Property insurance claims can be extremely complex, and things are not always as they are portrayed by the insurance industry. In this video, Mark Miller gives a perfect example of how property insurance claims can benefit from a second look by an insurance recovery lawyer. This story is a real life example where a quick review of claim documents by an insurance recovery lawyer resulted in several million dollars of value to the client.
To hear Mark’s story, watch the video.
For a transcript of the video please see below
Property Insurance Claims: The Value of a Second Look.
A client says, “Take a look at this thing. I don’t know if they’re doing the right thing, I think I deserve a little bit more money. The numbers aren’t working for me, I don’t get it.” I said, “I’d be happy to look at it. I know the policies, I know the law, and look, let’s just give it a second look.”
He goes, “Got this meeting. Come on down.” So I go down to the meeting, fly down to Miami, go in there, and the client’s thrilled. Good friend, I’ve known for years. Worked with him on a whole series of different insurance matters at a prior law firm, so he knew me, and he trusted me.
The accountant and the broker were a little bit standoffish, they were not that happy to see me, and I could tell, but I expected it, so I was very ginger about what I said and very nice. I didn’t want to call anybody out, and I didn’t know if there anything wrong to begin with, but this is getting to the point of why in legal analysis, a second look sometimes matters.
Client says, “Hey, Mark’s here, he’s going to check things out. We don’t think he’s playing a big role, but let him look at what we got and let’s see if it’s consistent with the legal framework.” Broker’s like, “Well, you know, we do these all the time”, and accountant’s like, “Yeah, this is exactly what we do, we know how these things work, it’s mostly a numbers game, it’s not all a legal game.” They’re all giving their spiel, and the client’s like, “Well, who brought the claim information?”
So the accountant says, “I’ve got it here, here’s the spreadsheet.” It was a thick thing, so paging through, paging through. Go back to the beginning, and I’m thinking, this isn’t right. This is not right. They got the first part completely wrong.
But I didn’t tell anybody, and I certainly didn’t act that way. I said, “How’d you guys come up with a 3 million dollar deductible?” The broker chimes in first, “That’s what the policy says. Policy says 3 million dollar deductible.” I’m like, “No it doesn’t,” but I’m listening. Then, the accountant says, “Yeah, it’s pretty simple. It’s pretty simple. We got it right.” I didn’t even say they got it wrong, at that point.
Then I said, “Well, can you explain it to me? It’s 3 million dollars, and it doesn’t say 3 million in the policy.” I knew exactly what the policy said, but I opened the question up so they could tell me. They go, “Oh, it’s 5% of TIV, that’s standard industry language, 5% of TIV.” They start explaining standard industry policies and procedures, standard industry this and standard industry that, and what TIV is, and everybody knows what TIV is and if you don’t know, we’ll help you out and we’ll let you know what TIV is.”
I said, “I know what TIV is. It’s not defined in the policy, and I know exactly what you did, it’s a 60 million dollar full property coverage for this building, and you took 5% of that, and 5% is 3 million.” I said, “I get it. But I think it’s wrong.”
“How could you ever say that?” And I said, “What is the insured value for a hurricane here?” “20 million.” I was like, “You’re right. It is. It’s 20 million for hurricanes, because there’s a sub-limit on hurricane damage.” The policies cut off at 20 million dollars. So I said, “What’s the total insured value for hurricanes?”
They’re like, “60 million!” I said, “No it’s not. It’s 20 million. The policies stop at 20 million. This loss is a hurricane loss. You stop at 20 million. What’s 5% of 20 million?” 1 million.
The client drops his pad down and he stands up and goes, “I don’t believe it.” He’s says, “Give me that, Mark.” At this point, I’m like, “Here it is.” He takes it and he looks at it, and he’s like, “You guys almost cost me 2 million dollars. Did you give this to the insurance company yet? What is going on here?”
It was just … the client, I love him because he’s so passionate about it, and he was angry. The broker was like, “That won’t fly! That won’t fly! That argument, insurance companies don’t like that argument, they’ll never take it.” And the accountant was like, “I’ve never seen this in my 30 years of practicing! Never seen this, never heard of it! Nobody’s ever raised this issue before.” I said, “That’s right, it’s the first time I’ve raised it, because it’s the first time you got it wrong. First time I’ve seen it wrong.”
To be fair, this is an issue that they wouldn’t have seen before, because what was happening was a whole series of hurricanes came through Florida, so the property insurers were collapsing what they would limit, what they would pay. Four years ago, you had a 60 million dollar building, they’d insure 60 million for hurricanes. But then, we had a series of them come through, Katrina and then there were a whole series after that, and over time, they started knocking down what they’d cover for hurricanes. 60 million went down to 30 million went down to 20 million, and in some cases, it went down to zero, they wouldn’t cover any of it.
The point of the matter is, this fluctuation is going on, and at that time I’m watching the fluctuation, wondering how it’s going to impact deductibles, and then it comes up, and the accountant’s got it wrong, and I tell the client, the client’s pissed. We created 2 million dollars of value with one trip to Miami. That’s the moral of that story.