Chip Merlin | Property Insurance Coverage Law Blog | October 23, 2017
Barry Zalma recently wrote an excellent article, Claims in a Catastrophe, in the The CPA Journal. Zalma is a very experienced property insurance attorney. He is a prolific writer of articles and books involving property insurance claims. To all policyholders having felt the impact of 2017 catastrophe claims, one important point in Zalma’s article is that a second opinion is often needed.
Many insureds believe that insurers make a practice of making inadequate (sometimes called “lowball”) offers of settlement. They are wary of what they think are estimates from insurance-company-friendly contractors. Whether true or not, it is a good practice to get a second, or even a third, written estimate to repair and replace damaged property from reputable, independent professionals. . . .
2017 has had numerous catastrophe claims with hurricanes, floods, and now California wildfires. Zalma warns that these catastrophes bring out all kinds of scammers and people who will say things that are not true and sometimes designed to steal money and twice make a person a disaster victim. Consumers need to be careful who they believe and hire.
In an age where many insurance industry attorneys are supporting insurer backed contractors, this is what Zalma refreshingly stated:
Thoroughly investigate the qualifications, license, and references of your insurance company’s approved contractor before agreeing to hire them to perform the repairs. The State Contractors Licensing Board will usually provide the consumer, by telephone or over the Internet, with the contractor’s license status and history of discipline. At a minimum, the licensing entity and a reference should be checked before a contract is signed.
You do not have to use or accept the opinions of consultants or contractors recommended or approved by the insurer to perform repairs.
Approved contractors are typically contractors who have agreed to discount their labor and costs and follow insurer guidelines in exchange for a volume of business from the insurance company. If your insurer promises to guarantee the approved contractor’s work, the guarantee is generally limited to replacing any defective materials or correcting faulty workmanship. The insurer is not insuring against any contractor delays, negligence, or liability. Accordingly, do not use the approved contractor unless it is a contractor that you would independently hire to do the work after a thorough screening. Check that each contractor’s license is valid and for any complaints against the license. Ensure that the contractor is bonded and insured before you allow it to work on your property.
While I cannot agree with him that “almost all claims will be handled promptly and fairly,” I do agree that policyholders should not sign releases, assignments of benefits or other legal forms without first seeking an experienced attorney:
If the dispute does require legal advice, contact a lawyer who is experienced and specializes in representing policyholders. There are many consultants who claim to be “insurance claims experts” who do not have adequate training, skill, or experience. Before you retain one investigate the person diligently by contacting licensing bodies and references.
If you use the search function on our blog and type “Zalma,” you will see that Barry has been quoted numerous times. He corrected me as noted in Zalma Provides A View Shared by Others Regarding Appraisal and a Warning About the Unauthorized Practice of Law. The CPA Journalarticle noted that Zalma is the first recipient of the Claims Magazine/ACE Legend Award.
Bravo Barry!