Washington Injury Law Blog

Imagine your house and everything you own is gone to a devastating fire when you return from work today. Then your insurance company says it will only pay an amount that covers 80% of what its going to cost to rebuild the house you just bought brand new 3 months ago. Your homeless, with only the clothes on your back, what do you do? So many people find themselves in this situation every year.

Wind storms, firestorms, hurricanes, tornadoes can all cause catastrophic damage to your home or even the entire loss of the home. Wind storms and firestorms have destroyed many Washington homes in the last couple years. At tragic times like these you need something to hold your life together as it crumbles around you. Homeowner’s insurance is suppose to be that safety net – where you’re put back to as good as new by your friendly neighborhood insurance company.

All too often – this is merely TV hype – and the reality is shocking and infuriating.  Insurance companies are raking in record profits this year – more money than any time in their history. How is this happening? The companies say their just having a few good years, others say their cutting coverage and low balling claims payments. I wonder if these record profits have come on the backs of Katrina victims or San Diego firestorm victims or tornado victims in the midwest?

In 2003 San Diego had a wildfire that destroyed attorney Karen Reimus’ brand new house and her entire neighborhood. “It’s what I would fathom Armageddon would look like. Because it was just every home completely down to the ground and just black and sooty and there’s smoke in the air … And it looked like maybe you were walking into hell.” Reimus said a different kind of hell soon followed – dealing with her insurance company – Liberty Mutual.

Reimus’ house was fully insured based on the recommendations and determinations made by Liberty Mutual when she purchased the insurance. However, the offer she received from Liberty Mutual after the total fire loss stunned her. The offer of things Liberty Mutual would pay for – called a scope of loss – failed to included everything necessary to rebuild the house. The offer contained no money to have blue prints draw up to rebuild the house – how do you build a house without architectural blue prints? Other areas of the offer were also missing or too low.  It quickly became clear to Reimus and her husband that the offer was not based on reality – they had been low balled!

The Reimus’ were forced to take the gloves off and go to battle with Liberty Mutual. As an attorney this choice was much easier for Mrs. Reimus, but most homeowners do not have the advantage of a legal education. What happens to them? Abuse by insurance companies happens!

Instead of managing risk, insurance companies are attempting to eliminate risk – which is crazy and counter to the whole way insurance is suppose to work. Insurance companies are suppose to collect enough payments from their customers to cover a certain amount of damage claims that they knows will occur on average per year with a little extra to make a profit. Insurance companies are not suppose to collect payments and pay no claims at all – by constantly changing the language of the policy and eliminating coverage all together. Why have insurance if the company is always trying to find ways to not pay for the protection its agent said you would have?

If you find yourself face with a low ball offer following a catastrophic loss of your house,  good first step is to file a formal complaint with the Washington State Insurance Commissioner. The second step is to contact an experience Washington insurance claims attorney to find out what rights you have given your circumstances. Getting good information early about the claims process and traps to avoid can save you headaches down the road.

A good general tip before you find yourself in the situation is to document the inside and outside of your home with good photos or a video.  It’s also a good idea to do the same with your personal belongings.  Having a complete and accurate record of all your clothes, furniture, electronics, power tools, yard tools, and all other personal belongs with as much detail as possible including purchase date and price will help fight any low ball offers from your insurance company. 

Source:  CNBC – March 3, 2008, by Dana Ervin Miller and Scott Cohn