Property which simply wears out or is damaged by rot is never covered, right? That is what most insurance company adjusters and attorneys will say. Indeed, they will defiantly state something like: “This is a property insurance policy and not a maintenance contract.”

So, what happens if the damaged portion of the property cannot be repaired because the underlying property has pre-existing rot or is simply worn out?
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One of the most offensive examples of insurance company claims managers losing their ethical way is when they demand that their insureds risk life and limb to immediately investigate their roofs after a hail storm. Most insurance policies require “prompt notice” of loss. But, does the insurance company ever warn its customers they must risk their lives to climb on their roofs or pay money for somebody else after every hail storm?
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Property claims adjusters are supposed to promptly evaluate damage, investigate coverage, and provide full benefits to policyholders. Adjustment is about giving the customer the service promised and paid for when the policy was purchased. This service is not paid with "indemnity dollars," but with insurance company claims expense dollars, which insurance companies must spend to make certain their policyholders are promptly and fully receiving benefits.


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It’s no secret that Citizens Property Insurance Corporation routinely treats policyholders like numbers on a page. Despite its title as the state’s largest property insurer, Citizens consistently gets the most complaints from policyholders, earning a reputation as the worst property insurance company in the state — and in a state like Florida, that’s really saying something.


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Insurance companies and insurance industry advocates consistently point to insurance fraud as a reason for higher insurance premiums. But, if insurance fraud is such a problem, why are property insurers still reaping massive profits? With profits like these, is there really justification for consistently raising premiums?

Revenues

Profits

Rank

Company

Fortune 500 rank

$ millions

% change from 2009

$ millions

% change from 2009

State Farm Insurance Cos.

(mutual)

37

63,176.7

2.8

1,762.8

129.9

Berkshire Hathaway

(stock)

7

136,185.0

21.1

12,967.0

61.0

American International Group

17

104,417.0

1.2

7,786.0

N.A.

Liberty Mutual Insurance Group*

82

33,193.0

6.8

1,678.0

64.0

Allstate

89

31,400.0

-1.9

928.0

8.7

Travelers Cos.

106

25,112.0

1.8

3,216.0

-11.2

Hartford Financial Services

117

22,383.0

-9.4

1,680.0

N.A.

Nationwide*

127

20,265.0

-2.3

959.0

33.9

United Services Automobile Assn.*

145

17,946.1

2.2

2,637.4

-12.7

Progressive

164

14,963.3

2.7

1,068.3

1.0

Loews

168

14,621.0

3.5

1,288.0

128.4

Chubb

185

13,319.0

2.3

2,174.0

-0.4

Assurant

285

8,527.7

-2.0

279.2

-35.2

American Family Insurance Group*

358

6,491.8

0.6

487.1

89.6


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Dennis Wall is a veteran commentator on various claims practice issues and on advice to avoid bad faith accusations. In Hurricane Report: Acting in Good Faith,I found his point regarding what every insurance company should do when faced with partial payment situations following catastrophes to be dead-on:

The clear lesson from these recently enacted and revised state laws is this: Good faith claim handling — particularly of claims for policy benefits and proceeds in the aftermath of a hurricane or another catastrophe — requires prompt payment for any part of a claim that is reasonably covered.

What constitutes "prompt" payment? It may vary from place to place, depending upon the local law, but the same concept still holds true. A claim should be paid within either a reasonable amount of time or within a specific time period dictated by local laws — usually 30 days — of that portion of any claim that is reasonably proven as covered by the proof-of-loss statements. (emphasis added)


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In several of my older posts, I wrote about different ways some insurance companies have tried to make a profit by changing the way a claims handling department is operated. The following posts touched upon ways that claims handling employees can be compensated for meeting different types of goals set up by the insurer that, in effect, turn a claims handling department into a profit center: The Big Picture in Discovery of Insurer Claims Practices; Don’t Forget to Consider the Severity of Your Claim; Don’t Forget to Consider the Severity of Your Claim: Part II; Plaintiffs are Entitled to the Claims File in a Bad Faith Lawsuit. Some insurance companies also determined that they generally pay less on claims when the policyholder or victim is not represented by an attorney. As a result, it has become more appealing to an insurance company to resolve a claim with an unrepresented individual, and some carriers have spent money, time and energy implementing policies or procedures with the goal of dissuading policyholders or victims from hiring an attorney.


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