Articles Of Interest

When A Property Loss Occurs, Who Is In Control?
By Arthur G. Jansen, Sr., CPPA, SPPA

March, 1994

People watched in horror last summer as the rising waters of the Mississippi River flooded many areas throughout mid-America. More recently, devastating fires roared through the California coastline, wiping out scores of homes and businesses. Suffering a large property loss is every apartment complex owner’s nightmare. Now is the time to ask yourself what you would do if your property suffered a disaster.

If your apartment complex suffers a large property loss, do you know the proper steps to take to claim your loss? Considering the emotional state most disaster victims are in after their loss, it is vital to have an organized and detailed plan in place in advance.

After A Loss

An organized and professionally submitted claim will ensure higher recovery values, expedite settlement, and eliminate the hassle normally associated with insurance claims. The amount of recovery is dependent on the quality of claim you present.

The first step to take after you’ve discovered a loss is to immediately notify your insurance company and insurance agent. Make sure your on-site managers have all the information that will allow them to take the proper steps immediately after a loss.

"Having dealt with everything from fires to hurricanes, I understand the importance in having your on-site personnel know the proper measures to take when emergencies occur." say Paul Nichols, president of the Sterling Companies, Houston, Texas.

In addition to notifying your insurance company by telephone, send written notification to document the initial contact. Documentation is a vital part of the insurance claims process because detailed proof is required when submitting all losses.

Two valuable ways for gathering evidence of damage that are often overlooked are taking photographs and videotaping. Pictures taken are not only worth a thousand words, but can also be worth thousands of dollars when you start receiving repair bills. Always request that a representative of your insurance company visit the site of the disaster to see the damage first-hand. Do not remove any of the damaged items or begin clean up until the insurance company has been able to tour the site and inspect the damage. Hold off having a cleaning crew discard the rubbish from the disaster site until your insurance company or public adjuster gives you approval to do so.

If your loss involves liability, workmen’s compensation or bodily injury, you should consider contacting a lawyer.

Your insurance company will assign an insurance adjuster who is responsible for investigating the claim, determining how much of the claim is covered by your insurance policy, and recommending the amount of payment for the claim.

The adjuster assigned to your claim will inspect the damage to your property, analyze evidence of loss, and review all repair bills. If the adjuster gives you a settlement that is less than fair, refer to your insurance policy for your rights to go to arbitration. Call your insurance company’s home office if you feel your claim hasn’t been handled fairly.

Public Adjusters

After your property is damaged by fire, windstorm, water damage, burglary, or something else, you must take control of the situation and avoid making costly mistakes. Because insurance policies typically contain highly technical information that is difficult to understand, policyholders are placed at an immediate and distinct disadvantage.

If your loss is a property insurance claim above $10,000.00 and falls into the category of structures, contents, business interruption and other time-related losses, you should consider contacting a public adjuster.

Public adjusters are experts, employed by you, who are trained to understand how insurance companies deal with the complex policy requirements. It is best, if you do choose to hire a public adjuster, to contact one immediately after contacting your insurance company.

The public adjuster’s role is to advise and assist in the preparation of inventories, estimates and other factual proofs of loss, and to handle all the necessary details for compiling and filing claims, as required by the terms of your insurance policies.

Public adjusters are hired because their expertise normally assures a higher amount of recovery, a more expeditious settlement, and eliminates the hassles associated with dealing with insurance companies. The typical length of time for a commercial claim under $100,000 (without complications is between 30 and 60 days. But, an $8 to $10 million commercial loss could take several months. After any loss, the goal of the property owner is to get back in business as quickly as possible.

Some public adjusters will help clients before a disaster to ensure that they are properly prepared. Many property owners mistakenly insure their property according to current market value. However, you must factor in the value of the land. A public adjuster can estimate replacement costs and advise you on the proper policy and the amount of insurance you should have.

Public adjusters have a surprisingly positive relationship with insurance companies, considering one is taking money away from the other. Sometimes insurance adjusters recommend hiring public adjusters because they realize this will expedite the entire claims process. If it is the common goal of all parties involved to settle the loss quickly and at a reasonable dollar amount, the process should go smoothly.

If the insurance company and/or the insurance adjuster wants more evidence, public adjusters are on the policyholder’s team to provide it in a concise, professional manner.

How do you contact a reputable public adjuster? Contact the National Association of Public Insurance Adjusters (NAPIA) at 703-438-8254. An accredited public adjuster is a member in good standing with NAPIA. You may also contact your local Better Business Bureau. Check client references and call NAPIA when in doubt. Make sure your public adjuster doesn’t make unrealistic promises about how much money to expect. It is also helpful to use a public adjuster who has a background as an insurance adjuster.

Some Things to Avoid Before and After Any Loss

According to many insurance companies, there are a few things to avoid.

Do not wait until a disaster occurs to become familiar with your insurance policy.

"You can never plan for Acts of God," says Joe Sharp, president of the Sharp Network, Austin, Texas, an investment property management firm. "Policyholders need to have an understanding of their rights and coverages to protect themselves if anything should ever happen." Make sure your policy covers everything you own, insures these items at the replacement cost value and, if applicable, meets the co-insurance requirements.

Policyholders should re-evaluate the value of their property at least every two years. By re-evaluating the value of your apartment complexes, you can avoid underinsuring the property. This precaution helps to avoid penalties and lawsuits.

When preparing your claim, do not exaggerate and inflate numbers.

If you have no proper documentation and no idea about replacement costs, avoid estimating the value on your own. An inflated insurance claim submitted to the insurance company will appear obvious and may result in a lower settlement than expected.

Avoid lumping everything together when you submit your claim. When estimating the cost of damage, detail every item in every room. Breaking down the value of items damaged is a very tedious task, but it increases your chances for getting a fair settlement.

Do not overlook the importance of keeping proper records.

Keep organized receipts, records that support earnings loss, and records of purchases to help estimate replacement costs.

Do not submit an unorganized or incomplete claim.

The quality of your claim is directly related to how much you will recover from the insurance company. If your adjuster can not read or comprehend your claim, don’t expect him to read between the lines. Fill in the missing pieces to give a proper itemization to your claim.

Do not think the insurance company will hand over the money to you just because you had a loss!

Consider an expert to help you, especially if you don’t even know the proper questions to ask.

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