July 19, 2016

Five Things You Need to Know About Property Insurance: 1) When You Make a Property Insurance Claim, You Are Stepping Into a Minefield

Today, we start a new series, Five Things You Need To Know About Property Insurance.  In the first installment, we address why making a large property insurance claim is akin to unsuspectingly stepping into a minefield.  Property insurance claims are filled with potential pitfalls that can cripple a policyholder’s chances of recovery.  Yet, many of these pitfalls go unrecognized. 

Watch the video to learn more, and please check back in in the following weeks to see the continuation of this series.


We have included the transcript of the video below.

Five Things You Need to Know About Property Insurance:

1) When You Make a Property Insurance Claim, You Are Stepping Into a Minefield

Point number one, when you make a property insurance claim you’re steeping into a minefield. By that I mean anywhere you step you can get blown up and by getting blown up I don’t mean taking a haircut, I mean getting killed. Let’s give some examples. You make a claim and you think everything is fine, you’re working with the insurance company, they’re sending their people out and you’re sending your people out. It goes on for six months and you’re not even close to figuring out what happened. It just keeps on going, and then a little bit after six months the insurance says well you didn’t submit a proof of loss. You’re like, “Okay, we’ll submit one now,” and they say “Well you had 180-day deadline and we’re past that and there’s really not a lot we can do right now.”

You’re like, “Well that doesn’t seem right, I’m going to check into that.” You check into it and quite frankly they’re right, you had 180 days and you missed it. There are lots of things you could have done. If you would have requested an extension on that 180 days, and you would have requested it from the whole tower of property insurers all the way up and down the line, they probably would have given it to you. If they wouldn’t have given it to you, you would have had grounds to say that they were doing things improperly. Companies, sophisticated entities do miss these deadlines, and it’s much more than just this 180-day proof of loss deadline.

By the way, that might be 90 days or it might be some other number, but there’s a whole series of deadlines that immediately come upon you when you enter into the claims process for property policies. The terminology is sometimes so foreign and the jargon is so extreme that most business folks don’t know where to start. I can understand that because the jargon is ridiculous. You will get terms thrown around that you’ve never heard before. You will get accountants telling you one thing and you’ll get claims folks from the insurance company telling you the exact same thing with such certainty that you may actually believe that they’re true, but be careful. There is truth and the truth comes from the law and from the policy.

Another example of the minefield, and this one is one that’s blown up on a number of folks and it’s published decisions in New York and elsewhere and it’s really problematic and that is most policies have a limitation on filing suit of 2 years. Now look, I’m not saying you want to file suit or don’t want to file suit but the fact of the matter is for a complex claim it can take you two years to figure it out. The insurance company may say they’re in the process of paying. You don’t want to file suit so what do you do? If you’re aware of this 2 years you ask for an extension and you document it properly under the policy, but if you’re not aware of it the 2 years passes.

There’s been case after case where courts have looked at this and said, “We’re sorry, you missed the deadline. You can’t file suit anymore.” You say, “Well that’s okay, they’ve still got an obligation. I don’t have to sue them, they’re going to pay anyways.” That’s what I would generally think, but the bottom line is they won’t pay because they don’t have to because you can’t sue them. It seems like they shouldn’t take that position but that’s the position that will be taken and has been taken in the past. There’s a whole series of cases upholding it.

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