Fighting Fraud in the Wildfire Claims
Adjusting the wildfire Personal Property Claims
The recent wildfires have provided a lot of material for people like me to write about and to be discussed on radio Talk shows. The subjects of discussion go all the way from the possible involvement of the Mafia, to the $500,000 paid to the Los Angeles Fire Recovery Czar for a reported 3-month temporary job. Whether these stories are true or not, remains to be seen. However one issue is certain, and that is the avoidance of explaining the adjustment process of the claims for those who do possess insurance and who need some direction.
Documentation of the Loss
The one principal issue to deal with today is time and documentation of loss. Please note that if documentation of the loss experienced is not correct, the door then swings wide open for fraudulent acts to follow. As an example, the usual time frame for insureds to report to their insurance company concerning the loss of their Personal Property items is 180 days from the date of loss in order to be reimbursed on a Replacement Cost basis.
The State of California has recently legislated that insureds will now have a full year from the date of loss to get their inventory into their insurance company. My first question would be will all insurance companies with insureds that have fire damage claims be held to this time frame? Also, the State of California has legislated that insureds can make a claim for 100% of their Personal Property loss without the benefit of giving their insurance company an inventory of the items destroyed. I can see every property claims supervisor having heart failure when a payment request for undocumented claims is received.
After having adjusted fire claims for many years, I did a little bit of digging and determined that each of the following government agencies, FEMA and California Fair Plan, will need some type of proof to back up a payment request. The following quote is taken from Fire Victims Trust concerning the need for documentation:
“Victims of California fires may need to file a Personal Property Inventory with their insurance company and FEMA and the California Fair Plan. An inventory allows the Trust to evaluate damages more precisely and may result in a higher award to the Claimant” wwwfirevictimtrust.com.”
The Insurance Journal has reported the following concerning the loss amounts of just the Eaton and Pacific Palisades fires:
“More than 14,400 claims have been partially paid under laws requiring advance payments to speed recovery, CDI said. Lara issued a bulletin on Jan. 23 ordering insurers to provide advance funds for replacing personal property or contents in an amount that is 30% of the policy’s dwelling limit, up to $250,000, without requiring policyholders to file an itemized claim, and an advance payment of no less than four months of living expenses.”
The bulk of unpaid claims include property damage and debris removal, which will be paid when people begin the process of rebuilding and debris removal, according to the CDI.
Meanwhile, the FAIR Plan, the state’s insurer of last resort, reported it has received more than 3,200 claims as of Jan. 28 for damage caused by the Pacific Palisades Fire and more than 1,200 claims for damage caused by the Eaton Fire.
Insured losses from the Palisades and Eaton fires are likely to rise. At this point losses look to be heading toward early estimates from predictors of up to $40 billion.
The above quote means we have an estimated $40 billion loss from just two fires that would not require complete documentation.
Respectfully Submitted
Norman Lambe
nwlambe@gmail.com