I have a piece of construction equipment insured for 60k... had a major problem and had a claim with it. Insurance adjuster told me the actual worth of my machine was 85k, therefore he said I had it underinsured to the tune of about 70%. So therefore they would cut a check to me for 45k which is 70% of what I had it insured for. Has anybody ever dealt with a situation like this before? Need some opinion''s here other than the fact I think im being horned. Gramps.
Is this from a local insurance agent of yours or some kind of long distance online type insurance contract?
Local as in my state
Well, I really don't know this stuff gramps, just thinking out loud, but isn't one of the reasons you do business with (pay) an insurance agent is for them "to tell you what something is worth" to know how much to insure it for? Just a thought.
Not these days willie,,, they expect you to put a value on it yearly.... no risk to them i guess
I think you should have got the amount you had it insured for regardless of what the ajuster says. You have been paying the fee for that amount of insurance and if it was a complete loss it should be pretty cut and dried.
Dang, tough lesson learned eh. Think I'd still tell them you're looking for a new agent, would like some service with that premium ya know.
That sucks big time.I had a agent tell me once that the adjuster they sent was for my benefit.Yea right.Adjuster another word for stealing your money legally.
Sorry to hear your getting scammed but I'm thinking their in the right here, I just went over my insurance and was told the same thing, you might try a different approach, have an audit of your entire insurance program and see if your any closer on values for a total of everything insured, one piece might throw you off but if your closer to the total on everything, you have something to argue with. Also where did they get the 85K from? Have other agents adjust it and see what they say its worth, then you might have something to argue with as well rather than just one agent. Equipment prices are at an all time high for used right now across the country and are throwing things out of whack for insurance values. Also get an independent adjuster to come and give his values on it as well, like a sales lot or selling agent, to find like kind values to argue with, if they come in at for example 75K or less, your on target for values and they'll have to pay the full amount, which is what they are trying hard not to do. Don't worry, if they'd value it at 50K they wouldn't have given you the 65K you insured it at either, welcome to insurance scams and how the companies make money, remember they wrote the policy you signed, and the writer always has things to their advantage not yours.
This is the type of situation that always happens when people don't read their insurance contract as soon as they receive it and then rub the agent's nose in it until you understand every sentence. There are two types of insurance policies for personal property. They are the cash value and agreed value policies. In the cash value policy the insurance company is on the hook for repairs or replacement up to the market value or replacement cost of the machine. Since machines depreciate in value every year and through wear and tear, the replacement cost is always going to go down. The replacement cost is determined at the time of loss. The premium usually stays about the same and it may be more expensive than the agreed value policy. In this case you have an agreed value policy in which you told your agent that the machine was worth $60,000 and when you had a loss the adjuster decided that the "cost to replace" the machine was $85,000. Since $60,000 is just over 70% of the "determined cost to replace" the insurance company considers you a co-insurer. Any loss you suffer means the insurance company only has to pay 70% of the covered loss and you pay the rest. The big difference here is that the replacement cost is stated at the inception of the policy and not at the time of loss. I haven't dealt with these policies much but I'm told they are less expensive the cash value policies. This is a trap that your agent should have warned you about when you purchased your insurance. Generally this clause doesn't apply as long as you keep the replacement cost at 75% or more of the "cost to replace", but that depends on your state and the language in your policy. What your agent also didn't tell you was the formula and methodology used by the insurance company to determine that replacement cost. What most people make the mistake on is using auction company results to determine value in the belief that the insurance premium will be less and they can use the dollar pay off to obtain another machine at auction. When they find out about the co-insurance clause the reaction is exactly as yours is. The way the insurance company determines replacement cost is to call franchised dealers and ask them what they would sell a replacement machine for. Since they are on the hook for replacement cost, they are not allowed to go to an auction and purchase a used machine and give it to you. They have to replace the machine from the "Retail Market". The insurance company usually doesn't do that at any rate but the settlement negotiations are based on that methodology. Your options at this point are to do the same. Call up your nearest franchised dealer, explain your situation and ask what they would sell a machine of "like kind and quality" to you for. Ask them is they would give you some kind of paper that shows what they sold comparable machines for in the past. You might drop a hint that you need to know this in order to replace your machine. If usually doesn't hurt if the dealer thinks he might get a sale in the near future. The adjuster also may just be blowing smoke to save the company some money and you need back up information to argue with. If you don't like what the dealer tells you, you can invoke the appraisal process. Here you hire and appraiser and the insurance company does the same. Both appraisers will then hire a third appraise and you and the insurance company will share this cost. The two appraisers will determine value and the umpire will pick either one or neither or decide on a value of his own. What eventually happens is that when any two appraisers agree on a value, it is written in stone. You can usually go to court if you still don't agree but you will just be throwing money away on lawyers. Sorry to make this so long but it is a complicated subject. If you have more questions you can PM me directly. If it were me I would consider a new agent. Either they didn't know how this type of insurance works which means they are incompetent or they had a reason to not fully inform you of what you purchased. You might also make a call to your state office that handles insurance. Good Luck!
Thanks for the good replies fellas... give's me some ammunition at least on my position. One of you called it a scam,,,, boy that's hitting the nail on the head. Im going to proceed forward with requesting and independant adjuster give the thing a value and then wrangle from there. At least I know this is the new game in insurance, make'''s me think im in business all by myself... and the ad Hi were your insurance and were here to help.... my a**! Thanks fellas...... Gramps
On my insurance, I need to be within 80% of total values, I'm thinking you can also request an audit of total values if you have more than one machine insured with them, say for example you have six machines insured and one is valued low, like this one and you have the rest insured closer or higher, your totals on the policy will come in at or above the 75-80% level and they'll have to pay full insured value on this one piece. Next time around when your dealing with the next agent, include them in the values figuring, each year when the policy starts, this does two things, first off it gives another opinion, second it puts some of the "guessing" in the agents lap, so you can go back and argue who put the values on the machines in case of a loss. Thats why they say don't underinsure it nor over insure it, like anyone really has an idea what its going to be worth when a loss occurs anyhow, its just a guess at best, either way, switch agents like John stated. Just be thankful you didn't lose everything you owned in a fire or something catastrophic like that and now have to deal with the insurance company to replace everything, I've known a few that literally lost their business over a deal like that, they couldn't replace their stuff or property and no bank would loan them the balance needed to replace the destroyed property. If its any consolation, the only way to come out ahead on insurance is to over insure your stuff and pay the added premiums or when you buy life insurance and die, then they pay, which won't do you any good, your dead anyhow and if they don't pay you won't know about it. I have a brother in law that sells insurance and is as crooked as they come, like he once said, insurance is the only game where he gets paid up front for years, even decades and if there is a claim, there's a million ways to not pay and there are plenty more suckers out there to sleeve every day. I think he's totally right on that statement.
Randy sometimes over-insurance doesn't pay either. They take an estimate of the machine value and then depreciate it out and cut you a check. Been there and nothing you can do. A good agent will go over the policy every year and values of each machine on an annual basis. You should also have a agent that knows a little bit about equipment-not just some college kid fresh off the streets that doesn't know the difference between a car and a dozer. Another piece of advice-shop your insurance! Had an old agent and thought he did a good job-had friend for the heck-of-it give a quote and what a surprise! 6 figures different and better coverage-you know what happened then-new agent. It was just business. Man, there is really some horror stories about insurance out there and I don't care to one of them.
Yup, catken been down that road already,,, and when the good old insurance man finds out your changing policy providers he says "why didn't you give me a chance to compete?". Dang I thought you were working for me..lol sorry, see ya around town,,, buddy.
Gramps, it seems we're getting an insurance edumacation at your expense. Is this related to what you said last night about always getting the shaft?
Yes willie,,, same situation. But its real life episode's like this, thats shared in a forum like this, that may teach one or two, not to make the same mistakes. I know i've gleaned my fair share of info off this forum ... what about you?
Honestly, I knew nothing about this until you brought the subject and circumstances up.
This is the state of insurance today. All you contractors need to go thru your insurance policies and make sure the value you have your machine's insured for is very close to their actual value. Over insuring you don't get paid, underinsuring you don''t get paid........... if you overinsure they accept your pre mium,, if you underinsure, they take your premium... ..
Business You must put business ahead of friends-saves alot of money!!!!
Depends on how your coverage is written. Mine was written for full replacement on my shop and contents when we had a fire two years ago. Got current day replacement cost on the building and total contents. Nothing depreciated etc. Very pleasant surprise. Equipment you got to be real careful how coverage is written
Adjusters are nothing more than a licensed agent acting on behalf of a client. States usually regulate and license them through some sort of insurance control agency of the state. There are two types of adjusters. Independent adjusters work for insurance companies and may set values and negotiate settlements. They are not employees of the insurance companies, just independent contractors. Public adjusters may work for either the insurance companies or the claimants. Public adjusters can act as a agent for the claimants. They usually get paid by the hour or by a percentage of the money they save the claimant. In my experience neither type of adjuster needs to know anything about the equipment they are negotiating claims on. I haven't heard of many successful pubic adjusters and they usually work on huge claims. Disasters on large buildings and industrial plants come to mind. There isn't much money in handling a settlement on a car, bulldozer or excavator. When there are claims of loss, the either adjuster will first try to bluff and then call people and business entities that will give them the answers that support their side of the negotiations. If you are the claimant, you will have to do the same homework to make your case. Claims adjusters don't usually have a long career. The job is extremely frustrating and stressful. Your frame of mind has to get tilted in order to work for the insurance companies. The other thing to get straight is about agents. "They are not your friend"!!!! They are agents for the insurance company. They are paid a commission or a salary by the insurance company to get your business. When things go bad, they are legally required to represent the interests of the "insurance company". You cannot ever trust them. Most will not show you a sample policy when you make the purchase. You have to know the risks of your business, ask questions and then weigh everything they say. When you get your policy you need to go back to that agent and make them explain how everything works.
I was just reading about this at the end of last month because I know my insurance payment is about to come up. I can't tell you how many times I've read over the types of insurance for businesses to make sure I wasn't getting swindled by my agents. I finally decided they were a decent bunch of folks, because they helped me keep from over insuring - at least that's my understanding. I don't feel like I'm getting the short end of the stick, at least.