The Great Insurance Scam

The Great Insurance Scam………under-insure to force people to settle.

There you have it folks, now would you like the back story?

cabin

Not long ago I wrote THIS post and at the end I wrote an edit which was a rebuttal to a response from our insurance adjuster. I thought I would re-share the thoughts here as it has an “A HA Moment” that every person who holds insurance needs to think about. It outlines how property owners are being vastly under-insured so that they can be bullied into taking inferior settlements. Please have a read and please help “out” this practice in the insurance industry if you or your family have been victimized.

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This entry begins with a response from our adjuster, amazing what you have to do to get a response acknowledging a receipt of an email.

Below is the email we received this evening with names “x”‘d for privacy reasons.

Mr. and Mrs. xxxxxxx,
Please accept this e-mail as confirmation of your prior correspondence and request to have the cabin repaired.
As I stated to Mr. xxxx on the phone I was communicating the decision that Wawanesa did not accept the building quotations presented.
Mr. xxxxx stated he was having a very difficult time in secure builders to quote on the replacement of the cabin.
He stated he was not even getting return calls for requests for quotes.
As explained the quotes to replace based on the total square footage of the structure would be in the category of a full custom home.
The quotes presented have been reviewed by the appraiser on file and submitted to Wawanesa.
I have not ignored your file as you have stated below.
As stated to Mr. xxxxx on the phone and at his request I approached Pxxxxx  yesterday to see if they would be interested in seeing if they would perform repairs at the structure.
I am waiting for their response. As the Representative from Pxxxxxxx needed to review the file and discuss it with management.
Future, I am also waiting for instructions on the file.
At present as both parties seem to be at an impasse as it would related to the quantum of the damages it appears necessary to proceed with the appraisal process as set forth in the Insurance Act.
Please accept this communication as first notice of this process. Our office will forward further written communication with the appropriate forms shortly.
We have made every effort to accommodate your requests. This commenced with a detailed investigation, coverage review and the presentation of timely settlement offer once the second review process was completed.
I have not stated the cabin can be repaired. The determination of repairability is made by construction experts. This the reason why I have spoken to Pxxxxxx. I have not been able to communicate with the project manager with Bxxxxxx at this time as he is not back from vacation.
Mr. Hxxxxxxx stated it is the obligation of the insurer to repair the cabin and to place you back into the same position prior to the loss.
Further I wish to advise that in accordance with the insurance act it is the insured who has to choose their contractor. While we can recommend one the contract for reconstruction rests with you.
Clearly my comments to Mr. Hxxxxxx have been taken out of context and I find it interesting this communication states something different than what our understanding was.
Accordingly future communication will be in writing by e-mail or by way of in person meeting at your brokers office where the meeting can be appropriately documented for the file.
Thank you,

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Followed by the rebuttal:

First we have two hugely detailed quotes in our personal possession for the repair of the cabin stating exactly what needs to be done, provided to us by the insurance adjuster. His chosen professionals. These quotes and scope of work were completed by the two firms mentioned in the email above. “Repairability” has actually already been assessed; it was assessed in the spring of 2015. The quotes were completed by “construction experts” as stated above. This leaves one to question the statements in the above email. If the quotes are valid, it is just a call or email to the contractor to okay the work. It makes me wonder how valid the quotes are. Were they manufactured? We’ll see. My husband has a theory on this, but we will leave it there for now.

Secondly how can insurance simply not accept the quotations? These are the only quotes we could get. We even asked to see the Wawanesa quote, but the request was ignored. Was this Wawanesa quote for a rebuild fictionalized ? We knew their quote was off because we knew how expensive our fireplace was to replace; it is hand laid brick. We were offered $126,725.37 including demo for a TOTAL LOSS; we are insured for $167,000 (and still paying to have the property insured at this level). A difference of $40, 274.63. Demolition is averaging at about $10K, the fireplace averages out at $12.5K. If we take off these two items alone we are left at $104, 225.37, not even enough for a single wide trailer. But beyond that I will share the actual quotes we were given by two contractors that did not know each other (from different cities) and that we do not know from beyond asking for a quote. These quotes are WITHOUT FOUNDATION. Quote #1 – $239, 058.75
and Quote #2 – $259,610.40. You see our cabin is built on post and pier as a foundation so insurance refuses to put a foundation under our cabin. They tell us this over and over. They say it is a “code upgrade”. What it comes down to is even if we achieved a full settlement for what we are insured for, at best we are $72,058.75 short, plus we still need to pay for a foundation. With the settlement of $126,725,37 we are $112,333.38 short. We insured this property trusting our broker and Wawanesa that our investment would be secure if disaster ever struck. Our investment is LOST due to insuring with Wawanesa. Repair is the only way we can attempt any form of salvage of our investment and property.

It is not our fault as an insured that it is difficult to get quotes. (Of course Wawanesa, or the adjuster, refused to share their quote with us.) It is a rural area. Wawanesa insured the property, they knew its location, they took the risk. Remote areas cost more for builds, for service people, for trades. Rural areas lack amenities such as the local hardware store and require added cost regarding travel time and travel costs. It is a one off build, it isn’t a housing development. So when the adjuster says in the email above: “As explained the quotes to replace based on the total square footage of the structure would be in the category of a full custom home.” Yeah, every total loss infill build IS a full custom home……WITHOUT FOUNDATION…..that is a “code upgrade”.

So let’s assess this statement: “Further I wish to advise that in accordance with the insurance act it is the insured who has to choose their contractor. While we can recommend one the contract for reconstruction rests with you.” This is interesting. A few years ago our home suffered sewer back up. Wawanesa was the insurance company. Here is how the discussion went:

– Adjuster – (says to us over the restoration work) – “Do you have a preferred contractor?”,
– Us – “No”.
-Adjuster – “Is it okay if we use xxxxxx?”- us – “Fine.”
– the adjuster dealt with the contractor, the quotes, the work. All we had to do was let the workers in and write the cheque for the deductible. Proper handling. Respectful and professional handling.

Completely different handling. Both water situations, but one is our house and one is our recreational property. One was being tended to within days while our recreational property still hasn’t been tended to 14 months (less two days) from the date of discovery of the damage; it still sits waterlogged. Why the difference in handling? Why are we so under-insured? Why is the settlement offer so below the amount we are paying for when the property is a TOTAL LOSS. There is something very, very wrong.

I am becoming increasing wary and suspicious of the whole situation.  Do you think a contractor will repair our cabin for what is quoted? I doubt it, it seems to be a special “insurance rate”. This is why in the email above the adjuster is trying to wiggle out of responsibility to repair our cabin. That is why he is deferring to the Insurance Act, so that they can cut a cheque and leave us without enough funds for the repair. It is happening all the time, my husband has come home with multiple stories of insureds who have been completely screwed by the company that they trusted.

We can’t remotely rebuild our property even though our broker has time and again run the numbers for what it should be insured for. His numbers come up the same every time. The build quotes are $72,058.75 short without a foundation. Someone is setting these numbers, I don’t know if it is Wawanesa or some other aspect of the insurance industry, but they are vastly wrong. How can a company insure a property, it ends up a full loss, but changes to the building code means it is the insureds fault? They know no one can rebuild. The numbers that we pay insurance for should reflect numbers where a property can be rebuilt to code.

And there is the “A HA Moment”. Did you catch that?

They know no one can rebuild. The numbers that we pay insurance for should reflect numbers where a property can be rebuilt to code.

And there in lies the scam of the insurance industry. If they knowingly under-insure you they know their customer, especially if the adjusters are nasty enough, will eventually cave. It is a scam. It is a scam by the whole insurance industry to make people settle.

Insurance doesn’t protect your investment.

Insurance is there to screw you over and take advantage of you when you are at your lowest.

Wawanesa states on the third page of their 2013 Annual Report the following values:

VALUES
We treat others in a respectful and truthful manner.
We conduct business with integrity, honesty, consistency and fairness.
We act ethically and lawfully.
We take pride in making service a priority.
We encourage collaboration, innovation and excellence.
We support the communities in which we work and live
 
Spot the difference with what we have experienced!
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Please check out your policies, do due diligence, and take issues further and public if you feel victimized. For Alberta this information may be of use:

Alberta Treasury Board and Finance
Superintendent of Insurance
Financial Sector Regulation and Policy (FSRP)
Room 402, Terrace Building
9515 – 107 Street
Edmonton, Alberta, T5K 2C3

PHONE:  780-427-8322

TOLL-FREE:  (In Alberta):  Dial 310-0000, then 780-427-8322

EMAIL:  tbf.insurance@gov.ab.ca

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