Help! I Have to File a Claim 2

How is the settlement amount determined?
The settlement amount depends on which type of policy you have. Having inadequate insurance can affect the amount of compensation you get.

Replacement Cost and Actual Cash Value
Replacement cost provides you with the dollar amount needed to replace a damaged item with one of similar kind and quality without deducting for depreciation—the decrease in value due to age, obsolescence, wear and tear and other factors. An actual cash value policy pays you the amount needed to replace the item minus depreciation.

Suppose, for example, a tree fell through the roof onto your eight-year-old washing machine. If you had a replacement cost policy for the contents of your home, the insurance company would pay to replace the old machine with a new one. If you had an actual cash value policy, the company would pay only a percentage of the cost of a new washing machine because a machine that has been used for eight years would be worth less than its original cost.

Suppose, also, that the tree damaged your 15-year-old roof so badly that it had to be completely replaced. If you had a replacement cost policy, the insurance company would pay the full cost of installing a new roof. If you had an actual cash value policy, it would pay a smaller percentage of the cost of replacing it.

Extended and Guaranteed Replacement Cost
If your home is damaged beyond repair, a typical homeowners policy will pay to replace it up to the limits of the policy. When the value of your insurance policy has kept up with increases in local building costs, a similar dwelling can generally be rebuilt for an amount that is within the policy limits.

Some insurance companies offer a replacement cost policy that will pay a certain percentage over the limit to rebuild your home—20 percent or more, depending on the insurer—so that if building costs go up unexpectedly, you will have extra funds to cover the bill. These are called extended replacement cost policies. A few insurance companies still offer a guaranteed replacement cost policy that pays whatever it costs to rebuild your home as it was before the disaster. But neither a guaranteed nor an extended replacement cost policy will pay for a house that's better than the one that was destroyed.

Mobile Home Policies
If you own a mobile home, you may have a policy based on replacement cost, actual cash value or, in a few cases, a "stated amount." With a stated amount policy, the maximum amount you receive if your home is destroyed is the amount you agreed to when the policy was issued. The depreciation in the value of your home is not considered in the settlement. If you opt for the stated amount, update your policy annually to make sure that the stated amount will cover the realistic cost of replacing your mobile home. Check with local mobile home dealers to find out what similar homes sell for now.

What can I do if I am having trouble settling my claim?
If you are unsatisfied with how your insurance company is handling your claim, you have several options:

Talk to the agent or company representative who sold you the policy
Let the agent know that you are dissatisfied and explain the specifics of your problem.

Contact the claims manager of the company
Provide a written explanation of your problem with copies of supporting documentation. Remember to send only a copy and not any original documentation. If you are insured with a smaller company, consider writing directly to the president. Going to the top can sometimes speed the process.

Contact your insurance regulator
Insurance is a regulated industry and your insurance regulator should be able to help you resolve your problem.

Call the General Insurance OmbudService

The General Insurance OmbudService service is to any policyholder in Canada, in both English and French, at no charge. GIO services are available on the web, www.giocanada.org. Alberta residents should visit the GIO Alberta resident links page or download a brochure about the dispute resolution process here. Reach the GIO by phone 1.877.225.0446, fax 416.299.4261 or write to them at:
10 Milner Business Court, Suite 701
Toronto, Ontario M1B 3C6

The majority of issues addressed by the General Insurance OmbusService are concerned with claims, interpretation of policy coverage, and policy processing and handling. Policyholders who have a dispute with a GIO member company (most of the general insurance companies operating in Canada) can initiate the process by contacting GIO with the details of their complaint after they have first tried to resolve the problem directly with their insurance company.

Consult an attorney
If you have tried all four of the above tips and still can’t resolve the claim, you may want to talk to an attorney. You may have to pay a consultation fee for your initial visit, so make sure you know how much this will cost. Meet with an attorney who has solid references or get the name of someone from your local bar association. Prepare for the visit by bringing a copy of your insurance policy and other relevant documents. Get the fee structure in writing before you decide to pursue the case.

What is a public adjuster?
Your insurance company provides an adjuster at no charge to you. Adjusters who have no relationship with your insurance company and charge a fee for their services also may contact you. These are known as public adjusters. You may use a public adjuster to help you in settling your claim.

Public adjusters may charge you as much as 15 percent of the total value of your settlement for their services. The fee isn't covered by your insurance policy. Sometimes after a disaster, the insurance regulator in your area sets the percentage that public adjusters may charge.

If you decide to use a public adjuster, first check his or her qualifications. Ask your agent, a lawyer or friends and associates for the name of a professional adjuster they can recommend. Avoid individuals who go from door-to-door after a major disaster, unless you are sure they are qualified.

How can I avoid scams after a disaster?
If your home was destroyed by a hurricane, wildfire or other disaster, be cautious.

Unfortunately, there are dishonest service providers that prey on disaster victims. They know that people who have lost their homes and valuables may not be thinking clearly. If you have suffered this type of loss, don’t make any rash decisions. Talk to your insurance agent, who may recommend service providers in your area.

Here are some basic guidelines for hiring service providers:

Roofers and builders
Don't be rushed into signing a contract with any company. Instead, collect business cards and get written estimates for the proposed job.

Beware of building contractors that encourage you to spend a lot of money on temporary repairs. Payments for temporary repairs are covered as part of the total settlement. If you pay a contractor a large sum for a temporary repair job, you may not have enough money for permanent repairs. In most cases, you should be able to make the temporary repairs yourself. Ask your insurance agent. And remember to keep receipts.

Investigate the track record of any roofer, builder or contractor that you consider hiring. Look for professionals that have a solid reputation in your community. You can call your Better Business Bureau for help. Also, get references and never give anyone a deposit until after you have thoroughly researched their background.

A common fraud scheme is for a so-called "contractor" to convince a homeowner that a large deposit must be provided before repair work can begin. Frequently, the job will be started, but not completed. Unfortunately, these con artists are never seen or heard from again.

Public adjusters and attorneys
Don't make any rash decisions about hiring someone to handle your claim. Be especially wary of individuals who go door-to-door soliciting business in the aftermath of a catastrophe. Most importantly, don't let anyone scare you into signing a contract. You don't want to be victimized by someone who comes into town, hoping to make a fast buck. You could end up forfeiting a significant portion of your insurance dollars.

Before hiring a public adjuster or an attorney, try to settle your claim directly with your insurance company. Your insurer provides an adjuster at no charge to you. Ask your insurance agent or company representative to help you with your claim and don't be afraid to ask questions. If you decide to work directly with your insurer, you still have the right to hire a third-party professional to help you.

If your claim is complicated and you want to hire a public adjuster or attorney, make sure that person is qualified to handle your case. Ask your friends, relatives or business associates for the names of well-regarded professionals in your community.

Understand that you will have to pay a public adjuster 15 percent and an attorney as much as 30 percent of your total claim settlement.