10 Essential Hurricane Claim Tips

Hurricane Irene’s destruction has left many people facing extensive property damage. Individuals who must file a claim have several things to do. First, make any emergency repairs that are necessary to prevent further damage. Don’t attempt any non-emergency repairs until an insurance adjuster is able to assess the property. Be sure to take clear photos of the damage. Next, contact an individual insurance agent. If the number was lost in the damage, consult the Insurance Information Institute’s list of claim phone numbers for various insurance companies. Before contacting an agent, consider the following common questions and valuable claim tips.

1. What To Do After Filing A Claim
The most important thing to do is prevent further damage. Make sure property is secure, board broken windows, dry carpets and board damaged roofs. Don’t attempt any major non-emergency repairs until an adjuster can see the damage. Keep receipts for emergency repair supplies and temporary accommodations.

2. How To Speed Up The Claims Process
Keep in mind that priority is given to the most severe cases after a disaster. Larger claims are settled in steps. Try these following tips to help make the claims process quicker:

•Get at least two repair estimates for the adjuster to review.
•Take pictures of the damage. If photos of the property before the damage are available, make copies of them.
•Construct a list of all damaged property. Include a description, original cost, age, purchase location and estimated replacement cost of each item. If receipts are available for any of these items, make copies of them.

3. What To Do If The Property Is Uninhabitable
Remember that most homeowners policies cover extra living expenses resulting from hurricane damage. As long as the policy has provisions for hurricane damage, the company should provide reimbursement for living expenses. If unsure whether this is included, consult the policy to review the exact provisions. Remember to keep all costs in line with regular living expenses.

4. Food Spoilage Due To Power Outages
Unfortunately, most policies don’t cover spoiled food. However, some companies provide limited coverage for food that spoils during a power outage. The amount is usually between $250 and $500.

5. Coverage For Fallen Trees
Unless a tree damages a house, fence or garage, there is no coverage for damage to trees resulting from perils of weather.

6. Damage From Power Surges
When the power comes back on after an outage, surges often damage electronics or other equipment. Most insurance policies have a provision for sudden or accidental damage from artificially generated electrical currents. This excludes computer chips, transistors and some similar items. This means televisions and computers are excluded.

7. Claim Checks That Aren’t Enough
It’s important to understand whether cash value or replacement costs are awarded. If the amount received is lower than expected, consult an agent to discuss individual provisions.

8. When To Expect A Check
After the adjuster visits and assesses the damage, he or she completes the paperwork for processing. Once it has been processed, the carrier issues a check to the claimant. The turnaround time for receiving a check varies depending on how many claims are being processed. Some companies provide status reports for claim progress. If the check is slow to arrive, call an agent to see if the company has any progress reports on the claim.

9. Understanding The Difference Between Replacement & Cash Value
Replacement cost is the amount it costs to replace or repair an insured item today. It doesn’t cover the full original value of the item. The only limits are based on the amount of coverage purchased. Cash value policies pay for the cost of replacement of the item minus depreciation.

10. What “Underinsured” Individuals Should Do
Sometimes an agent tells an individual that they don’t have enough insurance. This is usually because homeowners don’t review their coverage regularly. Adding a room or making another change can have a significant impact on a policy. Be sure to contact an agent when any improvement or change is made to the home.

Keep in mind that agents are busy. If a copy of the policy is available, try to find the answers in the document before making a call. However, if there are questions that the policy provides unclear answers about, be sure to contact an agent. It’s important to file hurricane claims as quickly as possible.

Certificates of Insurance – A Prudent Means to Avoid Costly Claims

More and more companies are hiring independent contractors to handle not only administrative matters, such as benefits and human resources, but also sales and distribution. With this delegation of authority to third-party suppliers comes less direct control over these operations, and greater becomes the need for clients to demand that vendors provide them with timely Certificates of Insurance (COI).

The COI proves that the insured (the third party) has purchased the insurance coverages as required by the outsourcing client. But, the COI also states that the holder of the certificate has no legal right to be covered by the insurance described in the COI, nor does it amend, extend or alter the represented coverage. The COI only shows that the outside contractor has the insurance coverage as explained on the certificate. This protects the business that has contracted with the third party against liability for negligence caused by the independent contractor up to the limits of the policy.

It is the responsibility of the independent contractor to provide the COI to the client that has hired the firm. Usually a COI is prepared by an agent/broker with a copy sent to the insurance company and the client for whom the third party has contracted to perform certain functions.

The COI contains the name of the insured, the name of the insurance companies issuing the policies as stated on the COI, what specific coverages are contained in the insurance policies issued to the insured, and various descriptions of normal policy terms, exclusions and conditions.

Most often COIs are obtained for commercial general liability to provide protection from liability arising out of the insured’s premises or operations, products and completed operations. Usually, a general form will provide broad, standardized coverage terms. In cases, where the coverage is more complex and of a higher risk, manuscript forms of a COI can be written specifically by or for an insurance company. These manuscript COIs should be reviewed carefully for the scope of coverage being provided.

There are two types of general liability forms — claims-made and occurrence. The trigger that compels the policy to respond is the main difference between the two forms. In the occurrence policy, occurrences are covered that take place during the policy period, no matter when a claim is reported. A claims-made policy requires that the occurrence take place during the policy period and the claim be reported during the policy period. Most COIs use the occurrence form for all independent contractors as claims-made policies limit coverage.

But simply having a COI in hand does not always mean that the independent contractor has the insurance coverage. A prudent practice is to have a system to audit, review and correct the certificates to reflect the provisions in the contracts. Some clients establish an auditing program in house, while others have the insurance agent or broker manage the program as part of their fee arrangement. This cost depends greatly on the workload.

The consequences of not monitoring COIs of a third party can be costly for the firm that hired the contractor. Consider this sobering example. A business hired an independent contractor to provide distribution service for the company. An employee of the vendor had a serious car accident, and soon afterwards, the contractor ceased business. When the employee began submitting workers’ compensation claims, there was no coverage — the contractor had never maintained that insurance. Unfortunately, the company had not insisted on a COI from the independent contractor to verify this coverage. Casting about for payment of the claim, the court ruled that the vendor’s employee was a statutory employee of the company that hired the contractor. The workers’ compensation claims have totaled more than $100,000 with more to come.

This is just one of many chilling cases of companies that have been caught with unexpected losses that came from not requiring proper COIs from independent contractors and auditing them to make sure they remain current and reflect the actual coverages held by the insured.

NAIC Offers Tips to Expedite Your Insurance Claim

Filing an insurance claim can seem like an overwhelming task, but it doesn’t have to be. The National Association of Insurance Commissioners has put together the following tips to help policyholders facilitate the process:

  • Know your policy – Your insurance policy is a contract between you and your insurance company. Know the terms of that contract, including what’s covered, what’s excluded and the amount of any deductibles.
  • File claims as soon as possible – Call your agent or your insurer’s claims hotline as soon as possible. Your policy might require notification within a certain time frame.
  • Provide complete, correct information – Be certain to give your insurance company all the information they need. Incorrect or incomplete information will only cause a delay in processing your claim.
  • Keep copies of all correspondence – Write down information about your telephone and in-person contacts, including the date, name and title of the person you spoke with and what was said. Also, keep a record of your time and expenses.
  • Ask questions – If there is a disagreement about the claim settlement, ask the insurer for the specific language in the policy that explains the reason why the claim was settled in that manner. If this disagreement results in a claim denial, make sure you obtain a written letter explaining the reason for the denial and the specific policy language under which the claim is being denied. If you have a dispute with your insurer about the amount or terms of the claim settlement, you should contact your state insurance department for assistance.
  • Make temporary repairs to protect property from further damage – Your auto/homeowners policy might require you to make temporary repairs. If possible, take photographs or video of the damage before making such repairs. Your policy should cover the cost of temporary repairs, so keep all receipts. Also, maintain any damaged personal property for the adjuster to inspect.
  • Don’t make permanent repairs – An insurance company may deny a claim if you make permanent repairs before the damage has been inspected.
  • Try to determine what it will cost to repair your property before you meet with the claims adjuster – Provide the claims adjuster with records of any improvements you made to your property. Ask the claims adjuster for an itemized explanation of the claim settlement offer.

Don’t rush into a settlement – If the first offer made by an insurance company does not meet your expectations, be prepared to negotiate. If you have any questions regarding the fairness of your settlement, seek professional advice. 

Beware of the Scam of Fake Auto Accidents

Many think of fraud as a non-violent type of crime. In reality, vehicle insurance scams, including the staged traffic accident, are far from non-violent. Aside from costing honest consumers hundreds to thousands of dollars in added insurance premiums, this steadily growing form of fraud has resulted in countless injuries and deaths to the innocent victims of the scams.  In fact, data from the NICB (National Insurance Crime Bureau) shows that staged traffic accidents have rapidly become a leading source of insurance fraud across the U.S.

How Does It Work?

These criminally staged collisions frequently involve several suspects driving a car. The victim is the driver of another vehicle that’s being targeted by the suspects staging the collision for their own financial gain.

The suspects will most often use one of two techniques:

1. Swoop and Squat

Two or more suspects drive two different vehicles. They target an unsuspecting vehicle, most often an older model that only contains one victim. This is done so that there will not be any witnesses to the collision. The one or two suspects in the squat vehicle position their car in front of the vehicle driven by the victim. They slow to create a smaller space gap between themselves and their victim. Then, the swoop vehicle suddenly changes lanes to cut in front of the squat, thereby causing the squat vehicle to throw on breaks and stop. As a result, the innocent victim rear-ends the squat. Meanwhile, the swoop vehicle is long gone and the squat vehicle is claiming that an unknown vehicle cut them off and forced them to brake.

2. The Drive Down or Wave On

In this version, the suspect(s) are stopped at the entrance to a parking lot or an intersection. They wave on or yield the right-of-way to the victim. When the victim proceeds, the suspect intentionally accelerates to collide with the victim.

What Can Drivers Do To Reduce The Risk Of Being A Victim?

* Stay aware of your surroundings, paying close attention to what the vehicles several in front, behind, and beside you are doing and maintaining sufficient room between you and all other vehicles.

* Use caution when making a turn in front of another vehicle, even if they yield the right-of-way.

* Since suspects tend to look for innocent drivers that accidentally cross the center line and then sideswipe them, pay close attention to staying within the lines of a lane.

* After any accident, count the number of passengers and get their personal information. You may find that more people are listed on the insurance claim than actually in the accident.

* Avoid driving when you’re stressed; preoccupied with a cell phone, map, or food; or lethargic. All of these lessen the care at which you drive and your concentration abilities, thereby increasing your vulnerability.

* Have a camera in your vehicle to take photos of the scene, license plates, and the occupants of the other vehicle you have an accident with.

* Always call the police and get a copy of the police report. If the damage to the other car is minor, then ask the officer to specify this on the report, as this will make it more difficult for the other party to create more damage for a larger claim.

* Alert the authorities if you feel the accident was staged.

In closing, these staged traffic accidents often have criminal elements that reach far beyond just the suspected drivers. It’s often a criminal collaboration between unscrupulous doctors and attorneys that willingly and knowingly assist in the fraudulent insurance claim process.

What is the Difference Between Occurrence vs. Claims Made Forms?

All the property and casualty insurance policies you buy fall into one of two categories – “occurrence” or “claims-made.”   This distinction may impact drastically on:

1.      Whether or not your policy will respond to a claim;

2.      What your responsibilities will be in the event of a claim;

3.      How much your policy will cost up front and in subsequent years, and;

4.      How much it will cost to keep the coverage in effect, in the event of cancellation.

With all this riding on the type of coverage form you purchase; it helps to understand the pros and cons of each so that you can make an informed decision if options are available.

“Occurrence” form coverage is the simpler of the two.  Most property and casualty insurance policies fall into this category.  Quite simply, “occurrence” form coverage means that the policy responds to events that occur during the policy period regardless of when the claim is made.  Once the policy period is over, the policy will respond to covered claims, even if the claim is made many years after the triggering event (accident, wrongful act, injury, etc.). 

The far more complex “claims-made” coverage form responds only to claims that are made during the policy period, though the triggering event may occur prior to the policy period if there is a “retroactive date” on the policy.   The key to “claims-made” policies is maintaining continuous coverage.  Without “continuity,” insurers will not give you that all important retroactive coverage.

“Claims-made” coverage came into vogue in the sixties and seventies as professional liability policies gained a foothold and underwriters sought to contain the volatile nature of the “tail.”  In property and casualty insurance lingo the “tail” refers both to the optional coverage that may be purchased to extend the policy for reporting purposes, and to the typical length of time between the triggering event and the claim.   Asbestosis, which often takes years to develop, is considered a “long tail” exposure.  Libel and slander lawsuits, on the other hand, usually occur right after the triggering event, i.e., libelous newspaper article or news broadcast.

“Claims-made” policies are becoming more popular in commercial lines because soon after the policy year is over, actuaries will have a pretty good idea of how many more claims might be reported.  Subsequent claims, even if the triggering event occurred during that earlier policy period, will be charged to the later policy period when the claim is made.  The ability to “close out” policy years quickly, is a palpable benefit to insurers of the “claims-made” form.

How do you identify “claims-made” or “occurrence” policies?  “Claims-made” policies are easier to identify because they will typically advise you in the declarations or the first page of the policy:  “THIS IS A CLAIMS-MADE POLICY.”  Additionally, you can search for Extended Reporting Period, aka “tail” option, provisions in the form.  A space for “retroactive date” on the declarations page is another telltale sign of “claims-made.”

“Occurrence” policies are more difficult to spot.  While some policies might herald the occurrence nature of the form, in other cases it will be the lack of “claims-made” language and provisions that will provide the clues.

While “claims-made” might seem more onerous than “occurrence,” for the buyer there are some benefits that warrant mentioning.  First and foremost, there is the pricing issue.  The first year of “claims-made” coverage should typically cost somewhere between 40 and 85% of an “occurrence” policy.  The price automatically increases in subsequent years as the “claims-made” exposure increases.  Usually, after three to five years, a “claims-made” policy is thought to be roughly equivalent to an “occurrence” policy and should cost about the same.  In addition to the cost savings enjoyed early in the early years of coverage, in a competitive marketplace insureds can benefit as underwriters discount the step factors that bring up the price.  Also, although Extended Reporting Period options can be quite costly, it is rare that an insured will need to exercise such an option unless they retire or are unable to find retroactive coverage from another carrier.  Still, it’s a good idea to compare Extended Reporting Period options if you are presented with quotes from different carriers.  How long are the “tail” options and how expensive? 

While “claims-made” coverage can be confusing, it’s clear this coverage form is here to stay as the preferred choice for insurers across an increasingly broad array of product lines.  So get used to the concept now and be prepared to explore all the options carefully.

Worker Found Eligible for Compensation from Seizure Related Injury

In an August 2006 ruling, Connecticut’s Supreme Court ruled that the claimant in the case of Michael G. Blakeslee Jr. vs. Platt Brothers & Co, who was injured when co-workers tried to help during a seizure, is entitled to workers’ compensation benefits. Typically, workplace injuries caused by a seizure wouldn’t be eligible for compensation because the injuries arise from the medical condition itself and not from conditions in the work area. In the Blakeslee case, the claimant received two dislocated shoulders on February 13, 2002, when three co-workers tried to restrain him during his seizure. He had fallen near a large steel scale, and then started flailing his arms and legs as he regained consciousness.

The claimant filed a workers’ compensation claim contending that because the actual injury resulted from the restraint, and not the seizure itself, the shoulder injuries should be covered. The claimant argued that an injury received during the course of employment is eligible for compensation even if infirmity due to disease originally set in motion the final cause of the injury. The claimant also asserted that an injury inflicted by a co-employee is eligible for compensation, unless the injured employee engages in unauthorized behavior or the injury is the result of an intentional assault.

Initially, a workers’ compensation commissioner decided that Blakeslee was not entitled to workers’ compensation benefits. The commissioner determined that the claimant’s injuries resulted from a chain of events set off by a grand mal seizure unrelated to his employment. A workers’ compensation review board agreed with the finding. The review board stated that there is a prerequisite requirement for eligibility for compensation, which the claimant overlooked. The cause of the injury must arise out of the employment and work conditions must be the legal cause of the injury. The review board contended that the claimant’s seizure caused the need for first aid, which caused the injury. There was no element of the claimant’s employment involved.

Five out of seven Supreme Court justices reversed the board’s ruling. They were not persuaded by the argument posed by Platt Brothers, and the employer’s insurer, Wausau Insurance Co., that finding for the defendant would be in direct opposition to public policy because it would prevent employees from assisting co-workers in future medical emergencies. The majority noted that the co-workers restrained Blakeslee to keep him from harming other employees as well as himself. Their actions benefited the employer. The action was directly related to the employment and would therefore be eligible for compensation.

The two dissenting justices argued that the Supreme Court should not have accepted review of the case.

Workers’ Comp Claims for Mental Illness May Be Difficult to Diagnose, But Are Real in Today’s Workplace

When one thinks of workers’ compensation, images of workplace accidents and occupational diseases come to mind. Though the vast majority of workers’ compensation cases do involve claims for physical injuries and conditions, a small-but potentially growing-portion of workers’ compensation cases are based on mental or psychological claims, particularly related to stress experienced on the job.

Mental workers’ compensation cases fall into one of three categories: physical/mental, mental/physical, or mental/mental. A physical/mental claim involves a workplace physical injury that has progressed to a mental condition or disability; an example would be a back injury that lingers, and that results in the worker lapsing into clinical depression. A mental/physical claim involves a psychological condition arising out of the worker’s employment that has caused a physical illness; an example would be workplace-induced stress that causes ulcers. A mental/mental claim involves a psychological occurrence in the course of employment, which leads to a psychological injury or condition; an example would be an employee who witnesses a horrific workplace accident involving a co-worker, and who later develops a fear of operating the same equipment on which the co-worker was injured.

As with workers’ compensation claims that have only physical components, in order to be compensable, the claimed injury or condition must arise out of or occur during the course of employment. Some types of mental injuries are difficult to prove under this standard. For example, symptoms of physical ailments caused by stress (e.g., ulcers, heart attacks) may appear only after working in a stressful workplace for a long period of time. Furthermore, unlike claims based on a workplace accident, mental claims may not be linked to one particular incident, but rather to months or years of stressful working conditions.

Another example of the complexity of the cause-effect link in mental workers’ compensation claims is seen in claims based on post-traumatic stress disorder (PTSD). PTSD is a delayed psychological response to experiencing an extreme situation that overwhelms one’s usual ability to cope. Most commonly thought of in connection with soldiers and wartime, discussions of PTSD arose after the September 11 terrorist attacks. Though few would doubt the psychological impact of witnessing the devastation in New York or Washington first-hand, by definition, symptoms of PTSD do not appear for months or years after the event, making their connection to the workplace event difficult to assess.

Mental workers’ compensation claims represent a tiny percentage of all claims; estimates put claims with a mental component at about 1% of claims overall, although this figure varies by state. For a period of time in the 1980s and early 1990s, the incidence of claims with a mental component rose in some states, but stricter requirements imposed by state lawmakers, workers’ compensation boards, and courts stemmed this trend. In particular, mental/mental claims are least recognized.

Though workers’ compensation claims with a mental component represent only a small minority of claims today, the reality of the modern workplace should motivate all employers to be alert to their existence. White collar workers-who are most likely to claim an injury with a mental component-make up an ever-growing portion of the U.S. work force. Furthermore, today’s workplace puts great pressure on employees to be productive and cost-efficient. Many workers live with fear of job loss, as businesses continue to seek optimum competitiveness through “right-sizing.” All of these factors can breed stress.

All employers can take some basic steps to deal with increased stress levels in the workplace-

• Be alert to signs of stress among employees, and solicit input from employees and managers on this issue. Be aware that certain events, such as layoffs, may trigger stress levels in employees beyond what is to be expected on a day-to-day basis.

• Make employee assistance program (EAP) services available so that workers have ready access to help with dealing with stress.

• In the event of a severe workplace trauma, arrange for on-site intervention and counseling services.

Though these steps will not make a business immune from the possibility of a workers’ compensation claim with a mental component, they will, at the least, help make stress recognition and prevention part of the workplace ethic.