United Policy Holders | Tip of the Month

Increditable
It may surprise you to learn that your credit rating is probably impacting the amount you're paying for insurance more than your driving record or the condition of your home. This is called "credit-based insurance scoring." The worse your score, the higher your premium. There is no logical connection between your credit standing and your likelihood of having an accident or a home fire, so advocates believe insurers are using credit scoring to discriminate and overcharge. But despite years of efforts by United Policyholders and other consumer groups to ban the practice it remains legal and very common in all but a few states.


What can a careful consumer do?

• Review your credit report and fix any errors you find. You are entitled to get one free credit report annually from each of the three big credit bureaus. Beware - most sites that promise a free credit report are not free because they require you to purchase something.
  
  www.annualcreditreport.com is the official site sponsored by the credit bureaus and you can use it to obtain and compare credit reports to see what information is missing or incorrect - particularly the report from the bureau your insurance company used to get your score. You can also get a free report and score via www.creditkarma.com. Errors on credit reports can be hard to fix, especially if you're not a "V.I.P.", as a recent New York Times article points out, but be persistent.
• Seek out insurance companies that give discounts for positive actions such as pay-by-the-mile auto insurance which gives you the power to drive less and pay less for your insurance.

Insurance credit scoring penalizes victims of medical catastrophes and people that have suffered a job loss. The practice also penalizes consumers for rational and thrifty behavior. If you shop around for insurance, each insurer you get a quote from will make a credit inquiry. Their inquiries will be recorded and in turn hurt your credit score. If you like to use one credit card for rewards, you'll get a worse credit score than if you spread the charges over two or three cards. If you open a card account at a department store to take advantage of a 10% discount on first time purchases, your credit score will drop because of the inquiry and credit line.

Bottom line: Encourage your state lawmakers to ban credit scoring, and support United Policyholders' Advocacy and Action program by making a tax-deductible donation today. To learn more about this issue, read a special UP report by Economist Birny Birnbaum titled; Credit Scoring in Insurance: An Unfair Practice.

To read past Tips of the Month, click here. To suggest a future Tip of the Month, click here to submit your idea. 

Lack of home insurance can turn disaster into financial nightmare

2011 has seen more than its share of natural disasters, ranging from record-breaking tornado outbreaks to floods and wildfires. While catastrophic events disrupt the lives of everyone in their path, people without home insurance, renter’s insurance or the proper disaster coverage also must deal with debilitating financial consequences.

Unlike auto insurance, which is required by law, home insurance is not a mandatory purchase for many Americans. If you have a mortgage, your lender likely will require that you buy home insurance, but if your home is paid off, home insurance is an optional expense.

Many Americans’ homes aren’t insured for damage from disasters such as a tornado.

Some homeowners choose to get rid of their home insurance when times get tough. According to a 2009 study by the Insurance Research Council, 5 percent of homeowners reported canceling their policies as a result of the economic downturn. Others inadvertently let their policies lapse, says Ronald Reitz, a board member of the National Association of Public Insurance Adjusters. Reitz works with consumers to prepare and file insurance claims as president of Quality Claims Management.

“We often see homeowners who find that their policy was canceled two days or a week prior to this huge disaster,” Reitz says.

Renters disregard insurance

Homeowners aren’t the only ones often left dealing with the consequences of a disaster without insurance.

“Far too many renters just don’t buy rental insurance,” says Jeanne Salvatore, senior vice president of the Insurance Information Institute. Many renters think they have nothing to worry about since they don’t own the property, but if their apartments or rented homes are destroyed, their belongings usually are as well.

That’s what happened to Spencer Belkofer, an interactive marketing consultant in Alabama. “A few years ago I was renting a home which burnt to the ground,” he says. “I did not have renter’s insurance and lost everything I owned.”

Do you need flood insurance?

Not only can homeowners and renters be hurt by not having property insurance, but they can be caught off-guard without flood insurance as well. “Ninety percent of all natural disasters have some form of flooding, so the risk is very high,” Salvatore says.

A standard homeowner’s or renter’s insurance policy won’t cover flooding, even if it’s connected to another type of disaster. For example, if there’s a hurricane, a standard policy would cover wind damage, but flooding that resulted from the hurricane would be covered by a separate flood insurance policy.

While every American doesn’t need to buy flood insurance, “more people need it than have purchased it,” Salvatore says. Many renters don’t realize that they can benefit from flood insurance as well, since it not only covers damage to a building’s structure, but it also covers belongings that are damaged in a flood. You can find out whether your region is at a low, moderate or high risk of flood damage by visiting FloodSmart.gov.

Considering the costs

A standard homeowner’s or renter’s insurance policy won’t cover flooding, even if it’s connected to another type of disaster.

So, how much can a lack of insurance cost you? A 1,000-square-foot home with only 2 inches of flooding could sustain more than $10,000 in losses when you consider the costs of cleaning, repairs and lost personal items, according to the National Flood Insurance Program, created by Congress to offer flood insurance.

It typically costs more to rebuild a home than it does to construct one from scratch. One reason is because there may be demolition costs involved. Also, contractors must rebuild from the top down, which is a more time-consuming process than building from the ground up, according to building cost data provider Marshall & Swift/Boeckh.

Costs are likely to rise even higher after a natural disaster since so many people will be needing to rebuild at the same time, Reitz says. “As that demand goes up, so does the price and cost of the materials and the labor,” he says.

To find out how much a disaster would set you back:

1. Check with a local homebuilders association, surveyor or reputable builder to find out how much it would cost to rebuild your home.

2. Create an inventory of your possessions to get an idea of how much you’d have to spend to replace all of your belongings.

3. Add these two costs together to determine how much you should set aside if you decide to skip home, renter’s or flood insurance.

Should you ’skimp’ on insurance?

While other types of disaster coverage such as earthquake insurance may come into play for some people depending upon where they live, “everyone should have a homeowner’s policy or renter’s insurance policy to protect their home, and most people should have flood insurance,” Salvatore says.

An insurance agent can tell you about other types of risks that might affect your region.

“Insurance is an area that people seem to skimp on,” Reitz says. “But do you really want to skimp on insurance when it comes to protecting your home and your possessions?”

–Tamara E. Holmes

Adjuster Explains How To Maximize Claims

WSBTV: Jim Strickland reports.

http://www.wsbtv.com/video/27726226/index.html

Q&A: What to Know About Homeowners' Insurance

By Lily Leung
Friday, May 6, 2011 at 6:28 p.m.



High pressure over the western part of the U.S. created dry, offshore winds that likely caused brushfires to spread this week in certain parts of San Diego County, including Camp Pendleton and Santee.

The Camp Pendleton incident happened in a remote area but the Santee brushfire came close to homes before firefighters were able to put out the blaze, news partner Channel 10 reported, raising the perennial issue of homeowner's insurance.


Ron Reitz

Ron R. Reitz, a licensed public insurance adjuster in San Diego, talked with the Union-Tribune for this week's Five on Friday to give people tips on what kind of property insurance to look for and what key questions to ask while shopping for a policy.

Reitz is the past president of the California Association of Public Insurance Adjusters and is an officer on the Board of Directors of the National Association of Public Insurance Adjusters. He's an expert on hazard claims. (Responses have been paraphrased and edited for clarity.)

Q: What do San Diego homeowners need to know to make sure they have the right insurance for their property and possessions?

A: I often tell people they need to take a look at their insurance policy on a regular basis, especially if they've made any changes or improvements, they need to revisit their coverage. People are always surprised they don't have enough coverage.

Also be sure to tell your agent about any antiques, art, jewelry, collectibles, all those types of things, any collections or valuables. They will be added to a schedule. Check to see if you are covered for building-code upgrades.

Q: What's a common pitfall with property insurance?

A: People immediately ask, 'What's the cheapest?' It's something I wouldn't skimp on - and you have to check what the policies offer.

Q: What are some things condo owners need to know?

A: For condos, there are two different types of policies. One is the association's policy that covers all the common areas of the property. The other one is additional policy that covers the unit and everything inside of it, like the cabinets, wall coverings, drapes, etc. A lot of people mistakenly think that if they're covered through the association policy that it covers everything inside the unit.

Q: What are some things that threaten properties in San Diego, specifically natural disasters?

A: San Diego's biggest threats are fires. Floods naturally occur following fires, which can damage properties. Tsunamis are not very likely but it’s possible. Earthquakes are possible; a lot of people don't feel them when they happen here.

Q: How should a homeowner prepare for the next disaster?

A: Make sure you have some type of plan. Let's say we have a big fire in town...you have to decide where you will go. It's important to have more than one location. I recommend that people take inventory of all of their personal property. A good time is the beginning of the year when you typically get new stuff during the holidays.

For more testimonials, please visit our website: www.qualityclaims.com and click “Testimonials.”

Quality Claims is a member of the Better Business Bureau and the National Association of Public Insurance Adjusters. Quality Claims is nationally licensed as Public Insurance Adjusters or Insurance Consultants and complies with the Department of Insurance Regulations.

QCMC Volunteer Day at Balboa Park

On Thursday April 28^th members of the QCMC Volunteer Team worked with the nonprofit organization Friends of Balboa Park to plant 35 trees in palm canyon (right behind the international houses). We were also on garbage duty and cleaned up the entire area.  It was a beautiful day and we all had a great time giving back to our community!

It's not just about the money. It’s about getting the homeowner's life back in order.

The Value of a public adjuster for a property damage insurance claim.

by Joe Welch

Who do you call if you are having problems with your insurance claim? Getting the proper professional help after a disaster is very important.

Why use a Public Adjuster?

Public adjusters are licensed and trained professionals that help you - the insured homeowner - to rebuild your home and get the assistance that was promised to you when you contracted with your insurance company. After a major disaster or extensive storm/fire damage, most major insurance companies do a good job of responding to and handling their customer's immediate needs and claims. However, they may not do such a good job at restoring the homeowner's house and property to its previous condition. That is when you as a homeowner may need some help.

You could call an attorney but that is very expensive and most attorneys really don't know how to cost-effectively negotiate a settlement that leaves all parties happy. This is where the special training and experience of a public insurance adjuster comes in. The goal is not to win or to lose - it is to arrive at a financial agreement that enables a homeowner to get their home and property back to the shape it was before the disaster occurred.

The Public Adjusters (PAs) value-add for a disaster victim is their intimate knowledge of insurance coverage and policies. Many PAs previously worked in the insurance business before becoming a Public Adjuster. The PA will need to review the specific insurance policy to see what the homeowner is truly entitled to, establish the value of the damage, and, maybe most importantly for most disaster victims, manage all aspects of the claim process to take the burden off the shoulders of the besieged policyholder.

Working a claim can be akin to herding sheep. As long as the herd is in the pen, everything is ok, or as long as the claim is one dimensional, the homeowner can manage it. However, a typical claim can get complicated fast. The sheep start running wild and there is no way one person can herd them up.

The normal claim process starts with the notification to the agent or carrier. An insurance company adjuster will make contact and if necessary, make an appointment to see the loss. At the loss the company adjuster will review coverage, scope the damages and advise if any additional documents are required. Some will issue payment on the spot; others will need time to investigate the claim or will wait until they have received all the documents before updating the homeowner regarding the settlement.

There can be dozens of documents that need to be completed, inspected and reviewed. Keeping track of these can be a challenge.

In addition to managing document flow and timing, the claims process also requires working with a variety of people. In many cases, homeowners end up working with a succession of different insurance company adjusters. Usually there is the first team who respond to the emergency or disaster area. Then a second team takes over to keep the process moving, and then a third team takes over the investigation and payment process. The homeowner may end up dealing with a half dozen or more different insurance company adjusters, who often do not communicate well with each other.

The claim process also requires a variety of outside specialists to establish the damage, provide quotes and estimates on repair and rebuilding costs and to replace destroyed possessions.

Insurance company policies and processes can be byzantine, hard to understand, and often quite frustrating to someone who is not familiar with how insurance companies operate. For example, if the homeowner has a mortgage on the destroyed property to be rebuilt, the payment checks often first go to the mortgage lender who then has to disburse it to the homeowner. This can take months.

The entire process can get very complicated and hard to manage - especially if the homeowner has a job and family obligations. Making steady progress on a claim can take 20, 30 or 40 hours a week, leaving little time for job and family. The PA can take care of the claim in its entirety. They know what forms are required, what supporting information will be needed and the time frame requirements of the insurance carrier.

Do Public Adjusters Need to Be Licensed?

In 44 of the 50 states, Public Adjusters are required to be licensed by the state they are doing business in (more states are in process). In contrast, in many states, the Insurance Company's staff adjusters are not required to be licensed.

For PAs, most states require a test, and in order to renew, there must be a number of Continuing Education hours completed per license period. This requirement helps the Public Adjuster to stay up to date with the latest developments in adjusting and insurance law. There are organizations both state-based and nationally (National Association of Public Insurance Adjusters, or NAPIA) for Public Adjusters. These organizations provide a forum for the PAs and a set of high ethical standards its member adjusters must adhere too.

Its not just about the money, it’s about getting their lives back in order.

Many people value Public Adjusters simply because they can usually negotiate a more complete settlement for a claim than a homeowner can do on their own. However, maybe even more attractive is the opportunity to have a trained, experienced and licensed professional Public Adjuster to take over the minutia of managing an insurance claim, to enable the homeowner to stay in control of their lives and have peace of mind that they are getting a fair claim settlement.