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Local Voices

Insurance is a Necessary Evil; Learn How to Dance with the Devil! Expert Explains the Games Insurance Companies Play

Talk to any New Jersey business or home owner at a post-Sandy recovery meeting, and you’re bound to hear their tale of woe.  Not just over the damage done to their home or business, but over their ongoing battles with their insurance company.

Most people have come to realize that insurance is a necessary evil, but few have a clue as to how to dance with the devil!

According to a recent article in the NJ Star Ledger, “While the insurance company likes to note that the vast majority of Hurricane Sandy claims are now closed, a Star Ledger review of state data shows that nearly one out of every four of those claims resulted in no payment to a policyholder.”

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It’s no surprise to Mario Corletti, case manager for Price Law Group [PLG].  He’s the New Jersey representative for the firm, which specializes in disaster recovery insurance claims.  “New Jersey residents, businesses and homeowner associations are leaving millions on the table.  Why? Because over 90 percent don’t pursue claims with the  help of an attorney advocate.  They try to battle this on their own, and they simply don’t have the time or the experience to win.”

Price Law Group is a national firm that quickly hits the ground in disaster areas like New Orleans, Oklahoma and NJ with a team of architects, engineers, adjusters and lawyers to help those affected get what they need to rebuild.

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Corletti outlined a few of the insurance issues facing home and business owners here in New Jersey.

A Surge of Claims & Lack of Experienced Adjusters:  While insurance companies learned some lessons from Katrina, they weren’t prepared for the flood issues caused by Sandy.  Ultimately want to pay the claim, but they are overwhelmed by the onslaught of claims.

As a result, in their efforts to close as many claims as possible, they’re working with highly inexperienced adjusters. 

Corletti notes that it’s a training issue.  Anyone can take a three-week class to get their state license.  That individual is then sent out to do a $400K claim with little to no experience.  “You just can’t expect them to do a credible job,” he said.

For example, most insurance companies are hiring independent adjusters who are not doing a thorough inspection.  Some are just doing a drive-by, looking over the property quickly and not doing due diligence and checking for all the damages.  They simply don’t have the experience, and they’re sacrificing quality for speed.  No surprise considering that 450,000 private insurance claims were filed in the Garden State alone (not counting National Flood Insurance Program claims).

Actual Cost vs. Covered Cost:   Adjusters are in such high demand, that they are also coming in from other states due to state licensing reciprocity.  Adjusters who come from other states to work in New Jersey typically get a $400 daily fee.  They use a standard program called “Xactimate” to adjust pricing from state to state.  However, the labor charges can be completely off. 

For example, Corletti recently worked with a client in New York who was told by his adjuster that a roofer should charge $480 per square foot.  The insured was furious because the actual cost in New York area was $1200 per square foot on the street.  

Corletti explains, “These programs don’t get you the actual street price.   And, when demand is high, pricing goes even higher, and the program doesn’t take that into account.”  

Anyone in New Jersey who hired a tree company post-Sandy could attest to that.

Insurance Companies are not non-profits:  Forget being in good hands, insurance is a business and profit margins matter.  

That means brokers work hard to sell as many policies as possible, and most of them are fairly generic.  Consumers tend to trust their agents and don’t look too closely at how policies are written.  Moreover, they don’t always ask the right questions and many brokers don’t thoroughly explain what’s covered under a policy...until it’s too late.

For example, for those New Jersey clients who did opt for flood insurance, often the exact nature of the coverage was never fully explained. In fact, many didn’t realize their flood claims had limits on contents.  In other cases, they took the amount offered and didn’t push back on the insurance company.  And let’s face it, in the end, the insurance company wants to pay as little as possible.

For example, one woman here in New Jersey received only $120 for the price of an evening gown.  However, the gown was Dior and she had a receipt for $1800.  Add to this the fact that the adjuster was less than sympathetic.  PLG worked on her behalf and she was able to recoup the cost of her wardrobe.

In another example, PLG recently worked with a local EMS crew here in NJ.  One of their ambulances was found under six feet of salt water where it had been sitting for over 18 hours.  The insurance company wanted to replace the brakes (thus lowering their outlay) instead of the entire vehicle.   Let the games begin.




The Ticking Clock

Insurance companies also use time as a negotiating factor.  They know that time delays cause anxiety and often push claimants to settle.  In many case, the clock is ticking in regard to claim deadlines and they can reset the clock to push it out with just a letter acknowledging receipt of a claim or call.  

Chasing a claim, whether done solo or with the help of a professional takes time.  However, many here in New Jersey don’t realize that even after they accept payment on a claim, they can still go after their insurance carrier for more money.

“The bottom line is that firms like ours have the experts and resources to help insurance companies do what they are supposed to do,” said Corletti.  “While they’re not necessarily out to take advantage of policy holders, they’re still in business to make money.  We just make sure they do it fairly.”

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