PrepareRespondRecover2013

Managing Your PropertyManaging Your Property
Before & After A LOSS,Before & After A LOSS,
& After a Claim is Denied or Delayed& After a Claim is Denied or Delayed
Presented by:
William “Chip” Merlin, Jr., Esq.
President, Merlin Law Group

•Important to periodically review and assessImportant to periodically review and assess
your insurance coverage to fully protectyour insurance coverage to fully protect
your propertyyour property
DO YOU HAVE THEDO YOU HAVE THE
APPROPRIATE INSURANCEAPPROPRIATE INSURANCE
COVERAGE?COVERAGE?
PreparePrepare

•Who is insured?Who is insured?
•Person, business or other entityPerson, business or other entity
•Name or classificationName or classification
COVERAGE?COVERAGE?
PreparePrepare

COVERAGE?COVERAGE?
PreparePrepare
•What property is covered?What property is covered?
•Real or personal propertyReal or personal property
•Coverage for all structuresCoverage for all structures
•Can excluded property be added?Can excluded property be added?
•Fixtures, machinery and equipmentFixtures, machinery and equipment
•Floater policies for additional valuablesFloater policies for additional valuables

COVERAGE?COVERAGE?
PreparePrepare
•Are related coverages needed?Are related coverages needed?
•Additional living expenseAdditional living expense
•Loss of rents coverageLoss of rents coverage
•Business expense coverageBusiness expense coverage
•Business interruption coverageBusiness interruption coverage

COVERAGE?COVERAGE?
Prepare
•What Perils are insured?What Perils are insured?
•Needs covered clause and covered consequenceNeeds covered clause and covered consequence
•All risks vs. like perils policiesAll risks vs. like perils policies
•Subject to exclusionsSubject to exclusions

COVERAGE?COVERAGE?
PreparePrepare
•When is coverage provided?When is coverage provided?
•A peril is considered covered if it commences duringA peril is considered covered if it commences during
the policy periodthe policy period
•Check policy to make sure coverage does not lapseCheck policy to make sure coverage does not lapse

COVERAGE?COVERAGE?
PreparePrepare
•What limits the amount of coverage?What limits the amount of coverage?
•Recovery for loss limited by amount value of policyRecovery for loss limited by amount value of policy
•To receive full payment from loss, policy limits mustTo receive full payment from loss, policy limits must
reflect accurate value of propertyreflect accurate value of property
•Most properties underinsured, insufficient coverageMost properties underinsured, insufficient coverage

COVERAGE?COVERAGE?
PreparePrepare
•Replacement cost value (RCV) or actual cashReplacement cost value (RCV) or actual cash
value coverage (ACV)?value coverage (ACV)?
•Most properties underinsuredMost properties underinsured
•Two types of RCV in California-Two types of RCV in California-
•Full replacement cost policyFull replacement cost policy
•Extended (modified) replacement cost policy-Extended (modified) replacement cost policy-
provides for % over policy limit to rebuildprovides for % over policy limit to rebuild
•ACV coverage provides fair market value prior to lossACV coverage provides fair market value prior to loss

COVERAGE?COVERAGE?
PreparePrepare
•Other conditions and provisionsOther conditions and provisions
•Anti-concurrent causation clausesAnti-concurrent causation clauses
•Hazardous circumstancesHazardous circumstances
•Coinsurance provisionCoinsurance provision
•Conditions of the policyConditions of the policy

COVERAGE?COVERAGE?
PreparePrepare
•Other policy considerationsOther policy considerations
•Appropriate deductiblesAppropriate deductibles
•Ordinance & law coverage endorsementOrdinance & law coverage endorsement
•Error & omissions (E&O) coverage for business ownersError & omissions (E&O) coverage for business owners
•Alternative dispute resolutionAlternative dispute resolution
•Deadlines & post-loss conditions in policy neverDeadlines & post-loss conditions in policy never
mentioned by insurance adjustermentioned by insurance adjuster

DUTIES OF AGENTS & BROKERSDUTIES OF AGENTS & BROKERS
IN OBTAINING INSURANCEIN OBTAINING INSURANCE
COVERAGECOVERAGE
PreparePrepare
•Insured, not insurer, solely responsible for determiningInsured, not insurer, solely responsible for determining
and obtaining desired coverageand obtaining desired coverage
•However, courts have held insurance agents assumeHowever, courts have held insurance agents assume
““special duties” when they:special duties” when they:
•Misrepresent nature, extent or scope of coverageMisrepresent nature, extent or scope of coverage
purchasedpurchased
•Fail to procure coverage specifically requestedFail to procure coverage specifically requested
•Hold themselves out as having particular expertiseHold themselves out as having particular expertise
in the type of insurance the insured purchasingin the type of insurance the insured purchasing

ADVICE FOR INSUREDADVICE FOR INSURED
COVERAGECOVERAGE
PreparePrepare
•Tips for procuring coverageTips for procuring coverage
•Research & establish contact with reputableResearch & establish contact with reputable
insurance companyinsurance company
•Insist on in-person estimates, inspection appraisals,Insist on in-person estimates, inspection appraisals,
etc.. in writingetc.. in writing
•Create inventory of property, fixtures, furnishingsCreate inventory of property, fixtures, furnishings
with photos and receipts, and update inventory onwith photos and receipts, and update inventory on
regular basisregular basis

COVERAGECOVERAGE
PreparePrepare
•Tips for procuring coverageTips for procuring coverage
•Don’t underestimate for lower premiumsDon’t underestimate for lower premiums
•Consider excess coverage & additional replacementConsider excess coverage & additional replacement
cost policies & endorsementscost policies & endorsements
•Add flood insurance, & law & ordinance if neededAdd flood insurance, & law & ordinance if needed
•Protect valuables by having appraised &Protect valuables by having appraised &
considering floater policyconsidering floater policy

COVERAGECOVERAGE
PreparePrepare
•After coverage is securedAfter coverage is secured
•Adjust yearly limits to account for inflationAdjust yearly limits to account for inflation
•Review & change coverage accordingly afterReview & change coverage accordingly after
paying off mortgagepaying off mortgage
•Anticipate rate hikes & changes that provideAnticipate rate hikes & changes that provide
less coverage & higher deductiblesless coverage & higher deductibles
•Switch insurers to secure better over all policySwitch insurers to secure better over all policy

POST-DISASTER MANAGEMENT-POST-DISASTER MANAGEMENT-
FOLLOWING A LOSSFOLLOWING A LOSS
RespondRespond
•What-to-do checklistWhat-to-do checklist
•If residential property, help occupants seek alternativeIf residential property, help occupants seek alternative
housing if neededhousing if needed
•Before cleaning debris, & as soon as property is safeBefore cleaning debris, & as soon as property is safe
to enter, document losses by taking photos, not videoto enter, document losses by taking photos, not video
•Check every room and unit, detailed notes andCheck every room and unit, detailed notes and
inventory of all damageinventory of all damage
•If needed, arrange for fans, dehumidifiers and generatorsIf needed, arrange for fans, dehumidifiers and generators

RespondRespond
•Make sure walls and floors are dry as possible prior toMake sure walls and floors are dry as possible prior to
restoring power, have gas company check for leaksrestoring power, have gas company check for leaks
prior to restoring gasprior to restoring gas
•Immediately give written notice of the loss to theImmediately give written notice of the loss to the
insurance company, and make arrangements forinsurance company, and make arrangements for
insurance adjuster to visit the siteinsurance adjuster to visit the site
•Arrange for engineer to inspect structures to ensureArrange for engineer to inspect structures to ensure
they are soundthey are sound

RespondRespond
•Secure property and protect against further damage.Secure property and protect against further damage.
Use disaster recovery service to make repairsUse disaster recovery service to make repairs
•Inspect all areas again for mold and mildew damage,Inspect all areas again for mold and mildew damage,
take detailed photostake detailed photos
•Keep up mortgage payments and insurance premiums,Keep up mortgage payments and insurance premiums,
even if structures are leveledeven if structures are leveled

INSURANCE CLAIMINSURANCE CLAIM
PRESENTATIONPRESENTATION
RecoverRecover
•Beginning the recovery processBeginning the recovery process
•Resist acting on impulse, and accepting insuranceResist acting on impulse, and accepting insurance
settlementsettlement without independent investigation of damageswithout independent investigation of damages
& policy coverage; this may keep you from fully recovery& policy coverage; this may keep you from fully recovery
on your claimon your claim

RecoverRecover
•Note that “insurance” is a business, & insurance adjusterNote that “insurance” is a business, & insurance adjuster
acts in insurance companies’ best interest, not yoursacts in insurance companies’ best interest, not yours

RecoverRecover
•Many insurance companies believe in honest dealings; others giveMany insurance companies believe in honest dealings; others give
adjusters & claim handlers incentives to reduce claims paymentsadjusters & claim handlers incentives to reduce claims payments

RecoverRecover
•Consider qualified professionals to maximize benefitsConsider qualified professionals to maximize benefits
& hasten recovery& hasten recovery
•Insurance brokersInsurance brokers
•Public adjustersPublic adjusters
•Policyholder insurance attorneysPolicyholder insurance attorneys

RecoverRecover
•General tips for successful claim presentationGeneral tips for successful claim presentation
•Do not sign a release if you think you are notDo not sign a release if you think you are not
receiving enough to properly repair damagereceiving enough to properly repair damage
•Work with first insurance field adjuster to writeWork with first insurance field adjuster to write
complete & prompt estimate of damagescomplete & prompt estimate of damages

RecoverRecover
•General tips for successful claim presentationGeneral tips for successful claim presentation
•Obtain independent repair estimates from licensedObtain independent repair estimates from licensed
and bonded professionalsand bonded professionals
•Call, confirm, and follow-up all communicationsCall, confirm, and follow-up all communications
with the insurance company in writingwith the insurance company in writing
•Keep all receipts relatedKeep all receipts related to repair processto repair process

RecoverRecover
•Did the adjuster/engineer perform a proper inspection?Did the adjuster/engineer perform a proper inspection?
•How are they performing the inspection?How are they performing the inspection?
•Are they asking the right questions?Are they asking the right questions?
•Was adjuster shown all of the areas with & withoutWas adjuster shown all of the areas with & without
visible damages?visible damages?
•Is testing necessary, & was it recommendedIs testing necessary, & was it recommended
or performed?or performed?

RecoverRecover
•Did the adjuster properly estimate the damage?Did the adjuster properly estimate the damage?
•What is the scope of the estimate?What is the scope of the estimate?
•Are they asking the right questions?Are they asking the right questions?
•What, if any, modifications did the adjuster make to theWhat, if any, modifications did the adjuster make to the
estimate?estimate?
•Did adjuster obtain a real world market quotation?Did adjuster obtain a real world market quotation?
•Was overhead & profit included, and was laborWas overhead & profit included, and was labor
depreciated on estimate?depreciated on estimate?
•Were all affected areas accurately measured?Were all affected areas accurately measured?

RecoverRecover
•Policyholder’s post-loss obligationsPolicyholder’s post-loss obligations
•Submit proof of loss ASAPSubmit proof of loss ASAP
•Review your policy cooperation clause for deadlines &Review your policy cooperation clause for deadlines &
comply with insurance company requests for infocomply with insurance company requests for info
•Resist discarding any debris or damaged items prior toResist discarding any debris or damaged items prior to
insurance company inspectioninsurance company inspection

RecoverRecover
•Be aware of your policy statues of limitationsBe aware of your policy statues of limitations
•Time limitation to file suitTime limitation to file suit
•Most California breech of contract claims is 4 years, butMost California breech of contract claims is 4 years, but
may be shortened by contract or homeowner policiesmay be shortened by contract or homeowner policies
•Other exceptions, ie…standard fire & national floodOther exceptions, ie…standard fire & national flood
must be filed within one year from lossmust be filed within one year from loss

INSURANCE BAD FAITH-INSURANCE BAD FAITH-
IS IT APPLICABLE TO YOURIS IT APPLICABLE TO YOUR
CLAIM?CLAIM?
RecoverRecover
•California recognizes a cause of action for badCalifornia recognizes a cause of action for bad
faith against a first-party insurerfaith against a first-party insurer
•First bad faith in California 1973, where applied as a tortFirst bad faith in California 1973, where applied as a tort
in first party casesin first party cases Gruenberg v. Aetna Ins. (1973) 9 CalGruenberg v. Aetna Ins. (1973) 9 Cal. 3d 566. 3d 566
•Insurance co. wrongly accused policyholder of arsonInsurance co. wrongly accused policyholder of arson
to avoid paying claim under his fire policyto avoid paying claim under his fire policy
•Implied covenant of Good faith and fair dealingImplied covenant of Good faith and fair dealing
•““Every contact imposes upon each party a duty ofEvery contact imposes upon each party a duty of
good faith and fair dealing in its performance and itsgood faith and fair dealing in its performance and its
enforcement.”enforcement.” Foley v. Interactive Data Corp. (1988) 47 CalFoley v. Interactive Data Corp. (1988) 47 Cal. 3d 654. 3d 654

CLAIM?CLAIM?
RecoverRecover
•Bad faith in first party context when insurance company:Bad faith in first party context when insurance company:
•Fails to thoroughly & promptly investigate the claimFails to thoroughly & promptly investigate the claim
•Unreasonably or w/out proper cause denies paymentUnreasonably or w/out proper cause denies payment
of benefitsof benefits
•Uses abusive practices to avoid payment of claimsUses abusive practices to avoid payment of claims

CLAIM?CLAIM?
RecoverRecover
•Damages available in bad faith:Damages available in bad faith:
•Contractual damagesContractual damages (breach of contract)-damages(breach of contract)-damages
due under policydue under policy
•Extracontractual damagesExtracontractual damages (tort)-all damages(tort)-all damages
proximately caused by the insurance company’sproximately caused by the insurance company’s
misconduct, includes economic losses, attorney’s feesmisconduct, includes economic losses, attorney’s fees
to compel payment, & emotional distressto compel payment, & emotional distress
•Punitive damagesPunitive damages -to punish the insurance company,-to punish the insurance company,
conduct must be fraudulent or maliciousconduct must be fraudulent or malicious

HOW WOULD YOU ANSWERHOW WOULD YOU ANSWER
THESE?THESE?
AudienceAudienceOpinionOpinion QuestionsQuestions
L I V E M O B I L E P O L L I N GL I V E M O B I L E P O L L I N G
1.1. The insurance company HAS to pay forThe insurance company HAS to pay for
engineers to investigate your claimengineers to investigate your claim
TRUETRUE FALSEFALSEoror

THESE?THESE?
2.2. When an insurance company prepares a damage estimate,When an insurance company prepares a damage estimate,
the insurer has to pay the amount within:the insurer has to pay the amount within:
30 days30 days None of the aboveNone of the above60 days60 days 90 days90 days

THESE?THESE?
2.2. Which action is NOT required of an insured after a loss?Which action is NOT required of an insured after a loss?
SubmitSubmit
noticenotice
of lossof loss
MitigateMitigate
damagesdamages
SubmitSubmit
proofproof
of lossof loss
SubmitSubmit
estimate ofestimate of
damagedamage

ThankThank
you!you!
For more information, visit our Websites:
www.merlinlawgroup.com
www.propertyinsurancecoveragelaw.com
www.condominiuminsurancelaw.com

PrepareRespondRecover2013

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