|Blog update 4 September 2012: weather insurance|
This is an update on the payment status of weather insurance that First Express made available to our producers this spring. As of 4 September, most policies are projecting daily indemnities for both "drought" and "daytime heat stress". Payments will be in the mail soon and range up to $200 per acre, net of premium, depending on location. For further info and details, please call Mike or Ross at 800-245-2645 or email me at the address below.
Blog update 14 Aug 2012: Named Operator Auto Insurance
Occasionally we get a call asking to delete a vehicle that is the only vehicle on the policy. This means that the policy cancels too. But when a new vehicle is obtained some time later and a new policy is started, the new policy will be quite a bit more expensive because of the lapse (gap) in coverage. To fix this a person can get a Named Operator policy which is a regular auto policy but without a vehicle. It essentially is a liability policy for the driver, and bridges the gap in your coverage while you don't have a vehicle.
Blog update 22 June 2012: how weather-related insurance claims are handled
This is the first article in a short series about various coverage issues that aroused some interest after the devastating tornado in Thurman.
First, the claims process.
There have been lots of questions about how the claims process works. It should be a pretty straightforward thing, but unfortunately there are lots of ways it can get bogged down. First of course, is filing the claim. If you have damage, call your insurance agent and he/she will file the claim (some companies allow you to do this yourself by phone or online).
You should get a call very soon from an adjuster who will set a time to meet with you and review the damage. The adjuster will write up an estimate. It's important to realize this is JUST AN ESTIMATE, not a settlement. Its purpose is to let the company know the extent of the damage, and to determine an amount of money the company will send you in order to get repairs started.
Probably the most misunderstood part of the claims process is how much money you should receive up front and then how much more (if any) you will receive later. Let's say your loss is $20,000. Most policies will allow you around 60% up front, so you could expect a check for $12,000 to make a downpayment to a contractor. Keep in mind that there is a wide range of ways companies figure this upfront amount, the most important being how your policy was set up (more about that in a later blog). Companies call the remaining amount a holdback, or "depreciation". Using the word "depreciation" gets some folks excited, and some think that their damage amount is being depreciated rather than being paid the full Replacement Cost amount. This amount you do not receive right away is just a temporary holdback until the repairs are done if you have a Replacement Cost policy. In some (hopefully rare) cases, your policy might not be a Replacement Cost policy, or your policy has less coverage than it would take to replace your home, and the loss will indeed be figured to include depreciation or a coinsurance (under-insured) penalty, both of which can be painful to the pocketbook.
Once the repairs are made, the contractor will give you a final invoice. Usually this is pretty close to the adjuster's original estimate. If the invoice is indeed $20,000, once the company gets the invoice they will send the remaining $8000, which makes the total you received the original $20,000. Sometimes the contractor does the job for less than the adjuster's invoice. Let's say he does the job for $18,000 instead of $20,000. In this case, you get $6000 more, not the original adjuster's amount of $8000 that was held back. If the contractor's invoice is more than $20,000, the company will pay the extra over the $8000 holdback, provided the extra was a legitimate cost resulting from the storm and is covered by your policy.
When final settlement is made, you sign off. So up to this point, the money part of the claims process was based on the adjuster's original ESTIMATE, but now it based on ACTUAL dollars caused by the storm.
I welcome comments and questions. Please email me at email@example.com.