COLORADO | TEXAS
INSURANCE CLAIm: dangerous facts
If you live in Colorado or Texas, then you are painfully familiar with hail. It strikes every year like mother nature has an internal alarm set. In fact, according to the Insurance Information Institute, hail damage causes the state of Texas to have the highest number of properties affected and the highest average claims loss. Colorado receives the highest frequency of large hail in North America and most of the world according to the Rocky Mountain Insurance Information Association. Therefore, the question is not if you and your family or business will be affected by hail, it's when?
Annually, Colorado and Texas homes, cars, businesses, and other property are severely damaged by the icy nuisance. Billions of dollars in damages are filed with insurance carriers and substantially more goes unfiled from people unfamiliar with the claims process. Understandably, filing an insurance claim can be hard to navigate, lengthy, and confusing.
Insurance is a business and their objective is to bring in more money in premiums than they pay out in claims. The most common way insurance carriers achieve this, is to deny claims that should be covered and underpay claims that are covered. Attorney and Author Ray Bourhis wrote “The average American spends thousands of dollars per year on insurance. Homeowners, automobile, medical, life, business, disability, umbrella and other coverages. Because most of us never suffer the large losses that everyone worries about, people have very little experience in dealing with insurance companies on large claims. Those that do are often in for a bit of a shock. Delay, the use of complex policy language to deny claims, and substantial underestimating of losses by carriers are common. Many people don't realize that insurance companies, like banks, earn their profits from investments, stocks, bonds, venture capital and real estate. The profitability of a company depends on how much money they have available to invest. If a company owes X million to all claimants at a given point in time, it can save 8% or more of that per year in investment profits by merely engaging in delay. It can save another 30 to 40% by engaging in lowballing. Another 20 to 30% can be saved by wrongful claim denials on confusing policy language.” (http://www.badfaithinsurance.org/reference/General/0007a.htm)
When disaster strikes, policyholders do what they know to do. They call their insurance carrier and report the damage. Their carrier then sends out an adjuster to access the damage. [It’s wise to have your contractor present at this adjuster meeting. Keep in mind that the adjuster works for the carrier and your contractor works for you.] After the adjuster has inspected the damage, they go back to their office and write up your estimate. [22 of the top 25 carrier’s use Xactware/Xactimate. (https://www.xactware.com/en-us/company/about/#) BranchStone also uses Xactware/Xactimate for our estimating software.] Your insurance carrier/adjuster will then send you their estimate which is often accompanied by a check. At this point, most policyholders assume that their carrier/adjuster completed a fair assessment and covered all the necessary components to return them to their pre-loss condition. But did they?
Most adjusters are not construction professionals. To become an adjuster in the state of Texas the only requirements (found in Sec. 4101 of the Texas Statutes) are that the individual must be 18 years of age, trustworthy, reside in Texas or one that has reciprocity, submit application and fees to the State of Texas, complete an approved pre-licensing course, and pass the state approved examination. An approved pre-licensing course does not include construction, Xactware/Xactimate, manufactures installation instruction, building code, or OSHA law and regulations training. These components are crucial to thoroughly write a complete estimate. [Specifically, the pre-approved course includes: (.5 hrs) - Insurance History and Regulation (.5 hrs) - Protection of Consumer Interests (.75 hrs) - Insurance - What It Is (.75 hrs) - What is a Claims Adjuster? (.5 hrs) - Licensing Requirements (1 hr) - Contracts (3 hrs) - Insurance Policy (.75 hrs) - Loss Settlement Valuation (1.5 hrs) - Adjusting Losses (1 hr) - Settling Losses (3.5 hrs) - Dwelling Policy (2.5 hrs) - Homeowners Policy (.25 hrs) - Adjuster Math Problems (.5 hrs) - Flood Policy (1 hr) - Farm Policy (.5 hrs) - Crop Insurance (2.75 hrs) - Personal Auto Policy (.75 hrs) - Commercial Package Policy (3.25 hrs) - Business Owners' Policy (1.75 hrs) - Commercial General Liability (1.5 hrs) - Commercial Auto Policy (.5 hrs) - Bonds/Surety (1 hr) - Ocean Marine Insurance (.5 hrs) - Inland Marine Insurance (.5 hrs) - Aviation Insurance (1 hr) - Workers' Compensation Insurance]
Colorado does not license insurance adjusters. Residents wanting to adjust in Colorado obtain a nonresident license in another state, with the majority choosing Texas or Florida. Adjusters with no experience usually break into the industry when a catastrophe happens. There is always a shortage of adjusters as insurance companies scramble to meet state deadlines during these CAT events.
BranchStone consistently receives carrier/adjuster estimates for hail property damage missing, on average, 40-70% of the repairs needed and oftentimes substantially more. It takes years and years of adjusting experience to properly scope a damaged property. Even with years of experience, damages and repairs needed can and do go unnoticed because adjusters are not actively involved in the construction field.
Did you know that almost all building codes require that along with being compliant to the building code itself, the products being installed must be installed in accordance to "approved manufacturers installation instructions”? (International Residential Building Code IRC R903.1 International Building Code IBC 1503) That means, unless adjusters are actively involved in the actual construction and installation of building materials, there is a good chance they are not covering your project properly.
Most policies have ordinance and law (code upgrade) in them, but we have never received an initial estimate detailing any line item included only on the basis of building code. BranchStone has on numerous occasions had to send in documentation specifying the local building codes for the carrier/adjuster to recognize that these codes are required for us to do our job. Similarly, we have had to send in manufacturer installation instructions for some carriers/adjusters to acknowledge that what we have included in our estimate is warranted.
Not everyone will understand building code, manufacturers installation instructions, OSHA requirements, etc., but the bottom line is that if you don’t choose a company that has knowledge and understanding of the construction field and insurance process, then there will be things that get missed or left out.
Many contractors simply accept the initial scope from the insurance carrier/adjuster, do the job and move on to the next. They either don’t know the process well enough or they have done it before and don’t want the headache that follows when you’re knowledgeable on all fronts of the rebuilding process.
BranchStone cares about the details concerning your investments and we show ourselves approved by doing our job thoroughly.
You pay one hundred percent of your premium, you should get an estimate that is one hundred percent complete. “The devil is in the details.”