How To Evaluate What Is Owed Following Property Damage

“How much am I owed?”

“How did the insurance company come up with that figure?”

“Do I need help to make certain I am not getting ripped off?”

These are the questions I answer all the time. And that answer to how much is owed to the policyholder is a never-ending study. For everyone representing policyholders, you should feel the same as me and be deeply passionate about it. If not, do something else.

Some insurance companies have a culture to get a lot of money to the policyholder and give every benefit of the doubt to their customer. Chubb and AMICA are usually that way. But that type of attitude is no longer typical for most insurers. Instead, most insurance companies get into the policy small print and engage in a legal nuance game and practical war of delay based on technical arguments leading to paying less. That is the current state of property claims adjustment.

I read a lot of materials from insurance company claims departments. Some come from internal documents we get through discovery in cases, and the best documents to read are in response to bad faith lawsuits when claims management internal documents have to be turned over. Yet, there are other publicly available articles that somewhat show their attitude about claims valuation.

One such “must read” article, Defining Indemnity in the Context of Actual Cash Value Calculations, is from insurance company consultant Jonathon Held and insurance defense attorney Heidi Hudson Raschke. Both are respected leaders in the property insurance defense industry. The article demonstrates how the traditional concept of actual cash value and indemnity have so many different views and concepts that one could literally write a treatise on the topic of “what is owed for actual cash value.”

Still, being insurance company paid, these authors start off with this quote from a court¹ limiting the concept of indemnity:

The basic premise of traditional property insurance is the concept of indemnity. The insured who suffers a covered loss is entitled to receive full, but not more than full, value for the loss suffered, to be made whole but not be put in a better position than before the loss.

This almost begs the question, should insurance companies leave their customers in a worse position if the only alternative is not to leave them in a better position? Sometimes in life, you cannot have it both ways. Good insures give the benefit of the doubt to their customers. Other insurers seem hell-bent on not paying a “penny more than what is owed” and end up in fights over every detail of a property insurance claim adjustment. My experience shows that the current state of adjustment affairs is that we are in an era of countless fights and policyholders need more help against very skilled opponents.

Again, the article discusses the complexity involved in the “what is owed” analysis, and is very worthy of reading. For me, I want to know and analyze how my opponents think about these concepts. It makes me a better policyholder advocate.

Thought For The Day

A promise made is a debt unpaid.
—Robert W. Service
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¹ In re: State Farm Fire & Cas. Co., 872 F.3d 567, 573 (8th Cir. 2017).