Archive for the ‘Homeowners Insurance’ Category

Inside the Insurance Industry’s Secret Database About You

Thursday, April 16th, 2015

Q. Are you paying more for your homeowners and car insurance than you should?

A. Yes.

Q. Do you know why?

A. Probably not — in fact, we haven’t a clue.

And that’s just the problem. We haven’t a CLUE.

Most Americans Are CLUE-less

This would appear to be the upshot of a new report out of, a subsidiary of personal finance website (RATE).

Says (we’ll call them “IQ” for short), the insurance industry has a “‘Secret’ Report That Affects What You Pay for Insurance.” It’s called the “CLUE” report, which stands for “Comprehensive Loss Underwriting Exchange,” and essentially, it’s a database keeping track of every insurance move you make. When you call your insurer to report damage to your home or auto, that goes into the CLUE database. What’s more, even when you simply call your insurance agent to ask about whether a certain incident is covered by your insurance — that goes in there, too.

And that’s the real revelation today. Most consumers probably assume that insurance companies have some sort of system to track their insurance claims. After all, it’s common knowledge that insurers often raise your rates after you make a claim.

But that’s about all we do know about CLUE.


According to IQ, a whopping 82 percent of Americans surveyed have never even heard of the CLUE database (at least not by that name). Only about 7 percent of insurance customers say they are at least “somewhat familiar” with the concept of the CLUE report. These people may be aware of the bare outlines of the system — for example, that CLUE tracks loss dates, claims for losses and monies paid out for insurance claims for up to seven years.

And yet, only 1 percent of us say we’re “very familiar” with how the database works. The vast majority of Americans have no clue at all, for example, that the database: •Records denied claims as well as claims paid out — so that your insurance rate may be raised after you’ve made a claim, even if you got no money out of it.
•Includes not only claims made by you, the customer, but also claims made on the same property by its previous owners. Thus, you can be penalized for insurance claims made by the person from whom you bought a car or house.
•If you simply ring up your insurance agent to discuss a claim you might want to make — but ultimately decide not to make — that discussion can also go into your CLUE report, and be used by an insurer to raise your rate.
Yes, you read that right: Insurers can hike your insurance premiums just for asking them if an accident might or might not be covered.

It’s Time to Get a CLUE

So, now that you’re aware of what a CLUE is, what can you do to make sure your CLUE report doesn’t get used against you?

Sad to say, there’s probably no getting around the fact that once you admit you’ve suffered some damage and make a claim, an insurance company can decide you’re a riskier client than you were before making a claim, and raise your rate. But regarding the “unfairness” of insurance companies hiking your rate simply for asking a question about coverage, IQ senior insurance analyst Laura Adams has a few words of advice.

The fewer clues you give the insurers to the fact that you may be about to make a claim, the better for your bank account.
 First and foremost, unless you plan to make a claim — and a claim for a dollar amount significantly higher than your insurance deductible — it’s best to keep mum. If you absolutely must contact your insurer, though, to find out whether it’s worthwhile to make a claim, IQ notes that “talking to an insurance company about specific damage to your auto or home can result in a notation in your CLUE report, which could result in higher rates.”

The key words here are “specific damage.” As in, when calling your insurer, try not to mention specific items or damage. Warns Adams: “If you begin to discuss details of an actual loss, such as a broken water pipe or a roof leak that has occurred, an insurance company may record that information and it may appear on your CLUE report.”

Instead, “when speaking with an insurance company or an agent … be clear [that you are] only making an inquiry. If you need to ask about what potential issues may or may not be covered under your home insurance policy, say so” at the very start, and make it clear that you are not making a claim for, or even asking about, a specific incident that has already happened.

The fewer clues you give the insurers to the fact that you may be about to make a claim, the better for your bank account.

You can order free copies of your CLUE personal property (i.e., home) report or CLUE auto report — or both — from Lexis-Nexis.

Motley Fool contributor Rich Smith recently made the dumb mistake of asking if a frozen water pipe would be covered by his insurance — and fears he may pay a price for this slip-up. (So much for the theory that “there’s no such thing as a stupid question.”) Neither he nor The Motley Fool have any financial interest in any of the stocks mentioned above. Is your portfolio ready for the new year? Check out our free report on one great stock to buy for 2015 and beyond.

Housing Bubble 2.0? Cheap Financing Comes Back Into Style

Thursday, April 16th, 2015

Most Americans remember all too well the housing bust and subsequent financial crisis, which left millions of homeowners owing more on their mortgages than their homes were worth and made it nearly impossible for many people to sell without taking huge losses. In the past five years, housing prices have recovered considerably, but tougher lending standards have left many would-be homeowners unable to buy. That’s the rationale behind the latest move from government-sponsored mortgage-lending enterprises Fannie Mae and Freddie Mac that opens the door to buyers getting into the home of their dreams with as little as 3 percent down.

Most policymakers see encouraging home ownership as a positive thing. Yet given the role that cheap financing had in the first housing crisis, the obvious question is whether low-down-payment programs will bring on another unsustainable housing bubble.

What the New Programs Let You Do

Earlier this month, Fannie Mae and Freddie Mac released the details on loan programs that would allow borrowers to get loans of as much as 97 percent of the value of the homes they want to buy. In its press release, Fannie Mae noted that the goal of the program “is to help additional qualified borrowers gain access to mortgages.” Citing barriers that have impeded homebuyers from gaining access to the credit they need in order to finalize their purchases, Fannie Mae asserted its confidence that 97 percent loans “can be good business for lenders, safe and sound for Fannie Mae, and an affordable, responsible option for qualified borrowers.”

Under both programs, at least one of the borrowers on a new-purchase loan has to be a first-time homebuyer. Borrowers must have a credit score of at least 620, and they need to buy private mortgage insurance and show their financial eligibility for a mortgage. The properties involved must be single-family residences and cannot be manufactured homes. Adjustable-rate mortgages aren’t allowed under the program, and fixed-rate mortgages can’t have terms longer than 30 years. In addition, the borrowers have to certify that they’ve participated in a home-buying educational program.

Fannie Mae has also opened the possibility of allowing cash-out refinancing transactions that would bring outstanding debt up to 97 percent of the home’s value. To qualify, Fannie Mae must already own the existing mortgage loan, and borrowers must meet most of the other eligibility requirements of the purchase-loan program.

What’s the Risk?

The obvious concern among those who oppose the latest moves to loosen credit standards is that allowing smaller down payments makes it easier for borrowers to get in over their heads with the mortgage loans. Given that home prices fell by more than 30 percent from 2006 to 2009, according to the Case-Shiller Home Price Index, having just a 3 percent reserve leaves homeowners extremely vulnerable even to a more modest future decline. Even Robert Shiller, who helped create that home-price index, has said that lenders and the government-sponsored entities are taking on more risk with 97 percent loans than they might realize.

To their credit, Fannie Mae and Freddie Mac appear to be sensitive to the risks involved and have taken explicit steps to limit any downside from a future housing-market downturn. In particular, the government-sponsored entities have made it clear that private lenders using the program remain exposed to initial losses under these loans, therefore encouraging banks and other financial institutions to use good judgment in vetting these loans despite having the guarantees provided by Fannie Mae and Freddie Mac. Moreover, banks will know under what conditions the government-sponsored entities can force them to buy back a bad loan, hopefully preventing the massive multibillion-dollar lawsuits involving loan repurchases following the financial crisis.

Still, it’s hard to understand why new 97 percent mortgage loans will have such a markedly positive impact on the housing market. Already, the Federal Housing Administration has programs that allow 3.5 percent down payments, and other government programs exist that extend 100 percent financing to veterans or to low- and moderate-income homebuyers who live in rural or suburban neighborhoods. Presumably, the Fannie Mae and Freddie Mac programs are intended to reach a larger audience, but it’s uncertain how many would-be homebuyers would get the additional motivation from these programs to move forward with a home purchase.

In itself, an initiative to help first-time homebuyers isn’t likely to cause the next housing bubble. But as the next step in a progression toward making credit standards less strict, the moves could end up being seen as the catalyst that could lead to another explosive rise in credit availability — that eventually could end in disaster once more.

11 Secret Ways to Save on Your Homeowners Insurance

Thursday, April 16th, 2015

You know you need homeowners insurance, but what you may not know is how many different types of discounts that your carrier offers. According to, there are at least 11 types — and chances are, most will be a surprise to you.

That’s because, unless you seem like you’re about to jump ship and hand your money over to someone else, an insurance agent has no incentive to tell you about them. Agents typically are paid commissions on policies, so the more you pay, the more they make.

“They don’t really want to give that information out,” Crissinda Ponder, insurance analyst, told DailyFinance. “They don’t have to, either. Some homeowners might not know they need to be asking these questions. It’s up to consumers to take the initiative.”

There are two main principles at work. One is that the less risk you seem to be, the less the insurer can afford to charge you. The other is once the insurance company has signed you up, they know there’s a statistically good chance you’ll be paying them for a long time, and they want that business.

11 Ways to Qualify for Discounts 1.You have more than one type of insurance with the carrier, and it wants to encourage you to keep all of your business.
2.An alarm service or sometimes even smoke detectors will qualify for protective services discounts.
3.You avoid claims for a certain period, maybe two or three years, depending on the insurer, and you’re demonstrably a lower risk.
4.A newly built or renovated home might be more durable and is certainly earlier in its realistic lifespan.
5.Your house has disaster-resistant roofing.
6.Senior citizens, sometimes as soon as they turn 50, get a break.
7.You’ve just purchased your home, and the insurer want to lock you down as a new customer.
8.After some number of years, you might qualify for a loyalty discount.
9.You have a work or organizational affiliation that the insurer rewards with lower rates.
10.You’re a nonsmoker.
11.You shop for insurance well ahead of when a policy comes up for renewal.
(For a breakdown of which carriers offer which discounts, Bankrate created a convenient chart.)

There were more unusual discounts, as well, such as having had an interior inspection of the home done recently, being a married or widowed owner, insuring for up to 100 percent of a home’s replacement value and having a LEED-certified green home.

This list came from looking at the websites of the ten largest insurance companies that operate nationwide. Sometimes the discounts were fairly easy to find on dedicated pages. Other times, turning up the opportunities required some digging.

Not all insurers offered the full range of discounts; only two — multiple policies and protective items — were offered by all the companies. There’s also no guarantee that all the discounts appear on a company’s website. The only option is to be aggressive with the insurer and ask about all the types of discounts that might apply.

But be wary of getting too attracted by a discount. “It doesn’t mean it’s the best deal for you, so it is important to shop around,” Ponder said.

Get Aid After Superstorm Sandy? FEMA May Want It Back

Thursday, April 16th, 2015

NEW YORK — After Superstorm Sandy hit the East Coast nearly two years ago, the federal government quickly sent out $1.4 billion in emergency disaster aid to the hurricane’s victims.

Now, thousands of people might have to pay back their share.

The Federal Emergency Management Agency is scrutinizing about 4,500 households that it suspects received improper payments after the storm, according to program officials and data obtained by The Associated Press through a public records request. As of early September, FEMA had asked around 850 of those households to return a collective $5.8 million. The other cases were still under review.

FEMA’s campaign to recover overpayments, called “recoupment” in agency lingo, typically involves inadvertent violations of eligibility rules, bureaucratic mistakes or missing documentation, rather than outright fraud.

Many people asked to return money were deemed ineligible because their damaged properties were vacation houses or rental properties, not their primary residences. Others had double dipped into the aid pool, with more than one household member getting payments. Some received FEMA money for things later covered by insurance.

As of July 30, the average demanded refund was $6,987, a sum that could be difficult for many, given the modest annual incomes of most aid applicants. Roughly half of the households under scrutiny reported an annual gross income of $30,000 or less.

“I lost my home. I lost everything. I don’t have $17,000 to give back.
 The larger pool of cases still under review as of that date involved $53 million in aid payments — or about 3.7 percent of the total given out by FEMA through its individuals and households program — though any potential refunds would likely involve only a portion of that money.

“For most people, the money is long gone and long ago spent on storm recovery,” said Ann Dibble, director of the New York Legal Assistance Group’s storm response unit, which has been helping about a dozen families fight a FEMA clawback.

The list of people asked to return cash includes Gary Silberman of Lindenhurst, New York, who got a letter last November demanding just under $17,000. The agency said he was ineligible partly because he and his elderly father had both applied for disaster funds even though they were living together.

The Silbermans also were barred from getting some types of aid because they had failed to buy flood insurance after getting $25,000 in FEMA aid for flood damage during Hurricane Irene a year earlier.

Silberman says he should still qualify for the money because he was a rent-paying tenant in his father’s house, not a dependent, but FEMA has so far rejected his appeals.

“I lost my home. I lost everything. I don’t have $17,000 to give back,” Silberman said.

Costly Storm

Sandy was among the costliest hurricanes in U.S. history. More than 280 people died in the U.S. and the Caribbean. When the storm struck the New York and New Jersey coastlines, the surging ocean poured into densely populated seaside neighborhoods and turned entire communities into soggy, moldy wrecks.

About 179,000 households in New York and New Jersey received FEMA payments following the storm. The agency is also reviewing payments to some households in Connecticut, Maryland and Rhode Island.

FEMA mobilized for Sandy hoping to avoid problems that plagued the aid distribution process following Hurricane Katrina’s strike on the Gulf Coast in 2005. That destructive storm forced the overwhelmed agency to relax internal controls to speed up relief efforts, which led to huge numbers of people getting money they shouldn’t have received.

FEMA’s attempts to recover hundreds of millions of dollars, often from people who couldn’t afford to pay, led to a court fight and a procedural overhaul. By 2011, the agency had mailed out letters to at least 90,000 households asking for aid refunds. Congress authorized the agency to waive much of that debt.

The agency says it has since gotten better at making sure aid only goes to the right people, and in proper amounts.

“They have a lot more controls in place,” said John Kelly, the Department of Homeland Security’s assistant inspector general for emergency management oversight.

2 Years Later, Congress Poised to Undo Flood Law

Thursday, April 16th, 2015

WASHINGTON — Less than two years after Congress approved a landmark bill to overhaul the federal flood insurance program, lawmakers are poised to undo many of the changes after homeowners in flood-prone areas complained about sharp increases in premiums.

The House overwhelmingly passed a bill Tuesday night that would allow sellers to give their subsidized, below-market insurance rates to new buyers and lower the cap on how much flood insurance premiums can rise each year.

Rep. Michael Grimm, a New York Republican who co-sponsored the bill, said it would ensure that families across the country, including those still struggling to recover from Superstorm Sandy, can avoid “a wave of devastating premium hikes and foreclosures.”

The Senate could soon follow. Sen. Robert Menendez, D-N.J., says he supports the House measure, which mirrors a bill he sponsored and the Senate approved in January.

The House bill “will end the most egregious problems with the flood insurance program and bring some real relief to thousands of homeowners who desperately need our help,” Menendez said in a statement Tuesday night. “I’m encouraged by this progress and hope we can bring the bill over the finish line very, very soon.”

A White House spokesman declined to comment on the House bill,

but the White House said during debate on the Senate measure that it strongly supports a phased transition to risk-based flood insurance rates to help ensure that the federal flood insurance program has adequate resources to pay future claims.

“The administration recognizes that many policyholders may be challenged financially by the new rates and remains committed to working with the Congress to develop approaches that ensure economically distressed policyholders are not unduly burdened while maintaining the financial stability” of the flood insurance program, the White House said in a Jan. 27 statement.

Both the House and Senate measures are aimed at weakening a 2012 law designed to wean hundreds of thousands of homeowners off subsidized flood insurance rates. The federal flood insurance program is now some $24 billion in the red, mostly because of huge losses from Sandy and Hurricane Katrina. The 2012 law required extensive updating of the flood maps used to set premiums.

Rep. Maxine Waters, D-Calif., co-sponsored the 2012 law as well as the latest fix to what she called the original law’s “unintended effects” of dramatic rate increases for homeowners.

“Relief is on the way,” Waters said Tuesday night, adding that the new bill would make insurance premiums more affordable while making the Federal Emergency Management Agency, which administers the flood program, more accountable.

Some GOP lawmakers complained that the Republican-controlled House was going along with a measure widely supported by Democrats. A total of 180 Democrats joined 126 Republicans in supporting the bill. The measure was approved 306-91.

Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee, called the flood insurance program poorly run and doomed to failure, noting that it charges just 70 percent of what officials say is needed to break even.

The program uses a faulty model that understates flood risks, with the result that a single mother in Dallas who works at a grocery store subsidizes a millionaire’s beachfront home, Hensarling said. “That is the definition of unfair,” he said.

Implementation of the 2012 law has stirred anxiety among homeowners along the Atlantic and Gulf coasts and in other flood plains. Many homeowners have complained they face unaffordable rate increases. Anger over the higher rates has fueled a bipartisan drive to delay or derail many of the 2012 changes. The Senate bill approved in January delays implementation of the insurance overhaul for four years.

The House bill would permanently repeal a provision that imposes sharp rate increases on people who buy homes in flood-prone areas. The bill also preserves below-market rates for people whose homes meet federal flood map standards.

Rates imposed by the 2012 law are particularly high in older coastal communities in states such as Florida, Massachusetts, New York and New Jersey and have put a damper on home sales as prospective buyers recoil at the higher premium rates.

The House bill was brought to the floor under special rules that limited debate and required two-thirds support from those voting. That standard proved little challenge for bill supporters, despite opposition from tea party groups and other conservatives who said the measure would continue unfair federal subsidies for people who choose to live in flood-prone areas. Some environmental groups also opposed the bill, saying that climate change has increased the risk of flooding in coastal areas, making it illogical to continue to rebuild in flood zones.

The House measure would also give relief to people who have bought homes after the 2012 overhaul and therefore face sharp, immediate jumps in their premiums. Those homeowners would see rate increases capped at an average of 15 percent, with a maximum of 18 percent per year.

People whose second home is in a flood zone and those whose properties have repeatedly flooded would continue to see their premiums go up by 25 percent a year until reaching a level consistent with their real risk of flooding.

FEMA would retain the ability to increase premiums each year, but the increases wouldn’t be as steep as mandated under the 2012 law. A surcharge on each of 5.6 million policyholders would offset the cost of continued subsidies for about 1.1 million homeowners.

The changes proposed by the House dismayed supporters of the 2012 law, who said it began to remove incentives for people to live in costly, flood-prone areas.

“Nobody wants to see their rates go up. But taxpayers across the country don’t want to support a program that is $24 billion in debt and climbing,” said Steve Ellis, vice president of Taxpayers for Common Sense, a Washington-based watchdog group, of the federal flood insurance program.

A far better solution than either the House or Senate bill would be to slow down the rate increase, even dramatically, “but still allow rates to continue to move toward their risk-based” level, Ellis said.

Why I’m Glad Your Renters Insurance Was Canceled

Thursday, April 16th, 2015

I saw a segment on a news show recently that highlighted a family whose insurance company had canceled their renters policy. The family in question filed two claims against their policy over the holidays, after burglars broke into their home before Christmas and again just before New Year’s. As a result, their insurer dropped them.

Of course, the timing was horrible, and the local media covered the story exhaustively. But I’m glad the insurance company canceled their policy, and you should be happy, too. Here’s why:

What are the odds of a family having two robberies in such a short span of time? It’s very unlikely. In fact, such unusual circumstances are strong warning of potential fraud. And while I don’t want anyone to needlessly suffer, if insurance companies don’t take action when faced with those sorts of events, it could translate into higher insurance costs for the rest of us.

It All Comes Down to Higher Rates for All of Us

Most people forget that most insurance coverage is typically a group policy. Insurance companies, whether they’re selling property insurance or life insurance, depend on large groups of people acting as participating partners. It’s the law of large numbers at its finest.

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View all Courses Insurers have armies of actuaries whose sole job is to determine the likelihood of a payout on a given policy. Our policies, and their profits, depend on most people paying their insurance premiums and hardly ever needing to file a claim. That, combined with the actuaries ability to make accurate predictions, is what keeps premiums relatively low for the rest of us. Having one customer file two claims practically back to back is highly unusual. If it stopped being unusual (say, if unscrupulous individuals realized you could do that without consequences), the ripple effects would spread through the system.

Insurance companies raise the cost of premiums when they have to make more payouts than they anticipated. Maybe that wouldn’t happen right away, but eventually, they always increase prices to cover their unexpected losses.

Don’t File Small Claims on Your Insurance

So what can you do to ensure that your insurance premiums don’t go up? First of all, you should be happy if your insurance company is denying frivolous claims or dropping its coverage of less-desirable customers. That ultimately keeps prices low for those of us who rarely or never have to file a claim.

Most insurance is a safety net against catastrophic bad luck. And that’s the only time you should use it. If you can self-insure yourself against having to make small claims, that’s the way to go. Save your insurance for when you really need it.

For example: What’s the first thing you do when you have a fender-bender? Most people reach for the phone and call their car insurance companies. But, you may be better off self-insuring in the case of a single-car accident with no injuries. The same may also be true for small renter’s insurance claims, which may be better to self-insure.

For your own single-car accidents, you should seriously consider getting an estimate from an auto body shop to have the damage repaired out of pocket instead of filing an insurance claim. Many can give you a free written estimate on your first visit.

You also have to consider your deductible. (On our cars, it’s $500.) Even if the cost to repair the damage is a little more than that, it could be worth it to simply pay out-of-pocket. Otherwise, if you file a claim and get paid, you could see your insurance premiums go up or even have the policy canceled altogether.

But if another person is involved in your car accident, you should call your car insurance company. If you don’t make a police report and file a claim with your insurance company, the other party could still sue you later for injuries. And your insurance company may refuse to cover a bodily injury claim against you if you didn’t notify them of the accident in a timely manner.

Have an Emergency Fund to Protect Yourself and Keep Your Premiums Low

An emergency fund can help protect you from having to file small claims against your insurance policy. These funds are no longer simply to protect you against a job loss, a broken-down car, or an unforeseen expense. You should also think of your emergency fund as a cushion that can provide you with a stopgap for small losses from accidents or theft.

While no one wants to pay for damages or replace stolen items out-of-pocket, filing a claim might not be the best route either. Your insurance should protect you from the major losses, not the little ones.

Has your insurance company ever rejected a claim you filed? Has one ever cancelled your coverage? Do you dip into your emergency fund rather than submitting small claims? How many claims have you filed in the last year?

How to Get Your Insurance Claim Paid

Thursday, April 16th, 2015

When emergencies like car accidents, medical scares or house fires strike, filing an insurance claim may not be top of mind. But once the dust settles and the bills start pouring in, many consumers are relieved to know that insurance could help protect them against financial losses resulting from these calamities. However, the claims process doesn’t always run smoothly.

If, for instance, you forget to submit a key piece of documentation, your loss falls under an exclusion or you use an out-of-network provider, your insurance provider may not cover your losses. Here’s a look at strategies for maximizing the chances that your claim will get paid.

Know what’s covered. Ideally, you’d be familiar with the ins and outs of your policy before you actually need it, including the amount of any deductibles you are responsible for, how long you have to file a claim and how long the process takes. Knowing this can help you set realistic expectations and choose providers that are likely to be covered (auto insurers may try to steer you toward a certain body shop, but you are not required to use the shop they prefer).

Issues around health care insurance claims often center on whether the medical provider is in-network or out-of-network, according to Martin Rosen, executive vice president, chief marketing officer and co-founder of Health Advocate, an independent health care advocacy and assistance company. In-network doctors have a contracted rate set with your insurance company, so you’ll typically pay less out of pocket. “If you go out of network, doctors are able to bill their regular list charges and then to the extent that you’ve met your deductible and your insurance kicks in, insurance companies only pay what’s usual and customary,” Rosen explains.

Unfortunately, the in-network issue isn’t always clear to the patient.

Say you have a doctor who’s in-network and refers you to a hospital. You might assume that the hospital would also be in-network, but Rosen says this isn’t necessarily the case because some doctors practice at multiple hospitals. “All of this ends up in confusion depending on what you did,” he adds.

Understanding your policy is also key with property and casualty insurance, where there’s an important distinction between replacement cost and actual cash value for your car, home or possessions. Say a tree falls through the roof of your house and destroys your eight-year-old washing machine. “With a replacement cost policy, the insurance company would pay to replace the old machine with a new one,” explains Loretta Worters, vice president of the Insurance Information Institute. “If you had an actual cash value policy, the company would pay only a part of the cost of a new washing machine because a machine that has been used for eight years is worth less than its original cost.”

When it comes to destruction from floods, standard homeowners and renters insurance policies do not cover flood damage, but separate flood coverage is available from the federal government’s National Flood Insurance Program and a few private insurers.

Keep detailed documentation. Maintain records of all communication with your insurance company, including copies of documents you mail and logs of phone conversations, the date of each call, the name of the person you spoke to and what was said. If you need to appeal a decision, this documentation can prove critical, according to Rosen.

Amy Bach, executive director of United Policyholders, a nonprofit that advises consumers on the claims process, suggests following up on each conversation to create a paper trail. “If you’ve had a conversation with the adjuster, follow up on it with a short email confirming what’s been agreed to and what still remains outstanding,” she says. “Make it clear in your communications that you are a proactive consumer, give your insurer proof of your losses and be very specific in asking for the dollar amounts you are entitled to.”

Keep receipts for all out-of-pocket expenses such as a hotel stay while your home is being repaired or towing your car to a body shop following an accident.

Here are your options if your claim is denied and you still believe it should be covered:

File an appeal. Once you’ve exhausted your insurer’s internal channels for filing a claim, you can generally appeal with an external review through the government agency that oversees insurance companies in your state. “The insurance company is obligated to provide you with this information, but it might not be in the easiest-to-understand way,” Rosen says.

In cases when an insurance company has denied coverage for a medical condition that’s considered an emergency, you may be able to apply for an expedited review. Even if it’s not an emergency, pay attention to timelines. “Don’t ignore things because there are limits on how long you have to appeal [claims], and the clock is running,” Rosen says.

Hire a professional. For smaller claims, it may not make financial sense to hire an attorney, advocate or public adjuster to help argue your case. But if large sums of money are at stake or the issue is complex, the math may pencil out. Depending on your state and the size of your claim, you may be able to hire a lawyer on a contingency basis, which means the lawyer “will only get paid if they recover for you, and their fee will be a percentage of what they recover for you,” Bach says, adding that good contingency lawyers won’t take on cases of less than $50,000 because their fee wouldn’t be large enough to make it worth their while.

However, in many cases, consumers can recover losses on their own. “Insurance can be very intimidating,” Bach says. “The lingo is confusing to the average person, but if you educate and empower yourself, you get a lot more than you think just by speaking up.”

Hurricane Sandy, One Year Later: Following the Recovery Money

Thursday, April 16th, 2015 — Hurricane Sandy was without a doubt the most destructive storm to hit New Jersey in modern times, causing dozens of deaths, damaging or destroying nearly 350,000 buildings, and leaving 7 million residents in the dark. Official estimates put statewide losses at around $37 billion, but one recent study speculated that once factors like loss of economic activity and tourism dollars, borrowing costs, infrastructure repairs, and storm mitigation are taken into account, the cost could rise billions or even tens of billions higher.

New Jersey’s 127 miles of coastline contain billions of dollars of real estate, and they’re the source of tens of thousands of seasonal jobs and a $19 billion tourism industry, so rebuilding the shore as quickly as possible was seen as an imperative by many residents and business owners. On the one hand, the Christie administration has done all it can to expedite that endeavor, waiving standard permitting processes and minimizing interference from Trenton. It has also opted to leave important rebuilding decisions up to local municipalities, despite complaints and warnings from environmentalists and planners who call for more regional-based, long-term planning that takes future storms into account. On the other hand, even with the hurry-up-and-build approach, the Jersey Shore still has a long way to go to get back to normal.

Assessing the state of the recovery one year later is hard to do. There are plenty of anecdotes from shore residents to go around, but it’s hard to get a sense of the big picture. Building construction permit numbers don’t really tell the story, since there’s no way to separate figures of houses being rebuilt as a result of the storm from homes that would have been built anyway. And while vacant lots abound in places like Union Beach, there is no data available on a statewide level to indicate just how many people have yet to return to their homes. The Ocean County Planning Board did estimate recently, however, that it could be as high as 26,000 residences countywide.

There are certainly some promising signs. The administration has dedicated $300 million of FEMA money to offering buyouts of 1,000 flood-prone homes damaged by Sandy in tidal areas throughout the state, as well as another 300 that have repeatedly flooded in the Passaic River Basin. The first two deals were inked last week in Sayreville, and dozens more closings are expected in the coming months.

Many Hurricane Sandy Victims Getting Shortchanged on Flood Insurance

Thursday, April 16th, 2015

NEW YORK — Many homeowners who got slammed by Superstorm Sandy are finding their flood insurance checks are nowhere near large enough to cover their repairs, and consumer advocates put some of the blame on errors by the multitude of adjusters who were hired in a hurry after the disaster.

They say policyholders are being shortchanged — sometimes by tens of thousands of dollars — because of adjusters’ inexperience and their overreliance on computer programs, rather than construction know-how, to estimate rebuilding costs.

Those critics point to policyholders like John Lambert and Lee Ann Newland, whose house in Neptune, N.J., is still a moldy wreck a year after Sandy filled it with 4½ feet of water.

If you buy drywall, flooring or a new boiler in New Jersey, you have to pay sales tax. But when the insurance adjuster was using computer software to calculate the cost of repairing the home, he neglected to click a box adding taxes to the estimate, according to a consultant hired by the couple.

That cost the family $11,000, and they say it wasn’t the only thing left out of their claim: The adjuster failed to account for phone jacks that needed to be replaced, ceiling paint in one room, pipes that rusted because of contact with salt water, baseboard heating in places and other items.

“It was stupid things. Little things. But it added up to be a huge amount of money,” Newland said. She is trying to get the insurance company handling her claim to add $49,000 to her settlement. “In our case, that is the difference between us rebuilding, or not.”

Another homeowner, Joanne Harrington of Tuckerton Beach, N.J., said her adjuster had her down inaccurately as having electric heat instead of forced hot water. He said she had ceramic tile, when she had more expensive porcelain.

A similar pattern has been repeated up and down the East Coast as insurance companies working with the federal government have processed nearly 144,000 claims filed with the National Flood Insurance Program after the storm.

Insurance companies dispute that large numbers of customers are being paid less than what they are owed. They say the vast majority of adjusters do a methodical, professional job, and any oversights are easily corrected if homeowners can produce proof that a covered expense has been overlooked.

“In a big event, you are going to get some people entering the industry … and a percentage of those people are going to do great, because they are good people and they are smart, and they want to do a good job,” said Jeff Moore, vice president of claims for Wright Flood, which handled more Sandy-related flood cases than any other company. “And there will be another percentage that don’t do so well … and those are the ones you get to write about in the paper.”

Computer technology, he added, has made it easier than ever for newcomers to write up a claim properly, even if they know nothing about construction or insurance. “The software that they use, it’s very easy. I could take you in a day and teach you to write an estimate,” Moore said.

Some consumer advocates and homeowners don’t see it that way at all.

Immediately after the storm, insurance companies brought in an army of adjusters from all corners of the country. They arrived with varying degrees of expertise. All would have had to have passed a certification test in at least one state. Many were veterans of past floods and hurricanes, but not all.

The Federal Emergency Management Agency, which oversees the flood insurance program, requires adjusters to have four years’ experience. But newcomers with no track record can start work after a brief training period under certain circumstances, if they are working for one of the major insurance carriers that handle the bulk of flood claims.

Amy Bach, executive director of United Policyholders, an advocacy group for insurance consumers, said that for adjusters with no background in construction, there is a tendency to rely too much on software like Simsol, Xactimate and Symbility to tell them how much a repair job is going to cost.

“Some of these guys could have been selling oranges last week at a fruit stand, and this week they are an insurance adjuster,” Bach said. “Instead of using [the software] as a tool to check the estimates produced by the contractors, they use them as a last word. But computers don’t rebuild and repair homes. Contractors do.”

Claims software is widely used in the industry after major disasters and represents a break with the old practice of getting estimates directly from contractors. It is designed to take out the guesswork while offering a check against contractors who exaggerate the cost of a job.

The programs supply detailed prices, by ZIP code, for carpets, cabinets, light fixtures and almost every other part of a house, as well as the labor costs for tasks as simple as putting masking tape around electrical outlets before painting a room.

Using those programs properly involves entering an inventory of every piece of damage in the house, and every possible task that might be required to put the building back into its proper state. There are thousands of variables. Miss a few, and that means less money for storm victims.

Simsol’s president, John Postava, said that like any computer program, it is only as good as the data people feed into the system: “Garbage in, garbage out.”

Simsol also operates an adjusting firm and had 158 adjusters working in the Northeast on Sandy claims. Postava said he is confident the great majority did a good job.

Two of the largest adjustment firms involved in the Sandy effort, Colonial Claims Corp. and Pilot Catastrophe Services, declined to make executives available for an interview.

Earlier this month, FEMA gave homeowners an extension until next spring to submit proof of their storm losses after lawmakers complained that thousands of constituents were still arguing with their insurance companies.

To date, insurers have approved $7.8 billion in flood program payments to policyholders. Close to 92 percent of all claimants got at least some money. The average check was for $54,754, according to FEMA.

FEMA said it doesn’t keep track of how many claims are still being disputed. But Moore estimated as many as 30 percent of Wright Flood’s customers are probably still seeking a bigger settlement a year after Sandy — an unusually high percentage, even for a major disaster.

He blamed a number of factors, including delays in having contractors start work because of uncertainty in many communities about what sorts of flood-proofing to require in rebuilt homes.

He said many homeowners are, indeed, getting stuck with repair bills significantly larger than their insurance settlements, but he blamed strict limits on what the flood program covers, not bad adjustments.

Simple Tip Can Save You Big on Homeowners Insurance

Thursday, April 16th, 2015

Question: How high a deductible can I get on my homeowners insurance? If I boost my deductible, how much can I save on my premiums?

Answer: If your deductible is $500 now, increasing it to $1,000 can lower your premiums by up to 20 percent. Most insurers offer much higher deductibles, too, which is a popular strategy for people who have enough money in emergency funds to cover potential costs. Raising your deductible is a good way to reduce your premiums, and it makes you less likely to file small claims that could result in a rate hike.

At Chubb, about half of the wealthiest customers choose a deductible of $10,000 to $50,000. “For homes here in Malibu that are valued at $10 million to $25 million, having a $25,000 deductible isn’t out of the ordinary at all,” says Derek Ross, president of Kulchin Ross Insurance Services, an independent agency in Tarzana, Calif.

The higher the deductible, the bigger the premium savings. Let’s say, for example, you have a policy with Fireman’s Fund with a $1,000 deductible and a $3,000 annual premium.

You’d save about 24 percent by boosting your deductible to $2,500, 37 percent by raising it to $5,000, 47 percent by raising it to $10,000 and 53 percent by raising it to $25,000. Compare the premium savings with the extra dollar amount at risk to make sure that boosting your deductible is worthwhile.

You should file a claim only if it is at least several hundred dollars more than the deductible. “If your insurer raises your rate by 10 percent for three to five years after you have a claim, that could easily exceed the amount the insurer paid beyond the deductible,” says Ross. Whatever deductible you choose, keep enough money in an emergency fund to self-insure up to the deductible — or even a few hundred dollars more.

The risk of self-insuring may not be as high as you think. The average person files a homeowners insurance claim only once every eight to 10 years, says Jeanne Salvatore of the Insurance Information Institute. You could take the money you save in premiums and add it to your emergency fund each year so that you’re prepared when you do have a claim, recommends Ross. You could also use the extra money to boost your dwelling, property and liability coverage levels by tens of thousands of dollars.