I'm guessing that Metairie had the highest number of big gold chain with gaudy medallion related claims?

My Rolls-Royce collection is now at the bottom of the Gulf of Mexico!

My husband told me of a time he was robbed before we met and told his insurance adjuster that, along with other items, his jar of quarters was also taken. He explained that it was about a third full and was likely a couple hundred dollars. The adjuster expressed surprise and said, "You mean it wasn't chock full?" and thanked him for being honest.

If I were a flood victim and had to list every piece of clothing I, my wife and my 4 children owned, along with full details - well, I think 2 or 3 Armani suits and some really expensive shoes might just cover the lot. Everything else could remain unmemorable.

The best dressed people in a city are always in the welfare neighborhoods.

The best dressed people in a city are always in the welfare neighborhoods.

Well, I personally wouldn't call them the "best dressed", but I might agree with "most expensively dressed".

Paul, Thank you for that little gem. I love the 'Heh' kind of posts. Made my day of slogging it out at work on a Saturday that much brighter.

It is amazing how many people think nothing of stealing from insurance companies. When I got broadsided, I remember my mechanic telling me I should claim damage to an alloy wheel--damage I know I caused when I struck a curb--as part of the accident. He was matter-of-fact about the idea of stealing.

So the insurance companies react--sometimes overreact--by making filing claims really annoying. Would be nice if people would try honesty occasionally.

Query:

Assuming that these Armani suits did INDEED exist (guffaw), how many of them do we thinnk were bought at retail (as opposed to, say, off the back of a truck)? And, of course, insurance doesn't pay for actual cost, it pays for replacement cost. So bring in the trucks!

So the insurers ask for that info, make you fill out a form with it, probably with small print stuff about perjury, and then never check on any of the claims? I mean, paying a guy to make some calls to some stores has got to be a lot cheaper than just paying Armani prices to any schlub who can put pen to paper, hasn't it?

Frankly -and I dislike the idea of stealing from an insurance company- they have it coming. Asking someone to list every piece of clothing they own is just asinine.

Making people who lost everything fill out paperwork to that level of granularity is placing a genuine burden on them.

And it is dumb business. You piss off the customer who now wants to try to screw you. Plus it is just more paper to push and that costs money too.

When you have 10 feet of water in the house, just give them 1000 bucks for clothes and move on. (or whatever number)

Insurance companies have teams of stats geeks figuring out their exposure. They probably know better how many dollars worth of clothes I have in my closest than I do.

Offer the people 80% the national average and if they whine, THEN ask for details.

I'm not for stealing from the insurance companies but if they made me fill out that damn form, I'd dog them too.

Well, I gotta respond on this one. I'm an insurance underwriter. Those are the guys in the black hats who decide if you qualify for insurance with the company, and are also the guys who decide if you keep your insurance after you have losses. I review claims every day as part of my job (I don't adjust losses; I see the result of the investigations...).

In situations like this, it's easy to say just claim all sorts of stuff. One of the reasons adjusters are asking for complete documentation is precisely because of all those "Armani suits".

You know and I know that there haven't been enough Armani suits made to account for all the suits "lost" in New Orleans. The only way an insurance company can keep this type of fraud (and it is fraud, a fully prosecutable crime) under some type of control, is to require detailed loss statements with proof of ownership if available.

Big bad insurance companies, right? Well, actually, they are in the business to make money, just like any other company. In a good year, a company might be able to make $0.05 on the dollar. A really good year, maybe $0.06 on the dollar. Some companies have been able to make more in certain years (My own company made about $0.08 on the dollar last year...our best year ever. And we are over 100 years old.)

Where does that money come from? From the premiums you pay. That money is used to turn the lights on in the morning, pay my princely salary, pay all expenses of operating the company, customer services, claims adjusting, and losses. A company's yearly results are measured as something called a loss ratio. A pretty good loss ratio is 1.03 or less. That means for every $1.00 that comes in the door, $1.03 goes out.

Who caught it? What, more outgo than income? That can't be right....

Yes, in fact, it is. Insurance companies, like banks, generally make their money on the "float", as they have use of the money between the time it is received as a premium payment, and the time it is spent for operating expenses and/or claims. The money is invested and additional income is produced from the investment returns. That's what lets a company survive with a loss ratio greater than 1.00, and it is normal to have loss ratios over 1.00.

Now, if Joe Bonehead says he lost 5 Armani suits at $1,000 each, when he really only lost a pair of Nike shorts at $10, should the company really pay the additional $4,990. Remember, that's money you paid to the company in premiums. If the company pays that out, and comes up short of funds, several things may happen. One, the company could go out of business. Aside from the lost jobs (my job, darn it!), all the other people who have bought coverage from the company now have a problem. Not a good solution. Two, the company may have to raise rates. Remember, the money that comes in the door is the same money that goes out the door. If more goes out than comes in (from permiums and investments), something has to go up. If anybody has a fool-proof method of increasing investment returns on demand, let me know. Absent that, premiums will go up. So you, and you, and you over there will all help pay for those Armani suits. Three, the company can be very careful in adjusting the losses, making sure to only pay for the Nike shorts, not the 5 Armani suits for Joe Bonehead. That's the ideal solution all the way around.

Now I'm not going to say that these requirements aren't odious and a pain in the butt. No doubt, some adjusters will revel in their "power". But by and large, insurance companies are in the business of paying claims. They will do that to the best of their ability, because they have a responsibility to their clients to do so, not to mention a contractural obligation.

I remember a quote from a former Vice President of Claims at my company. To paraphrase, he said that the company's responsibility is to pay every dollar of every valid claim, but not a dime more. Over-paying claims does a disservice to our other insureds.

Of course this is all way over-simplified, but I think it addresses some of the comments. I could talk (type) for hours about fraudulent claims I have seen, and accounts I have terminated because of them. In catastrophe situations, fraud is rampant. Also, costs of losses are greatly elevated due to supply and demand. You can't repair your roof if there are no shingles to be had, and those that are available, being in short supply, will be priced dearly. Consider this before bitching about those damn insurance companies.

\soap box

Well stated, Bill M.

Imagine the noive of those nasty insurance companies, making it such a chore to defraud them (and us).

Imagine the genuine economic consequences if the insurance industry were to cease to exist. There's a reason why insurance sells: it's called DEMAND.

And anyone who needs to stop and think about WHY there is demand for insurance (not counting auto insurance, frequently required by state law), please feel free to do so.

I am faced with the task of listing everything in my two refrigerators that were lost as a result of the lack of electricity. For one, I don't remember exactly everything in my fridge, but also, it was right before Labor Day so there was extra meat in the freezer. And, since we have an extra fridge, I tend to stock up on meat when I find it on sale. I'm so afraid that they are going to think I'm inflating my losses.

But, I do have to admit, that I probably won't use all of my insurance money to replace the food. I will probably use it to pay for the 18 trees that had to be removed from my property- something insurance doesn't cover.

Wow, I'm seeing a lot of venom coming from people who have no idea about what they are talking about. The greater New Orleans area DOES have the highest number of tuxedos per capita than any other city in the United States. I don't know if they are all Armani, but Tuxedos aren't cheap.
Jake, we are not a welfare city, but we do host the U.S.'s largest party, Mardi Gras. Members of the Walking clubs, Krewes[sic], etc. are ALL required to have a tuxedo. I have one when I used to ride with the Rex parade (I had it upstairs, so the floodwater didn't reach it. By the way, its Brooks Brothers, not Armani).
Wavemaker, I don't really have any respect for you. Why do you assume that the suits weren't bought retail? I know, you saw some punks looting on television and then, in your small brain, you told yourself that all New Orleanians must be like that. Wow, great logic

Bill M,

You stated your point well, but you avoided mine.

Asking people to list every piece of clothes they own is not only annoying but at this stage it is (yes) borderline abusive.

As I stated above, your industry already knows how much the average person owns in clothes. Just offer them 80% and go on. Not only is it easier on your company and on the victim but it is good business.

You did a great job explaining how the industry works. Something I think we all knew. You didn't even attempt to defend this really stupid practice.

I think at this point if an insurance company wants to bury their insureds in red tape, they get what they deserve.

Hi Paul,

That is a good question.

As I stated above, your industry already knows how much the average person owns in clothes. Just offer them 80% and go on. Not only is it easier on your company and on the victim but it is good business.

The problem is, we have a contract to indemnify the insured for the loss. That means return them as close as possible to their pre-loss condition. We can't, under the contract, say "Well, the average person has $xxxx dollars of clothes, so here's 80%, move along." If we did, we would be open to Bad Faith claims, because we didn't comply with the contract.

Indemnifying an insured is what the claims process is all about. As an example, think about the last time you had an auto accident. If your car was totaled, the value of the vehicle was based on the value of the car at the time of loss. You may have has special chrome wheels on it that cost you $400 per rim. The loss adjuster would not have normally taken that into account when adjusting the claim, unless he had actually seen the car. But all you have to do is advise them that the special rims were there, and the claims rep will make an adjustment to the value. And they might ask you just what type of rims they were and ask whether you have a receipt for them, to verify that they did, in fact, exist. This is especially true in theft situations, where we can't go and look at the vehicle. People do stretch the truth at times, and we go right back to my mutterings above about controlling claims costs.

But the most important thing is that the insurance contract doesn't let us do what you suggest. I agree with you that it would certainly smooth things out and would make them go much faster.

The same thing is true when you look at Coverage A (the value of the building). I just read you note above about the people whose home collapsed. Yes, there now may be coverage for them under their homeowner's policy, and I am glad to hear it. But let's think about something else.

They have (or had, I guess) a $500,000 home. At least I am making that assumption. What does that $500,000 mean? [Sorry, I am going to get a little long-winded here. This is a topic I am way too familiar with.]

A $500,000 home can mean you walk into a real estate office, plop down $500,000, and buy a house, lot, landscaping perhaps, that is, the whole package. In that case, the structure of the home is worth somewhere south of that figure, depending on land value. Here in the Pacific Northwest, if you are buying a home on what is called a view lot, the structure may be worth a wopping $200,000, and the land worth $300,000 due to the view.

I'll make the assumption that the home was insured for $500,000, meaning that the pre-storm sales value of the home was greater than that.

(What? Yes, homeowner's insurance doesn't cover the value of the whole package. We insure real property - the structure of the home itself, not the cost to buy the home. See my example above about the view home. We would insure the home in that situation for $200,000, the cost to rebuild the structure. If it burns down, that's all that needs to be replaced. The land is still there and hasn't lost it's value. I fight this with banks and loan companies all the time as they think we should insure for the loan amount. We do not. If we did, we would be getting premium dollars for an exposure that doesn't exist -- the land will not be destroyed in that type of loss. That would be unfair to the insured who would be paying considerably more for insurance than he would ever realize in an indemnity situation. And it would be unethical.)

Was the home insured to value? Would it really have cost $500,000 to rebuild the same home, or was it underinsured? During the Oakland fires in California some years ago, many homes were way underinsured. The $500,000 Coverage A limit might be insufficient to rebuild if the cost to indemnify the insured (i.e., return them to their pre-loss condition) is greater. In catastrophe situations, where building costs skyrocket due to supply and demand (building supplies and labor both), the same house that was insured for $500,000 and maybe would have cost $500,000 to rebuild if it had been destroyed before the storm, may cost $600,000 to rebuild now. The contract calls for a payment of $500,000. If the cost to rebuild is greater, the company will pay $500,000.

[Aside: There are endorsements available with many homeowner's contracts for "extended replacement cost", which may provide an additional 25, 50, or even 100% of the Coverage A limit. These endorsements generally are very inexpensive. If you don't have this endorsement on your homeonwer's contract, run, don't walk to your agent and add it. It is a very wise investment! \sales pitch....]

Where was I? Oh yea... Suppose it only costs $450,000 to rebuild the house (which you have insured for $500,000). Hot damn, just made a cool $50,000 on my loss......Nope! Remember, the contract says it will indemnify the insured. If it only costs $450,000 to do so, that is all the company will pay, because that is all the company is obligated to pay. This goes back to my example above about the view home, and the paraphrased quote in my earlier post. We will pay every dollar of the claim, but not a dime more.

I almost forgot. Dana posted about having to list all the food in her refrigerators. I'd have to see her contract, but the one my company uses gives you a flat amount for food spoilage. I'd suspect that Dana's contract doesn't do that and includes the value of the food as "personal property". Since there was so much, it would be natural for the adjuster to ask that question. Goes back the the average person you talked about Paul. Most people only have one refrigerator. Yes, Dana, they are concerned about that, but it is more a standard response, rather than a "Dana looks shifty and is trying to inflate her claim...let's try to catch her at it" response. They need to document the loss. Fill it out to the best of your memory, and include a brief description of why there was so much meat. It'll probably just sail through.

OK, I'll shut up now. Hope I've answered the question. Insurance companies are generally looked at as the "bad guys" in these situations. I will almost bet that you have seen a number of TV Newscasts describing just how terrible those insurance adjusters are, and how unfair, etc. But we really aren't the bad guys here. We are doing what we contracted to do, and trying to protect the interests of all our insureds (and the company too).

P.S. My company doesn't write in the Southeast and unless we had some insureds in the area visiting, I doubt that we have taken any losses. I have no axe to grind here and am not trying to put a happy face on my own company's response to this catastrophe. I'm responding solely as a member of the industry.

hey steve, lighten up dude. I can understand you bein a little sensitive and all, but do you think my SARCASM was entirely misplaced when N.O.'s reputation for poverty and corruption is what it is?

I have to agree with Bill M.

(Bill might find that odd, considering that I'm a lawyer who specializes in Bad Faith, and make a living suing insurance companies for their failure to pay or settle claims properly.)

They can't just guesstimate the value of clothes and offer to pay 80%. The transactional costs of adjusting claims is exceedingly high, but the consequences of failing to properly adjust them is even higher.

This is an interesting thread - just a little b/g on how things are going from my end...I am a flood adjuster, this is my first storm, I don't claim to be "an expert" but I can say I've been put through the ringer on this storm - I'm in New Orleans btw...

For the most part, listing your clothes item by item isn't working on this flood, on most floods, yes - they are letting us "lump" like items except for the high ticket items.

Now, let me say this, I've got a pretty open mind, however, I live in the real world and I don't like to be lied to and I enjoy NOT being in prison or owing the government any more money than I already do because an insured tried to pull a fast one on me. More than once I've had between 70 and 90 year old ladies telling me about their 60" Plasma screen televisions - one of them had TWO in one room - C'mon.

See this senario works both ways, I know the insureds get tired of the "fight" list the items, serial #'s, model #'s, - but I'm sure I speak for Bill as well...get real. We want to close your claims as bad as you do, we have to play by the book too.

If only everyone were as smart as me :) (just a little humor - don't get fired up)

just my 2 cents...

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