SO YOUR PROPERTY WAS LOST IN A FIRE, BURGLARY, THEFT OR THROUGH WATER DAMAGE.

WHAT NOW ???

by Alan Plafker, PRESIDENT & CEO Member Brokerage Service LLC

A Melrose Credit Union Service Organization

I received a call from my customer, Harry Lemish, one cool and clear autumn night. He came home around 8:00 p.m. and found his apartment turned upside down. Every drawer was emptied on the floors; the television and VCR were gone. His wife’s jewelry box was on the bed, empty. His stomach turned and he felt violated.

The first step was to get out quickly (in case anyone was still there), run to a neighbor and call 911. When the police came they did their routine investigation and asked him what was missing and to describe the items which Harry did to the best of his knowledge.

They all knew it was hard for Harry and Sally to remember all the items, and they hadn’t yet had knowledge of what was really missing. They were told to complete a list of all the items with descriptions and approximate values, and to get the list to the Police Station as soon as practicable. After thinking about what to list Harry picked up the phone and called me, his cousin and his insurance broker/agent.

There is no doubt his tenant or renter’s policy covers the loss, less whatever deductible the policy contains. I reported the loss to the insurance company first thing the next morning. Now the fun begins.

Within hours of reporting the claim to the company their adjuster called Harry to arrange to see him and his wife at their apartment. They meet at the apartment the following day, and the adjuster requested a copy of the list given to the Police.

I must first tell you what happens at the insurance company level at this point. A copy of the report of claim is given to the company’s Special Investigation Union (SIU), which is now required by New York State Law to combat fraud. The first report to the SIU by the adjuster also notes if the items stolen or lost fit into the premises’ appearance and the insured’s social status or the insured’s assumed income. This is only a footnote on the report that may or may not lead the SIU to investigate further.

The company’s SIU may also refer to industry computer cross reference files which contain details of prior claims, description of items claimed and any other prior claim details.

Although some people do not agree, most insurance companies do want to pay the full amount of the item(s) claimed and are not looking to disclaim or give the insured a hard time with legitimate claims. They really don’t want the NY State Insurance Department looking over their shoulder. It just doesn’t pay for them. However, the fraud that is so prevalent in our area costs millions of dollars, and must be passed on to the other policyholders in the form of future premium increases. These premium increases are not usually for the profit of the insurance company or their stockholders, and is against public policy.

Back to our story: The adjuster takes the list of stolen items, and now asks Mr. & Mrs. Lemish to prove:

(1) they actually owned the items,

(2) the amount paid for the items,

(3) when the items were purchased.

This information is not a problem for those people who buy on credit cards, save a copy of their receipts, save their credit card monthly bills, or buy for cash and save those receipts. But the Lemishes purchased the listed items over as many years as they are married, 20 years. They may have receipts for something purchased last week, and they have no credit card statements or receipts for anything purchased before last month. Now what??

The Lemishes must first show the adjuster that they owned the item. I asked Harry if he has an instruction book, label or any accessory that belonged to the item. This is usually sufficient to show ownership. Maybe a photograph wearing the item or the item being as part of the picture.

Then we have to show the value of the item. If they have no receipt but if they remember where they purchased the item they could, perhaps, get a copy of their transaction and value of the article they purchased from the retailer. They could also go on line or to a local store that sells the item to show the market value of the article. Although it may or may not be a discontinued item we can still find a similar item and use that value.

Next is to show when it was purchased. If we satisfy ownership and the exact description of the items, date of purchase is usually not a problem, and could be ascertained by the model or type of property in question.

Fortunately, Harry and Sally actually had taken my advice some time ago, and they videotaped every room and every item of value with a narrative as they went along. And they even had some 35mm slides of newly purchased items of value. Insurance companies usually will go along with the video as evidence of ownership. They really did what I asked them to do in order to minimize the work involved in settling any claim.

I also told Harry to keep the film and slides away from the apartment; maybe a bank vault, or his office, or a friend or relative’s house. Well, he never got around to doing that. He kept it in the camera bag. And guess what? They stole the bag with the camera, and video cassette and the 35mm slides. Well, Houston, we have a problem.

Now it’s time for negotiation and discussion with the adjuster. There is a possibility that the SIU may think there is some sort of fraud involved. Maybe some letters or statements from friends, relatives or neighbors evidencing that they saw the items in the house at one time, or maybe evidence that some of them bought the items as a gift may help. At least, this may keep the insurance company’s SIU at bay.

Some weeks later Harry called me at my office. The adjuster believes much of the ownership and valuation and is now ready to pay the claim. His new problem is that just this past week he wanted to wear his new leather coat which he hadn’t had a chance to wear since spring. Guess what? He never bothered to check the clothes closet after the theft, and his new leather coat is no longer there. I told him this must be part of the claim, and he should go to the store where he purchased it and get a statement or duplicate bill from them. We notify the adjuster and the claim is held up pending Harry’s evidence of the coat and it’s value.

So, here we are at last. The adjuster is figuring up the value of all the property, has a complete list (which also has been given to the Police as a requirement of the insurance policy) and he comes to a total figure less the deductible Harry has on his policy. The total is pretty good and will permit Harry to replace the items to a great extent because Harry paid extra for “Replacement Cost” insurance on his policy. Harry is happy to have this finished so he could replace the items he needs. Maybe Harry and Sally will decide not to replace some items they really never used, and spend the money on painting the apartment and install new drapes.

Wrong! The “Replacement Cost” feature of the policy, which he paid extra for, states that the insurance company will pay that cost to replace providing actual replacement takes place. The company will usually give you a fair percentage of the claim up front, and will pay additional amounts as Harry replaces each item. If not replaced they will pay the “actual cash value” or what that item is worth in like condition. For instance, a one (1) year old computer may be replaced for $1,000.00 but actually worth only $650.00. Harry will collect up to $1,000.00 for a new one but only $650.00 if he doesn’t want to buy a new one. This decision is one that Harry and Sally must make.

This is an everyday scenario when your real or personal property is damaged, lost or destroyed. It is a very distasteful situation that cannot be helped, but it can be easier for some people than others. The purpose of buying insurance is to replace your property in the same condition with like kind and material as before the loss. You may minimize the trauma of going through the settlement of a loss if you take the following precautions:

• Videotape or photograph each and every wall and valuable item in your household.
  
  
  
• Keep receipts of valuable items in a fire proof or fire resistant container or off your premises.
  
  
  
• Consider obtaining your insurance from an independent broker who represents you, not the insurance company.
  
  
  
• Co-operate with the insurance company as much as possible to avoid any appearance of fraud.
  
  
  
• If the claim is considerable or is difficult to resolve, consider using a Public Adjuster.
  
  
  
• Retain instruction books or other material that came with the item(s).
  
  
  
• Protect the undamaged property after a loss. Insurance companies may not pay for damaged or lost property if the property was not protected after a loss occurs.

One more precaution I must point out. Having proper fire or burglary protection devices installed and operating will go a very long way to avoid a loss.

Your Professional Insurance Agent…
We want you to know about the insurance you’re buying.

Alan Plafker is President of Member Brokerage Service LLC, a Melrose Credit Union Service Organization. He is a licensed Insurance Broker and serves on the Board of Directors the PIANY (Professional Insurance Agents Association of NY) and on the Board of CIBGNY (Council of Insurance Brokers of Greater NY). His Agency insures thousands of polices for TLC Insurance as well as many policies for all types of insurance. You can reach him in his Briarwood, Queens office at (718) 523-1300 ext. 1082.

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