Losing your house in a fire is devastating, but having your Insurance Company renege on their promise to cover your loss is beyond the pale. But that is exactly what is happening all over California as increasing firestorms destroy happy lives.
From Lake Tahoe to San Diego, from Santa Cruz to Malibu the insurance industry is ducking and weaving in an attempt to deny homeowners the full replacement value of their home.
It is these Insurers who set the replacement value of your home in the first place.
The scam starts by insurance companies offering low premiums to homeowners as a marketing tool to get their business. To do so, the agents and/or companies undervalue the cost of the dwelling. Then, when the catastrophe hits, the company refuses to pay the full replacement value of the home, much to the surprise of the victimized homeowner.
A recent survey by United Policyholders found that 75% of homes were undervalued by an average of $240,000 in the recent fires in San Diego and San Bernardino Counties. And only 46% of the victims had received offers eight months after the fire.
This is not a new problem. Insurance companies have been trying to get away with this fraud for years.
When Katrina hit New Orleans most, if not all, of the victims found they were underinsured. Moreover, the insurance companies began to utilize the small print in their adhesive contracts to avoid paying claims.
An "adhesive" contract is one in which the terms are dictated by one side and are not the subject of mutual negotiation. In other words, the companies "stick" you with their terms.
Fortunately the law is on the side of the victims.
Gigantic State Farm was held liable for $2.5 million for its bad faith in handling the losses of its insured. State Farm claimed that its contract provided protection against wind, but not water and it did not have to pay the homeowners claim.
A federal judge ruled that State Farm was liable for the damages and a jury awarded punitive damages to the victims for the bad faith actions of State Farm.
But was this insurance
company contrite? Did it do the
right thing for other victims?
No. Here is State Farm's response:
Robert Hartwig,
chief economist for the Insurance Information Institute in New York, said
before the jury announced its decision that a punitive damage award would be
"distressing" for insurers. "It adds even more cost and more
uncertainty to the other problems that already exist in the Mississippi
homeowners insurance market," he said.
Note to Mr.
Hartwig: There is no uncertainty
if you pay the rightful claims owed to people who acted in good faith. Nonetheless State Farm continues to
argue that the result of this case will make it harder for them to "settle"
future claims.
State Farm
customers should not be settling for anything less than what they are
rightfully owed.
The actions of the
Insurance Industry have been so heinous that it forced one former U.S. Senator
to see the light. Trent Lott a
one-time political beneficiary of these companies lost his own house and vowed to fight the Industry to his dying day. It is unfortunate that it took a
personal calamity to change the Senator's views, but he joins the thousands of
victims who must continue to fight their insurance company, even as much of
their life remains in ruins.
There are several
ways to get help. The California
Department of Insurance will help investigate disputes with the companies. http://www.insurance.ca.gov/
Consumer Advocates
such as United Policyholders http://unitedpolicyholders.org will advocate for consumers and have a wealth of
information regarding how to deal with your insurance company.
In addition, all
consumers should research how different companies handle these catastrophes
before buying insurance. There are
actually some companies who pay their claims in a timely manner. You should probably avoid the mass advertisers
who claim to be a "good neighbor" or will put you in "good hands."
But the best way to
fight these corporations is to have a strong advocate, your own personal lawyer
to deal with these companies for you. Victims should not have to fight for their own money. The insurance industry is in a position
of power and many victims walk away with less than their due, simply because
the process seems hard. And given
the complete destruction of their lives many victims are often not mentally or
physically able to take on their insurance company.
So, if you are ever
the victim of a fire, fight back.
Don't get burned after the fire.
Hire qualified legal counsel and insure your rights are protected.
As we know well,
your insurance company is only a "good neighbor" if you never make a claim.
Onward,
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