We send our heartfelt condolences, aloha and prayers to Maui and all who have lost loved ones in the devastating wildfires, and to those who have lost homes, businesses, and property.
In the days and weeks to come, many will be forced to deal with an insurance company in connection with the loss of a home, vehicle, or other property. Here are some tips and information on handling the process.
As you may know, Foster Law has represented dozens of homeowners with insurance claims that were wrongfully denied by Lloyd’s of London following the 2018 Kilauea eruption. We have been litigating these claims in the courts for over 5 years now. To avoid unnecessary delays and problems with the insurance claims process, here is some general information to consider. This is not intended to be legal advice, but rather general information on some things to think about when presenting and pursuing an insurance claim.
- File a claim.
Claims should be filed as soon as possible. Filing a claim can be as simple as calling your insurance company to report a loss. You may or may not be required to submit a written claim form. Whether your home has been damaged or destroyed, file a claim as soon as possible. If you report the claim over the phone, ask the agent, broker, and/or insurance representative to send you a copy of any claim form submitted on your behalf.
Claim forms should be brief. Avoid any speculation as to what caused the loss. Also, avoid speculating on the value of any property damaged or destroyed…that will come later.
- Policy Coverages – immediate financial help may be available.
For homeowner’s claims, immediate financial assistance may be available in the form of “Additional Living Expenses” (ALE) and/or “Loss of Use” coverage(s). These coverages may provide money to pay for temporary housing, replacement of clothing, personal effects, and living expenses. A discussion about the availability of these coverages should be undertaken when you file your claim. If the insurance company advises these coverages are available, ask when you can expect to receive payment. If the insurance company advises that they are not available, review your declaration page of your policy to confirm that you are receiving the correct information.
If your home was destroyed or damaged, “Dwelling” coverage is the coverage available to compensate you for the “total loss” or repair your home. A total loss occurs when the home, or dwelling, is destroyed. If your home was destroyed, then you may be entitled to the policy limits of the dwelling coverage. If your home was damaged, you should receive compensation sufficient to repair the damage to your home. If the damage to your home exceeds the dwelling coverage policy limits, then you should receive the dwelling coverage policy limits.
Personal property coverage is the coverage available to compensate you for destroyed or damaged personal property. Creating an inventory of destroyed or damaged property should be done as soon as possible to ensure that all such property is identified.
For auto claims, rental car coverage may be available to provide you with a rental car until you receive your “total loss” payment. Total loss payments should be made as soon as possible after the reporting of the claim. The total loss payment offered by the insurance company is negotiable. If you do not believe that the payment offered by the insurance company is enough to cover the replacement cost of the vehicle, you should negotiate the amount offered. When negotiating a vehicle total loss claim, you may want to present listings (Craigslist, Facebook Marketplace, etc) for comparable cars for sale in Hawaii. Auto insurance companies oftentimes determine value based on claims software that may not accurately account for car values in Hawai’i.
- Request a certified copy of your policy.
At the same time you file your claim also request a “certified copy” of your policy. Your policy is the roadmap for coverages and the claims process. You can review the policy’s declaration page to identify coverages, and the policy itself is to identify time periods the insurance company has established for responding to claims. The policy can be cross-referenced when an insurance adjuster tells you to do something. Oftentimes, insurance adjusters will instruct policyholders to do things that are not required under the terms of the policy.
- Communicating with an insurance company.
Communications with an insurance company after a catastrophic loss may be the most difficult aspect of the insurance claims process. Those who have suffered the loss of a home, business, vehicle, or any property are oftentimes contacted by insurance claims adjusters soon after filing a claim. In many cases, folks are communicating with claims adjusters during times of emotional trauma, anxiety and vulnerability.
Unfortunately, insurance company adjusters will use heightened emotions to gain an advantage in the claims process. Adjusters are trained to gather and use information from policyholders to limit or deny coverage/payments for losses.
Therefore, as difficult as it may be, try to limit conversations with insurance adjusters. If you are asked to provide a statement, first confirm with the adjuster that the statement is required under the policy. If the statement is required, you may want to consult with an experienced attorney who can provide advice on what to say and what not to say. If you make a statement without an attorney, try to stick to facts and avoid speculating on the cause of the loss and/or the value of the property lost.
To the extent possible, request that the insurance adjuster confirm everything they say over the phone in an email or letter. Oftentimes, an insurance adjuster will say one thing on the phone and then do something completely different when it comes time to pay. You may want to start a claims diary that details conversations with claims adjusters. If you do start a diary, only write down things the adjuster tells you – avoid writing anything about your own thoughts and judgments regarding the adjuster, your frustrations or the claims process.
- Avoiding speculation during the claim process.
When communicating with an insurance company, avoid speculating on what caused the loss or the value of what you have lost. In the 2018 Kilauea eruption, hundreds of homes were destroyed by fire, not lava. Fire was a covered (insured) peril under homeowner’s policies. Due to evacuations, some homeowners assumed that their homes were destroyed by lava.
Insurance companies used certain unintelligible and ambiguous language in the insurance policies in an attempt to avoid paying millions of dollars in claims to those who desperately needed the money. Not until the insurance companies were sued, and motions to dismiss the lawsuits were denied by the Court, did the insurance companies pay money toward the claims.
Do not give the insurance company any ammunition to deny or limit payments owed under the policy.
- Claim investigation.
After you file a claim, an insurance claims adjuster will be assigned. The claims adjuster’s primary job is to investigate the claim and to make recommendations regarding coverage and payments. If an insurance company has numerous claims, a temporary claims office should be established so folks can have a place to go for information and to collect claim payments. This did not occur following the 2018 Kilauea eruption and it caused significant issues, problems, and frustration for claimants.
The first question to ask a claims adjuster in a homeowner’s claim is when payments for ALE and/or loss of use be made. As these coverages provide immediate payments for living expenses incurred after being displaced, ALE/loss of use should be made asap. These coverages are among the most important since they provide financial relief, piece of mind and short term relief from the emotional impact of losing a home/property.
The claims adjuster should visit the property as soon as possible after the claim to document damage or destruction. In auto claims, a photograph of the vehicle will sometimes suffice. A claims adjuster may request a list of personal property damaged or lost. They may also request a value for each item of damages/lost personal property.
The claims adjuster will also ask you, the policyholder, questions about what happened. Unless you witnessed what happened first-hand, in-person, the answer to this question should be the truth – “I don’t know”.
It is the job of the claims adjuster to gather fire and police reports and interview any witnesses. It is not the job of you, the policyholder, to play detective or to investigate the cause of the loss. It is the job of the claims adjuster to offer her/his opinion on damage if the property was not destroyed.
claims adjusters use software to calculate the cost to repair damage to homes and vehicles. It is important to request the damage report, then obtain an independent assessment of the damage and the cost to repair. It is worth paying an experienced contractor for her/his opinion.
- Everything is negotiable.
If an insurance company offers a payment that is less than what you believe you are owed, you can negotiate the payment offered. Just because an insurance company proposes a payment on your claim, that does not mean that offer is a final offer. In many cases, insurance companies will offer lower amounts than they are willing to pay in an effort to safe money. There is no harm in negotiating.
- Be wary of the statute of limitations.
The statute of limitations is a time limit for filing a lawsuit. If the insurance company denies your claim or fails to pay what is owed on the claim, your only option may be to file a lawsuit. However, if you wait too long to file a lawsuit, the statute of limitations may bar the pursuit of any relief. For more information on the statute of limitations, contact an attorney experienced with insurance issues.
- Attorneys and public claims adjusters.
Hiring an attorney or public claims adjuster may not be necessary in connection with your claim. I hope and pray that insurance companies with claims on Maui will do the right thing and promptly pay all claims. However, if your insurance company sends you a “reservation of rights” letter or advises that there is no coverage or that coverage is being investigated, you may want to consult with an experienced insurance attorney asap. Many experienced attorneys will not charge a fee for an initial consultation.
When consulting with an attorney, it is important to bring your policy and any communications and correspondence received from the insurance company/adjusters. In some cases (like the homeowner’s claims arising out of the 2018 Kilauea eruption), the only way to compel an insurance company to pay when coverage is denied is to file a lawsuit.
A Public Adjuster helps a homeowner present a claim to the insurance company. When it comes to public adjusters, they can assist with the presentation of a claim but they cannot file a lawsuit on your behalf if coverage is denied or if there is a disagreement about what is owed on the claim. Also, there is no attorney-client privilege over communications with a public adjuster. As such, if the claim ends up in a lawsuit, the attorney representing the insurance company can seek to compel the communications by and between the insured and the public adjuster. Communications with an attorney are privileged and cannot be compelled.
- An insurance company’s good faith obligations.
If you are making a claim under your own Insurance policy, the insurance company owes you a duty of good faith and fair dealing. This duty requires that an insurance company not handle a claim based on its own financial best interests. Below is a quote from the case that provided policyholders with the legal right to pursue a legal case against an insurance company that did not act in good faith:
“The special nature of an insurance contract has been recognized by courts and legislatures for years. A whole body of case and statutory law has been developed to regulate the relationship between the insurer and the insured. An insurance Lucy is not obtained for commercial advantage; it is obtained as protection against calamity. In securing the reasonable expectations of the insured under the insurance policy there is an unequal bargaining position between the insured and the insurance company…Often the insured is in an especially vulnerable economic position when such a casualty loss occurs. The whole purpose of insurance is defeated if an insurance company can refuse or fail, without justification, to pay a valid claim. We have determined that it is reasonable to conclude that there is a legal duty implied in an insurance contract that the insurance company must act in good faith in dealing with its insured on a claim, and a violation of that duty of good faith is a tort.”
- Communicating with friends and family regarding your insurance claim.
It is human nature to communicate with friends and family. However, if you send emails, texts, social media messages, or other electronic or written communications regarding an insurance claim, those communications may be compelled by the insurance company down the road if your claim ends up in a lawsuit. This isn’t to say that you should not communicate with your loved ones, however, be careful what you say as anything that is communicated in writing may be used against you in a lawsuit.
