I just handled a burglary loss for a very nice woman in Atlanta. She decided to go to the market at about 8:30 pm on a Wednesday evening in late May. She began to drive toward the market and noticed four teenaged boys standing in a park very near her home. She hesitated for a moment, then continued to the market.
When she returned at 8:55 pm, she found that someone had broken through her back door and stole jewelry, cash, a TV, a laptop and some expensive handbags. Her claim totaled over $20,000. Only $1,500 of that were for repairs to the back door.
I provided a Contents Inventory Worksheet so she could list all the items stolen. She submitted the worksheet quickly. Unfortunately, she had no receipts or any other kind of documents to prove that she actually owned the stolen items. Even photos of her stuff would have helped to prove she owned it. But no photos either.
The insurance company wanted to pay some of the claim, but insisted that she provide some documentation. She could not. The insurance company denied the Contents portion of the loss, and paid her only $500 after assessing her $1,000 deductible.
Gentle readers, this is not an isolated incident in the claims process for property claims. Insurance companies are serious about holding down their claims cost. And it is YOUR responsibility to prove your claim.
You have a legal contract with the insurance company. Part of that legal contract requires you to provide proof of ownership of your contents. The insurance companies give a lot of latitude in these matters, but remember that they don’t have to.
Most people are not going to create a master file of all their receipts for the stuff they buy, and then keep that file in a fireproof box or off-site. So, most people who have a fire, flood, burglary, hurricane or water loss are going to be faced with proving ownership of their personal property.
So, remember this: The NUMBER ONE most important thing that you can do to prove ownership of your personal property is to PHOTOGRAPH IT.
Get a camcorder, or digital camera, or even disposable cameras. Go through your home or business and capture your personal property “on film.” Do it once a year, and then remember to update after every major purchase...like a new computer or flat-screen TV. Don’t leave anything out. Even photo inside drawers and closets.
Take the photos or video and place them off-site. I recommend a safe deposit box.
Then, in case of a disaster, you have some visual proof of your loss. You could review the video or photos and compile your inventory list. You could submit a copy of the photos or video as proof of ownership.
The photo/video process takes me an hour when I do it. And that’s filming in average sized home.
Don’t take a chance by being unprepared. It could cost you tens of thousands of dollars at claim time.
Showing posts with label personal property. Show all posts
Showing posts with label personal property. Show all posts
Thursday, June 18, 2009
Wednesday, June 10, 2009
Personal Property Claims: The Depreciation Trap
Personal property claims can be some of the most frustrating claims in the insurance claims process. The deck is stacked against you if you have any kind of insurance policy that insures your personal property. This is true for property owned by homeowners and renters as well as the personal property owned by businesses and other commercial entities.
Personal property, also commonly known as “Contents,” is usually described as any property in or on the insured premises not permanently attached to the building. Naturally, your policy will give you a definition that is more exact that this one, and will also have exclusions about some property that is not covered.
Many property insurance policies have the Replacement Cost (RC) Endorsement on the policy that covers the contents. The claims process for your Contents is the trap laid by the insurance companies. Don’t think that your insurer wouldn’t do that to you...they ALL do it.
Here’s the method of settlement found in all policies with the Replacement Cost Endorsement.
You submit your contents claim inventory. On that inventory you will have listed all of your contents, item by item, and the replacement cost. The insurance company will apply depreciation to each item of your contents, based upon its age and condition. Subtracting the depreciation amount from the replacement cost gives you the Actual Cash Value (ACV) of your property, whether business or personal.
The insurance company settles RC claims by issuing two separate checks. The first check will be for the ACV amount. According to the Loss Conditions in the policy, the insurer only pays you the RC of your contents once the replacement has been made.
For example, if you had an item with an RC value of $1000, and the depreciation amount was 30%, or $300, you would receive the first payment of $700. But, $700 does not replace the item. In order to receive the RC amount you will have to use $300 of your own money plus the $700 paid by the insurance company to make the replacement purchase. Then you are eligible for the second check, the $300 reimbursement.
Now...think about the same example if your entire contents claim is $100,000.
The insurance company “holds back” $30,000. In order for you to make the replacement purchases, you will have to find $30,000 of your own money, make the purchases, and then get reimbursed by the insurance company.
Where are you going to get that $30,000? Savings? Credit Card? Get a loan? Or perhaps you’re like many people that don’t have those cash resources available to them. They cannot make the replacements at all.
Do you see the trap?
Here is a strategy of three things you can do to minimize the effects of the Depreciation Trap.
1. Demand that the insurance company provide you a copy of the Depreciation Tables that they used to calculate your loss.
2. Compare each item, line by line, to be certain that the proper amount of depreciation was assessed by the adjuster.
3. Challenge any and all incorrect depreciation amounts.
By using this three-step strategy, you will maximize your Contents claim amount.
There is another Contents strategy that you MUST use when documenting your Personal Property claim. It relates to the personal property you won’t be replacing.
I knew a family that had a major fire loss. The wife was an attorney for many years. Then, when she had her first child, she decided to leave the business world and be a full-time mom. She had a closet full of expensive business suits, blouses, shoes and accessories. She was not going to replace them, since she was not using them any more for work clothing. So, we worked hard at establishing the highest possible value on her wardrobe. The ACV money that the family was paid for her wardrobe was used to make RC purchases of other items that did need replacing.
You can use this strategy in your Contents claim. Your home, condo, apartment or business is full of personal property that you’ve purchased over the years that (a) is obsolete or (b) you’re not using anymore. A business could have inventory items or office equipment that is unsold or obsolete. In each case, you have every right to be paid the correctly calculated ACV for those items. Then, you can use those dollars to offset the “holdback” amount when you are making your replacement purchases.
Don’t be a pushover! Don’t allow the insurance company to depreciate your Contents without a fight!
Fight back and WIN!
Personal property, also commonly known as “Contents,” is usually described as any property in or on the insured premises not permanently attached to the building. Naturally, your policy will give you a definition that is more exact that this one, and will also have exclusions about some property that is not covered.
Many property insurance policies have the Replacement Cost (RC) Endorsement on the policy that covers the contents. The claims process for your Contents is the trap laid by the insurance companies. Don’t think that your insurer wouldn’t do that to you...they ALL do it.
Here’s the method of settlement found in all policies with the Replacement Cost Endorsement.
You submit your contents claim inventory. On that inventory you will have listed all of your contents, item by item, and the replacement cost. The insurance company will apply depreciation to each item of your contents, based upon its age and condition. Subtracting the depreciation amount from the replacement cost gives you the Actual Cash Value (ACV) of your property, whether business or personal.
The insurance company settles RC claims by issuing two separate checks. The first check will be for the ACV amount. According to the Loss Conditions in the policy, the insurer only pays you the RC of your contents once the replacement has been made.
For example, if you had an item with an RC value of $1000, and the depreciation amount was 30%, or $300, you would receive the first payment of $700. But, $700 does not replace the item. In order to receive the RC amount you will have to use $300 of your own money plus the $700 paid by the insurance company to make the replacement purchase. Then you are eligible for the second check, the $300 reimbursement.
Now...think about the same example if your entire contents claim is $100,000.
The insurance company “holds back” $30,000. In order for you to make the replacement purchases, you will have to find $30,000 of your own money, make the purchases, and then get reimbursed by the insurance company.
Where are you going to get that $30,000? Savings? Credit Card? Get a loan? Or perhaps you’re like many people that don’t have those cash resources available to them. They cannot make the replacements at all.
Do you see the trap?
Here is a strategy of three things you can do to minimize the effects of the Depreciation Trap.
1. Demand that the insurance company provide you a copy of the Depreciation Tables that they used to calculate your loss.
2. Compare each item, line by line, to be certain that the proper amount of depreciation was assessed by the adjuster.
3. Challenge any and all incorrect depreciation amounts.
By using this three-step strategy, you will maximize your Contents claim amount.
There is another Contents strategy that you MUST use when documenting your Personal Property claim. It relates to the personal property you won’t be replacing.
I knew a family that had a major fire loss. The wife was an attorney for many years. Then, when she had her first child, she decided to leave the business world and be a full-time mom. She had a closet full of expensive business suits, blouses, shoes and accessories. She was not going to replace them, since she was not using them any more for work clothing. So, we worked hard at establishing the highest possible value on her wardrobe. The ACV money that the family was paid for her wardrobe was used to make RC purchases of other items that did need replacing.
You can use this strategy in your Contents claim. Your home, condo, apartment or business is full of personal property that you’ve purchased over the years that (a) is obsolete or (b) you’re not using anymore. A business could have inventory items or office equipment that is unsold or obsolete. In each case, you have every right to be paid the correctly calculated ACV for those items. Then, you can use those dollars to offset the “holdback” amount when you are making your replacement purchases.
Don’t be a pushover! Don’t allow the insurance company to depreciate your Contents without a fight!
Fight back and WIN!
Saturday, July 5, 2008
Wildfire Victims and Their Contents Claims!
CONTENTS, or UNSCHEDULED PERSONAL PROPERTY
Picture a homeowner couple in Southern California. They had a home in a wooded area, and wildfires began. The local Fire Department came to their home and required that they evacuate because the winds shifted and the fire was coming straight for their home. They gather up their most valuable possessions and leave their home. Three days later, they return to find a smouldering pile of ashes...a total loss.
This article is about the Contents portion of the claim. The insurance company will not just write you a check for the policy limits in your Homeowners policy. You're going to have to prove your loss.
The insurance company adjuster MIGHT give you an inventory form to fill out. They might not. But, they ARE going to expect you to submit a complete, accurate inventory list.
I hope that you videotaped all of the interior of your home PRIOR to the loss, and have secured that videotape in a safe deposit box off-site. Then, you could view the tape and write out the inventory.
But let's just assume that all you have is ashes. What to do next?
Get a copy of a JC Penney catalog. Better, get two...one Fall/Winter, one Spring/Summer. Get your hands on as many other catalogs as you can find. As you look at the pages of the catalogs, you'll remember the things that you had in your home. You will find hundreds or thousands of dollars in personal property that you likely would not have remembered owning. Not only will you remember dozens and dozens of items, but you'll have a retail price from a reputable retailer right at your fingertips.
Please don't misunderstand what I'm telling you to do here. I'm NOT telling you to write down items on your inventory list that you did not own. That's fraud, and you can go to jail for fraud. I'm simply showing you a way to remind yourself of things long ago purchased, and possibly stored and forgotten. For example, how many parents bought a vaporizer to run in their childrens' rooms at night when the children were sick? That vaporizer might not have been used in years, but you owned it, and you have a right to collect for it under the terms of your policy.
Write down EVERYTHING. Your inventory list will likely take dozens of pages. Remember to show (1) replacement cost, (2) age of the item, (3) Price paid.
When I say "write down EVERYTHING," I mean it. Thumbtacks, Q tips, makeup, bobby pins, tools, extension cords, light bulbs....if you owned it, record it.
You can be certain that the personal property you DO NOT INVENTORY will NOT be paid for.
Next article will discuss what happens next, when the adjuster begins to apply depreciation to your Contents Inventory. How can you win this fight?
Picture a homeowner couple in Southern California. They had a home in a wooded area, and wildfires began. The local Fire Department came to their home and required that they evacuate because the winds shifted and the fire was coming straight for their home. They gather up their most valuable possessions and leave their home. Three days later, they return to find a smouldering pile of ashes...a total loss.
This article is about the Contents portion of the claim. The insurance company will not just write you a check for the policy limits in your Homeowners policy. You're going to have to prove your loss.
The insurance company adjuster MIGHT give you an inventory form to fill out. They might not. But, they ARE going to expect you to submit a complete, accurate inventory list.
I hope that you videotaped all of the interior of your home PRIOR to the loss, and have secured that videotape in a safe deposit box off-site. Then, you could view the tape and write out the inventory.
But let's just assume that all you have is ashes. What to do next?
Get a copy of a JC Penney catalog. Better, get two...one Fall/Winter, one Spring/Summer. Get your hands on as many other catalogs as you can find. As you look at the pages of the catalogs, you'll remember the things that you had in your home. You will find hundreds or thousands of dollars in personal property that you likely would not have remembered owning. Not only will you remember dozens and dozens of items, but you'll have a retail price from a reputable retailer right at your fingertips.
Please don't misunderstand what I'm telling you to do here. I'm NOT telling you to write down items on your inventory list that you did not own. That's fraud, and you can go to jail for fraud. I'm simply showing you a way to remind yourself of things long ago purchased, and possibly stored and forgotten. For example, how many parents bought a vaporizer to run in their childrens' rooms at night when the children were sick? That vaporizer might not have been used in years, but you owned it, and you have a right to collect for it under the terms of your policy.
Write down EVERYTHING. Your inventory list will likely take dozens of pages. Remember to show (1) replacement cost, (2) age of the item, (3) Price paid.
When I say "write down EVERYTHING," I mean it. Thumbtacks, Q tips, makeup, bobby pins, tools, extension cords, light bulbs....if you owned it, record it.
You can be certain that the personal property you DO NOT INVENTORY will NOT be paid for.
Next article will discuss what happens next, when the adjuster begins to apply depreciation to your Contents Inventory. How can you win this fight?
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