Insurance. Just the word elicits feelings of safety and security. Someone else has your back should your world be upended by an auto accident, fire, flood, or a plane’s engine falls through your home (true story!). Many Americans hold insurance policies for years and never file a claim. According to the Insurance Information Institute, in 2016 just 5%of covered homeowners filed a claim with their insurance company[i]. Yet, even as a homeowner or driver that’s never filed a claim, you watch your rates climb each year and Florida consistently ranks near the top for highest insurance rates in the country. What gives?
Insurance companies live and die by actuarial tables. In a basic sense, an actuary uses a combination of financial theory, statistics, and mathematics to calculate the probability of an event occurring that would require the insurance company to pay out on a claim. The probability of an event occurring helps determine how rates are set and can vary greatly depending on the policyholder’s locale. The real numbers game, however, begins when an accident occurs and a claim is filed.
If you’ve been in this situation, the first person you’ll usually meet is the insurance adjuster. The adjuster has training in assessing the damage and is supposed to offer a fair amount for your recovery. Most often, however, the amount offered is nowhere near the total amount needed. After a few back and forths, many adjusters simply break communications until you stop fighting, accept their offer, and settle. Sadly, we see this case every day of the week.
Despite their marketing team’s best efforts to convince you otherwise, insurance companies are not in the business of paying out claims. Insurance companies take premiums, “pool” these together with members sharing similar risk characteristics, and use the funds to pay out for claims or losses. Like above, when only 5% of policyholders make a claim, the insurance company gets a steady stream of income, while it minimizes pay-outs. The real money-maker for the company is taking your premium dollars and reinvesting them to provide a good return for the company. Adjuster’s act in the best interest of the company, minimizing the risk the company has to pay out big dollars on a given claim. If a policyholder settles for a lesser amount, it doesn’t matter to the insurance company that the person doesn’t have enough to be made whole; to them and their stakeholders, minimizing payouts means maximizing profits for the company. What’s worse, when you actually use the insurance you pay for and file a claim, your annual premium will undoubtedly rise.
At Farah and Farah, we hate to see insurance companies try to bully their own clients - the policyholders. We’ve handled hundreds of cases involving insurance companies underpaying or delaying paying for as long as possible – after all this helps them make more money as the funds keep making interest day after day. If you have an insurance claim, you need to understand the bounds of your policy. The policy is a legal contract between you and the insurance company and they hope you’ll fail to understand the full amount you’re due after a claim. Contact our dedicated insurance team to go over your policy and chart the best path forward to getting you everything you’re legally entitled to under the terms of your policy. We love fighting bullies and holding insurance companies to the terms of your contract is something we do really well. We won’t quit until you have the compensation needed to be made whole.
[i]Insurance Information Institute https://www.iii.org/fact-statistic/facts-statistics-homeowners-and-renters-insurance