The Colorado Division of Insurance published a new Bulletin1 which supports faster and complete payment to policyholders. The bulletin provided in part:
- In the event a fire damaged home suffers additional damage from frozen pipes, water or other weather-related damage, the Division directs insurers to consider this damage related to the fire and treat such losses as one claim, subject to one deductible.
- Many of the homes that were not completely destroyed by fire continue to be uninhabitable due to loss of power, potable water and safety concerns. The Division directs insurers to waive any waiting periods related to Additional Living Expense (ALE) coverage for those policyholders that were evacuated but whose homes were not destroyed.
- Warping and structural integrity concerns due to extreme heat and/or particulate infiltration and contamination must be addressed.
- When handling the smoke, soot, ash, or water damage claims, the Division directs insurers to consider the related long-lasting effects on electronics, furniture and other property when estimating the total damage. Merely cleaning the walls and property will not necessarily return the property to pre-loss condition. Companies must consider their policyholders’ concerns about faulty wiring, inoperable electronics, and soft material contamination. Health related issues, including respiratory difficulties, directly caused by exposure to smoke, soot, ash, or mold are damage and loss, and insurers shall consider reasonable substantiation to make appropriate coverage decisions.
- Additionally, due to the housing shortage and other challenges, we anticipate that meeting the housing needs for the displaced policyholders will be difficult. The Division directs insurers to consider all available options for both short- and longer-term housing, including Airbnb, VRBO and individual rooms for rent. The Division encourages insurers to allow agreed upon monthly housing allowances for those policyholders who move in with relatives or friends during the claim and rebuilding period.
In Soot, Ash and Char Claims Are Hot Topic At Colorado Insurance Commission Virtual Town Hall Meeting, I noted that Colorado regulators got an earful from angry policyholders:
The Colorado Division of Insurance got an earful from Colorado policyholders dealing with insurance claim problems at a virtual town hall meeting last night. The event, Insurance Town Hall – Partial Losses in the Boulder Fires & Straight Line Winds, had panelists discussing the issues of soot, ash, and char claims following the recent Marshall Fire. Insurance Commissioner Michael Conway was obviously frustrated hearing how Coloradans are being treated with their claims. He stated that ‘his blood pressure was going up’ and that he intended to call Liberty Mutual and Travelers. The event was recorded and will be on the Division’s website.
The Colorado regulators were adamant about insurance companies paying for this special testing. Obviously, the policyholders complained that the insurance company adjusters were refusing to pay for these tests. Many insurance company adjusters are keeping quiet about this dangerous issue—keeping this claims issue secret may result in a lowered claim payment.
This is a developing issue which will surely keep our Colorado office busy. Soot, ash, and char losses are not minor claims.
One of the most significant claims adjustment problems is the lack of enough experienced catastrophe adjusters with sufficient authority to make prompt payment to policyholders with catastrophic losses. It is not just in Colorado but everywhere where a larger scale catastrophe happens. The field adjusters have little authority and claims drag while desk adjusters often change the estimates or demand that they be modified based on upper claims management guidelines and claims metrics designating how estimates are to be made and claims adjusted.
Thought For The Day
Surround yourself with the best people you can find, delegate authority, and don’t interfere as long as the policy you’ve decided upon is being carried out.
1 Colorado Bulletin No. B- 5.43. Division Position Concerning Policyholder Relief in the Immediate Aftermath of the Marshall and Middle Fork Fires. (Issued Jan. 3, 2022).