Barry Zalma recently wrote an excellent article, Claims in a Catastrophe, in the The CPA Journal. Zalma is a very experienced property insurance attorney. He is a prolific writer of articles and books involving property insurance claims. To all policyholders having felt the impact of 2017 catastrophe claims, one important point in Zalma’s article is that a second opinion is often needed.

Many insureds believe that insurers make a practice of making inadequate (sometimes called “lowball”) offers of settlement. They are wary of what they think are estimates from insurance-company-friendly contractors. Whether true or not, it is a good practice to get a second, or even a third, written estimate to repair and replace damaged property from reputable, independent professionals. . . .

2017 has had numerous catastrophe claims with hurricanes, floods, and now California wildfires. Zalma warns that these catastrophes bring out all kinds of scammers and people who will say things that are not true and sometimes designed to steal money and twice make a person a disaster victim. Consumers need to be careful who they believe and hire.

In an age where many insurance industry attorneys are supporting insurer backed contractors, this is what Zalma refreshingly stated:

Thoroughly investigate the qualifications, license, and references of your insurance company’s approved contractor before agreeing to hire them to perform the repairs. The State Contractors Licensing Board will usually provide the consumer, by telephone or over the Internet, with the contractor’s license status and history of discipline. At a minimum, the licensing entity and a reference should be checked before a contract is signed.

You do not have to use or accept the opinions of consultants or contractors recommended or approved by the insurer to perform repairs.

Approved contractors are typically contractors who have agreed to discount their labor and costs and follow insurer guidelines in exchange for a volume of business from the insurance company. If your insurer promises to guarantee the approved contractor’s work, the guarantee is generally limited to replacing any defective materials or correcting faulty workmanship. The insurer is not insuring against any contractor delays, negligence, or liability. Accordingly, do not use the approved contractor unless it is a contractor that you would independently hire to do the work after a thorough screening. Check that each contractor’s license is valid and for any complaints against the license. Ensure that the contractor is bonded and insured before you allow it to work on your property.

While I cannot agree with him that “almost all claims will be handled promptly and fairly,” I do agree that policyholders should not sign releases, assignments of benefits or other legal forms without first seeking an experienced attorney:

If the dispute does require legal advice, contact a lawyer who is experienced and specializes in representing policyholders. There are many consultants who claim to be “insurance claims experts” who do not have adequate training, skill, or experience. Before you retain one investigate the person diligently by contacting licensing bodies and references.

If you use the search function on our blog and type “Zalma,” you will see that Barry has been quoted numerous times. He corrected me as noted in Zalma Provides A View Shared by Others Regarding Appraisal and a Warning About the Unauthorized Practice of Law. The CPA Journal article noted that Zalma is the first recipient of the Claims Magazine/ACE Legend Award.

Bravo Barry!

Positive Thought For The Day

Bad things do happen in the world, like war, natural disasters, disease. But out of those situations always arise stories of ordinary people doing extraordinary things.
—Daryn Kaga

  • shirley heflin

    Dear Chip:

    Great information for insureds that believe they “have” to go with their carrier’s contractor, repair estimate, etc., after a loss. I think it would be extremely rare for an insurance company to advise their insured to get a second and/or third opinion after disclosing their loss assessment.

    Further, if an insured decides to go with the carrier’s contractor, performing a background check and “ratings review” of said vendor will prove invaluable. Obviously, if reviews reveal that the contractor is chronically late, does not complete the job, does not return to correct things they did wrong, etc., then they should be scratched off the list.

    Finally, I wish your Blog was akin to a national newspaper so that it could reach more insureds! The more information an insured has, the better off they are.

    Tampa, FL

  • Bruce Holmes


  • Philip Davidson

    One issue when you get estimates from multiple contractors is you are leaving the scope determination to the individual contractors. Contractors understandably want the job so they are more focused on price. They also are not aware of how the policy would address specific damage when it comes to whether your are entitled to replacement even though a repair may suffice.

  • Mark Goldwich

    I’m surprised Zalma would say insured’s do not have to use carrier contractors when “our option” has been exercised. I wonder how he would suggest the insured respond when the carrier says, “use our contractor, or the claim is denied.”

  • Thanks, Chip.