This post is was submitted by Lynne McChristian and Janet Ruiz, the I.I.I.’s Florida and California representatives.
Natural disasters (such as a flood, earthquake, hurricane or tornado) sometimes invite another type of disaster: “Storm Chasers” who try to profit from others’ unfortunate circumstances. These profiteers take many forms – from workers posing as qualified contractors to “volunteers” trying to help only themselves to lawyers and public adjusters offering to take over your claim. If you start having second thoughts about anyone who has offered assistance after disaster strikes, here are some tips to get you back on course:
- Never feel pressured to make a decision.
While the need to recover quickly is understandable, do not succumb to a high-pressure sales pitch. If you’ve signed an agreement or contract, remember the Federal Trade Commission has rules protecting consumers that allow you to cancel a contract up until midnight of the third business day after entering into it. This applies to door-to-door sales contracts for more than $25, as well as sale contracts for more than $25 made at any place other than a seller’s usual place of business. Additionally, states have similar rules to help consumers having second thoughts on the contracts they’ve signed.
- Think carefully about signing over your claim to an outsider.
This may sound like a good idea, since it appears to free you from handling the details of disaster recovery. However, what often happens when a third-party (which can be a contractor or public adjuster) takes over your claim is that you lose control of it and repair costs may be greatly inflated, delayed or not in compliance with building codes. The desire to get the job done right the first time makes a good case for the homeowner to stay involved in the process.
- Always deal with a licensed, insured contractor for both temporary and permanent repairs.
Be certain to have a pro handle your job. Unlicensed individuals may actually cause more damage to your property. And, if they are injured on your property, they may hold you liable if they do not have their own insurance. You can request to see their license and verify it with state or county officials. Unlicensed contractors can be reported to your state’s licensing board. Keep receipts for temporary repairs, as your insurer will reimburse you for these expenses.
- Know that your insurer is an on-call advisor to help you through every step of the claims process.
Home and business insurance policies comes with claims services, so consult your insurer as soon as possible after disaster strikes. Disaster claims are handled based on the severity of damage, so those most impacted get priority. That is why it is important to provide an accurate preliminary account of the damage when you make the initial call to your insurer. Also, be sure to mention any circumstances that may necessitate expedited claims handling, such as special needs situations. Contact the department of insurance in your state if you have complaints.
- Report the scam to local police and your state insurance department.
These scams can happen to anyone, so don’t hesitate to contact authorities. Many states also have consumer affairs departments to assist you in answering questions, protecting your interests and filing charges, if necessary.
The III’s Michael Barry briefs our membership every week on key insurance related stories. Here are some highlights:
The multiple wildfires raging this week in at least seven northern California counties have caused fatalities and widespread property damage.
Hurricane Nate made landfall as a Category 1 storm on the weekend of October 7-8 and generated storm surge-caused property damage and power outages in Louisiana, Mississippi, and Alabama.
The number of U.S. highway fatalities rose 5.6 percent in 2016 as compared to 2015, according to the National Highway Traffic Safety Administration (NHSTA).
Though the wildfires in California continue, RMS has estimated economic and insured losses between $3 billion and $6 billion, making this collection of wildfires the most expensive ever.
According to data from Property Claim Services as reported on the I.I.I web site, the most expensive wildfire previously was the 1991 Oakland Hills fire, which incurred losses of about $2.75 billion, adjusted for inflation.
Because the penetration rate for insurance is so high in this region, RMS says its figure represents both economic and insured loss.
The range includes loss due to property damage, contents and business interruption caused by the burn component of the fires to residential, commercial, and industrial lines of business.
It does not include automobile or agricultural crop losses, smoke damage, or any factor for post-loss amplification. Because of the impacts to the wine industry throughout the region, RMS notes the significant uncertainty regarding the long-term business interruption for this event, which could result in a higher total loss.
It is important to note that these events are still on-going and the perimeters of the active fires may change significantly before containment. Therefore, these exposure and loss estimate are considered preliminary and are representative of the current situations.
More than a dozen fires have burned more than 1,500 structures in Northern California, with more than a dozen dead as of Tuesday afternoon.
CNN lays down the facts:
- More than 119,000 acres burned, much of it in wine country – Napa and Sonoma counties.
- Fires surged behind hurricane force winds (79 mph gusts) – about the same speed as Hurricane Nate at its landfall a few days ago.
- Nearly 35,000 are without power.
- No rain is forecast for the next seven days.
Cat modeling firm RMS notes that the fires, taken together, are already the fifth most destructive in state history, as measured in the number of homes destroyed.
The Insurance Information Institute has background information on wildfires here.
The The Insurance Industry Charitable Foundation (IICF) has opened the IICF California Wildfire Relief Fund to assist in the growing need across the state. To donate click here.
Our thoughts obviously are with all of the families in peril right now.
Janet Ruiz, I.I.I.’s California representative, notes that wildfires differ from other catastophes like hurricane or tornado, in that the loss is more likely to be a total loss — the entire home burns along with its contents. Compounding the tragedy, often that includes the receipts and other evidence of ownership that make it easy to document what has been lost.
Her other thoughts:
- Coverage for alternative living expenses (reimbursement while waiting to return home) may be available through your insurance company. Money you spend on housing, food, clothing, etc as a result of a mandatory evacuation may be covered.
- After you have returned, report your claim right away to your insurance company. Insurers have multiple tools available to handle claims. Many will be onsite at local assistance centers or processing claims via mobile apps, online claims, call centers and more. Call your agent if you need additional assistance. Insurance companies are also proactively reaching out to people they know are in affected areas and may have a loss.
What are companies doing to protect employees against harassment? This question has added weight after the October 8 firing of Harvey Weinstein by the board of Weinstein Co. following reports of sexual harassment complaints against him. Earlier firings at Fox News and Uber have also brought the issue into focus.
From MarketWatch: “Companies are increasingly buying insurance, including employment practices insurance to cover costs associated with employment lawsuits,” said David Yamada, a professor of law and the director of the New Workplace Institute at Suffolk University.”
Some insurers are also providing training materials for companies to teach their employees about sexual harassment in hope of avoiding it, Yamada added.
Per this 2016 Betterley report, more insurers are partnering with vendors to offer risk management services, such as training and education, consultation and outreach to insureds:
“EPLI value-added services remain an important part of the product when done right, offering employers access to tools that can truly make a difference in the frequency and the severity of claims—as well as the bad feelings that accompany employee/ employer disputes.”
Gross written premium for employment practices liability insurance (EPLI) increased to $2.1 billion in 2015, according to MarketStance data.
I.I.I. information on EPLI coverage is available here.
The III’s Michael Barry briefs our membership every week on key insurance related stories. Here are some highlights:
- A lone gunman killed 58 people, and injured hundreds of others, in Las Vegas in the single deadliest mass murder in U.S. history on Sunday, October 1. The tragedy is already raising insurance liability issues.
- The Trump administration is asking Congress to authorize a $29 billion disaster relief package for costs associated with 2017’s Hurricanes Harvey, Irma, and Maria.
- In a 6-3 vote, The Financial Stability Oversight Council (FSOC) rescinded its determination that American International Group (AIG) is a systemically important financial institution (SiFi).
The AAA Foundation for Traffic Safety has released a study which found that new model cars are more loaded with driver distracting technologies than ever before. The study concluded that 23 out of the 30 models tested had technology on board that demanded the driver pay a high or very high level of attention to it while the car was moving.
Programming navigation was the most distracting task, taking an average of 40 seconds for drivers to complete. When driving at 25 mph, a driver can travel the length of four football fields during the time it could take to enter a destination in navigation—all while distracted from the important task of driving. Programming navigation while driving was available in 12 of the 30 vehicle systems tested.
“Drivers want technology that is safe and easy to use, but many of the features added to infotainment systems today have resulted in overly complex and sometimes frustrating user experiences for drivers,” said Marshall Doney, AAA’s president and CEO.
$125 million. That’s the first estimate of the insurance industry loss due to the Equifax cyber breach published by Property Claim Services (PCS).
Per Artemis blog:
“PCS’ initial estimate of the insurance market impact due to the Equifax hack attack is $125 million, however the firm said that the economic impact to the credit giant is expected to be much larger.
“PCS noted that there are outstanding coverage issues which could reduce the likelihood of the Equifax cyber insurance loss reaching the $125 million estimate, so it could be revised down it would appear.”
Equifax’s specific cyber insurance policy could provide as much as $150 million of coverage, according to Artemis.
Launched in early September, the PCS Global Cyber service provides industry loss estimates for cyber risk loss events of at least $20 million worldwide. The Equifax hack was its first designated event and PCS has since designated its second global cyber loss event, the impact of the Petya/non-Petya malware attack on pharmaceutical giant Merck & Co in June.
In a recent study on China’s natural catastrophe (NatCat) perils, Gen Re collected direct economic loss data over the past 10 years (2007 to 2016). I.I.I. staffer Brent Carris sums up the study below.
During the 10-year period covered by the study, 24 percent of catastrophe related economic losses came from earthquakes, only topped by droughts, at 25 percent. The remaining damages consisted of: rainstorms, typhoons, snow and low temperature, and hail and tornados at 24 percent, 12 percent, 8 percent and 7 percent, respectively. In 2008, there was a significant spike in losses due to the Sichuan Earthquake.
According to AIR Worldwide, catastrophe insurance indemnity account for only 9 percent of direct economic loss in Asia. In China, a projection of this number would be even lower if based on the past 10 years’ major NatCat events. For example, insurance payout against total direct economic loss for the Sichuan earthquake in 2008 was 0.2%, and less than 1% for the Ya’an earthquake in 2013. Insurers are reluctant to provide coverage for high risk areas, notably due to insufficient pricing and the inability to monitor NatCat accumulation/aggregates.
The situation is expected to improve, however, as the development of catastrophe insurance is deemed an important aspect of the growth of China’s insurance industry.
The October issue of our Latest Studies digest is now available.
In this issue:
- Wharton, The Congressional Budget Office and B.E. Journal of Economic Analysis & Policy all have recent reports on the National Flood Insurance Program
- Lloyd’s of London on the future of cargo insurance
- The latest on marijuana impaired driving from the National Highway Traffic Safety Administration
- J.D. Power on U.S. homeowners insurance customer satisfaction