Proofs of Loss are extremely important if demanded or required. He noted three aspects of the Proof of Loss:
- Form–use the correct form and fill it out completely.
- Content of Proof- Structures, Contents, Loss of Income/Additional Living Expenses. He suggests filling each coverage out on separate forms. But, give them what they want if they demand all coverages on one form to avoid insignificant disagreements.
- Supporting documentation and estimates should be included with the Proof of Loss. Do not just send the form.
New appraisal Issues and courts defining various issues of appraisal seem to be coming up all over the country. Diamond highlighted areas in Georgia where issues arise:
- Demand for Appraisal–how did it get to this point and if appraisal can resolve the controversy and scope of damage.
- Selection of an appropriate Appraiser and Umpire
Diamond has seen more claims where an impasse regarding the selection of the Umpire gives rise to a lawsuit. He discussed the difference between sending a letter, which some suggest can be done in Georgia, versus filing a petition. He cautioned that many judges are not familiar with appraisal and do not understand how appraisal differs from arbitration.
Jeff finds that many judges do not know what to do regarding the selection. He feels it is better to have a judge appoint an umpire than to agree to an insurance company’s selection of a biased umpire. The problem is that he thinks many in the insurance industry who agree to the policyholder’s view and would rule that way are under pressure by insurers who will not select or agree to them in the future as an umpire. For this reason, the appointment of an unbiased umpire is important and the selection by a judge is far better than agreeing to one proposed by the insurance company.
Diamond also made some comments on the considerations of misrepresentation and concealment:
- Concealment and Fraud Policy Language–Diamond made the point that a mistake is not an intentional misrepresentation. He even says that some insurance companies have pre-ordained the denial based on the assumption that wrong answers are fraudulent versus accidents or non-intentional acts.
- Duties of Cooperation—Diamond suggests public adjusters want to cooperate if possible to avoid lawsuits. Public adjusters want to have their clients get paid and not cooperating slows the payment or may prevent it. Diamond suggests asking to get in writing why certain requests or views are relevant or material. It is important for public adjusters to get the insurance company to place reasons why they are demanding what many may think are unreasonable things and get those reasons in writing.
Lawyers know about time limitations for lawsuits and Jeff warned public adjusters in Georgia they should be careful about limitations. His advice was Do Not Wait Until the Deadline. This is especially important if there is a claim for bad faith because there is a sixty-day demand time before filing a bad faith lawsuit.
So, follow Diamond’s advice. Public adjusters should use a professional tone with every communication. Follow the golden rule and remember that the insurance company adjuster has a tough job. Accurate and thorough estimates and inventories with prompt and full responses to requests for information lead to quicker and better claims results without having to resort to a lawsuit.