MacKinnon & Higgins - Problems, Solutions

Remember, your insurer, adjusters, fire repair contractors and restoration companies are in business to make a profit. And your insurance adjuster actually works for his or her company—not for you. So who will look out for your best interests when you have a loss due to fire, storms, water, theft, or vandalism?

We will. Even if it requires litigation in court.

If you have encountered any of the problems listed below, call MacKinnon & Higgins today. Or, if you have experienced a loss, have not yet taken any action on it and are unsure about what to do, call us now—before you make uninformed and irreversible decisions that could cost you many, many thousands of dollars in the long run.

The most common public adjuster problem.

If you decide to hire a public adjuster, or a person claiming to be a public adjuster, do not do so without checking with the State of Michigan Office of Financial and Insurance Regulation (877.999.6442) to determine whether that person has a valid license and has not had complaints filed against him or her. If you fail to take this step, you could be cheated out of insurance proceeds due you.

Ten potential problems.

1. Some insurers are fair, responsible and ethical. And it is possible that your claim may be handled promptly and that you will be adequately compensated for your loss. Unfortunately, today’s business model has changed. Excuses, interminable delays, low-ball tactics and unjustifiable positions relating to coverage issues and exclusions have become ever more frequently used tactics by insurance companies. Click here for more on the problem in the Bloomberg and McKinsey Report.

Also, click on the following link for a New York Times story about two Hurricane Sandy victims dealing with property loss and the low-ball tactics of an incompetent insurance adjuster.

2. The damage amount as determined by your insurance company and its adjuster may be considerably less than the amount of the actual loss that you have suffered. For example, the adjuster may suggest that items that are smoke and water damaged can be cleaned instead of replaced. However, when the property comes back stained and/or smells of smoke, the problem becomes your problem with the "restoration specialist." This is so despite the fact that your insurance adjuster recommended the restoration specialist. This problem is avoidable.

3. It commonly happens that an insured and the insurance company cannot agree on the costs to repair and/or the value of contents loss. And sometimes there are disputes as to the scope of repairs that are required. In such case, you will have to invoke the “appraisal process” contained in your insurance policy. You will need to employ an appraiser and you may have to petition the circuit court for appointment of a neutral umpire. Why? Because insurers are too often all too happy to hold onto your money since they make money off of money and have no incentive to seek an appraisal, agree upon an umpire or get the ball moving by petitioning the court for the appointment of an umpire.

4. The insurance company may suggest, or even seem to insist, that you use a particular fire repair contractor or one of its “preferred” contractors. Then, as problems develop with the repairs, the insurer’s preferred contractor is suddenly referred to as “your” contractor and the problems you have with them are your problems—not the insurance company’s—because you hired the contractor.

5. Payment on your insurance claim may be delayed because you are not aware of steps that must be taken to ensure that it is processed in a timely fashion.

6. Policies limiting the period in which you are entitled to claim additional living expenses, loss of use, lost profits and business interruption is a common problem. It may take far longer to replace your home or business than estimates suggest. It is critically important that you understand the terms in your policy, understand your options, and be in a position to hit the ground running.

7. Your insurance adjuster may explain that you are entitled to an “actual cash value” (ACV) payment and that your claim for “replacement cost value” (RCV) must await actual repair/replacement of your property. Only then will replacement cost “hold-back monies” be paid to you. Is this a problem? Click here for definitions of ACV, RCV and other insurance terms.

8. You could be told that the insurer has arranged for a “cause and origin” investigation. Next, the fire investigator wants you to sign a “release” form and asks for your permission to take a taped statement from you. And soon the insurance company sends you written notice that it wants you to file a “proof of loss” form within 30 days. Even more ominously, you could receive a letter from an attorney’s office, demanding that you appear for an “examination under oath.” The letter instructs you to bring bank statements, credit card statements, tax returns, utility records, telephone records and more. The letter also informs you that you may bring an attorney at your own expense. These are red flags—your claim is being reviewed by the insurer for possible denial. Your claim is in jeopardy—you need help now.

9. It is a big problem when a letter arrives from your insurance company telling you that your claim has been denied because there is no coverage; or because the cause of the loss is excluded; or because a policy condition was breached; or because you procured the loss, committed fraud, and falsely swore under oath; or that you misrepresented the amount of the loss. Or, perhaps the letter states that your insurer is not liable to pay because the policy was void ab initio. Big problem, indeed.

10. As stated above, insurance companies make money off of money they would otherwise have to pay on your claim. So they will be content to let matters drift. This can be a real problem if you do not know how to keep pressure on them.

Six typical problems with fire repair contractors.

1. Problems can occur if you fail to determine whether your fire repair contractor and salespersons are licensed by the State of Michigan and whether any complaints have been filed against them. (Check with OFIR at 877.999.6442 and/or the Residential Builders and Maintenance & Alteration Contractors Board at 517.373.8376). Moreover, does he carry liability insurance? Have you verified it? And what about building permits? Have they been obtained? Also, beware of any fire repair contractor who asks you to endorse the initial ACV check or your contents check so that repairs may begin. It could be the last you ever see of your insurance money.

2. If disputes develop with your fire repair contractor over the timing or quality of repairs to your home or business, you will lose all leverage if you endorse the final insurance check and deliver it to the contractor or if you consent to have the check sent directly to the contractor and not to you.

3. Some fire repair contractors will offer to have your building estimate done at no cost to you, but it may not be in your best interest to rebuild—you need unbiased advice based on your circumstances in order to make a sound decision.

4. What exactly has the fire repair contractor agreed to do? Repair to “as good or better,” whatever that is supposed to mean? Do the work stated on the building permit? The work on your public adjusters repair estimate? The work on your insurance company's adjuster's estimate? Something else? Written specifications should be incorporated into the agreement before the fire repair contract is signed.

5. You hired a building repair contractor, the contractor has been paid, but a subcontractor claims that he has not been paid and has filed a construction lien on your property. What can you do? More importantly, we know what to do to avoid this very real problem.

6. Although unusual, some fire repair contractors have been known to steal money by forging the insured’s name and/or the name of your mortgage company on the back of the insurance check.

A sampling of solutions from MacKinnon & Higgins.

No matter what problem you may experience with your fire, storm, water, theft or vandalism claim, we can help, advise and represent you. Here are just a few of the solutions we offer at MacKinnon & Higgins:

• We can review your declaration form and insurance policy to advise you on what is and is not covered and the extent of your various coverages.

• We can provide you with advice and guidance on completing your claim documents, including your proof-of-loss form. We can also recommend competent and knowledgeable public adjusters.

• We can provide representation as your legal counsel if you are called to an examination under oath (EUO), and we can thoroughly prepare you for it. In such cases, the insurance company retains an attorney to conduct the EUO for a reason. So it is highly advisable that you also have an attorney, and not just any attorney, but one who is knowledgeable and experienced.

• We can petition the court for the appointment of an umpire and suggest honest, competitive and unbiased umpires rather than the insurance industry “insiders” who your insurance company will invariably suggest.

• We can make recommendations and perform due diligence with respect to the drafting or review of contacts with public adjusters, fire repair contractors, cause-and-origin investigators and appraisers. Also, we can set up or review escrow arrangements proposed by your bank or mortgage company with respect to progress payments of insurance proceeds held in escrow by your bank or mortgage company during the course of repairs.

• If necessary, we can assist you in preparing and filing a complaint with the Office of Financial and Insurance Regulation of the State of Michigan.

• We can initiate litigation on your behalf. We sue insurance companies whenever necessary and advisable. Sometimes there is simply no other choice.

• Keep in mind that if you have even a small claim and it is denied by the insurer for fraud and misrepresentation, your ability to insure your property thereafter will be jeopardized.