How to Protect Your Interests in Insurance Claims

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Don’t Be a Victim Twice

By Rick Kahler MS CFP® ChFC CCIM

Rick Kahler CFPHurricane Sandy attacked the East Coast, did her worst, and disappeared. Yet cleaning up the mess she left behind will take months and even years.

When Disaster Strikes

Even dealing with damage from much smaller disasters can take a long time. As an example, in July 2011 a severe storm with baseball-sized hail moved through southern Rapid City. It only took nature a few minutes to flatten gardens, beat up vehicles, and damage buildings. It will probably take until the second anniversary of the storm to repair all the damage to our house.

Such a delay isn’t unusual. The most common reasons are finding a contractor and negotiating with your insurance company.

Rapid Response

Moving quickly to report a claim after a disaster is important. In fact, you should probably call a contractor even before you call your insurance agent. Insurance companies are fast to respond to disasters and easily move adjusters in from other areas. Local, credible contractors, on the other hand, fill their schedules fast. We spent hours on the phone to get bids from beleaguered roofers, painters, and carpenters.

Low Balls

These bids were worth our time, because they showed us that the initial repair estimates from our insurance company were low—usually by 50% to 66%.

For example, our roof had cedar shake shingles. The company’s replacement estimate was for much cheaper asphalt shingles. Estimates to repair our siding and deck were also low. It took us 15 months to come to an agreement on the cost of replacing the deck. The work probably won’t be done until summer of 2013.

Switching Gears

Does this difficulty in getting a full settlement mean it’s time to switch insurance companies? Certainly, I thought so more than once during the negotiating process. However, that isn’t necessarily the case. It’s important to remember that getting compensation from an insurance company is just business. And good business means not necessarily accepting the first offer. Negotiating will take time and effort, but it eventually should get you full compensation.

Competing Claims Interests

When you file a claim, you and your insurance company have competing interests. The company is not your advocate. You want as much money as possible from them for repairs, while they want to repair your damage for the lowest cost. There’s nothing out of place with either motivation.

Once I understood that the insurance company and I were natural adversaries, not friends, it helped me feel less victimized and more empowered. While getting the money we needed to make the repairs certainly took time and perseverance, the company readily acquiesced when we presented the facts. After all, their best interest also included keeping us as customers. We did not have to threaten a lawsuit or go to court.


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Certainly, when it’s time to renew my home insurance I will ask my agent to investigate other companies. That’s just business. However, I won’t change companies just because I had to argue with this one.

Understanding your role in negotiating an insurance claim helps bring a healthy perspective to your relationship with any service provider. Unless they are a fiduciary to you (like an attorney or doctor, or some a fee-only financial advisors], they have no responsibility to look out for you. Someone selling you something has no duty to put your interests before theirs. Protecting your interests is your duty and yours alone.



When a natural disaster strikes, whether it’s a hail storm or a hurricane, we are certainly victims of nature’s whims. When it’s time to clean up the mess, though, we’re not victims. We’re our own advocates, with the responsibility and ability to look out for our own best interests.

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2 Responses

  1. Big Companies – Small Claims

    Every business, no matter how good, will now and then find itself in a position of failing to deliver on a promise. Conscientious companies will quickly admit to the failure and do whatever is reasonable to make things right with the customer. Sometimes such actions even result in strengthening the customer’s faith in and loyalty to the company.

    Not all companies, or their employees, are this sensitive to customer service. If the company is small with plenty of competition, customers can easily express dissatisfaction by voting with their feet and their mouths. That is, they can take their business elsewhere and tell others (typically around 200 people) about their bad experience. If a business makes a habit of offending customers, it will eventually fail.

    Unfortunately, it isn’t this simple when a large company has a near monopoly on the service you need. The most obvious examples include governmental agencies, public transportation, or public utility companies. Less obvious examples are phone companies, airlines, cable TV companies, or Internet service providers. Even with two or three from which to choose, I frequently find my specific needs limit me to dealing with only one.

    In this instance, corporations can easily develop a culture of “you need us more than we need you.” I find few experiences more frustrating than dealing with an unconcerned, uncaring, impotent employee of such a company. They often deny any wrongdoing, refuse to make things right, and imply you are the real problem.

    What can you do if you’ve appealed to every level of customer service with no resolution—and the bottom line is that you do need their service more than they need you? I’ve found myself in this situation a handful of times. In every case I received satisfaction by filing a small claims action against the company.

    A small claim is a lawsuit for just what the name implies, small-dollar disagreements. In Pennington County, SD, the maximum claim amount is $12,000. Filing a small claim is easy and inexpensive. You don’t need a lawyer. The employees at the office of the Clerk of Courts will walk you through filling out the simple form, calculating the fee (usually under $100), and contacting the defendant. All you need is a written statement of what happened and some written proof of your loss. When your day in court comes, the judge will guide you through the informal hearing. You just need to tell your story and produce paperwork supporting your claim.

    However, when you file a small claim against a large company, chances are you won’t ever get to a hearing. The point in filing such a claim really isn’t to have your day in court; it’s to get your grievance switched from the ineffective customer service department to the much more responsive legal department. Since they don’t want to pay a local attorney to show up at a small claim hearing, it’s likely they will negotiate a satisfactory settlement with you.

    If they don’t settle with you, be sure to show up at the hearing. I once sued an airline that denied my claim but never made an effort to settle. On the day of the hearing, it was just the judge and me, as a representative for the airline never showed up. The judge ruled in my favor. Within a month, I received a check for the full amount of my claim.

    When all else fails, try a small claim. It’s an easy, fast, and often-effective way to make sure you are compensated fairly for a loss. Even more, it’s a way to have your grievance heard.

    Rick Kahler MS CFP® ChFC CCIM


  2. How to make a complaint to customer service and get results!

    My suggestions for you; Dr. Marcinko.



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