How Lindstrom Restoration Champions Customer Advocacy in Insurance Claims

In today’s increasingly contentious insurance claims environment, home and business owners need all the help they can get after suffering a loss. Ethical, customer-focused contractors like Lindstrom Restoration can provide customer advocacy in insurance claims for policyholders who find themselves fighting for what is rightly theirs according to the policy coverage they have.

“I sometimes think we’re the only one looking out for the customer,” says President Mike Lindstrom, third-generation operator of the company. “We’re observing situations where our clients are not getting what they should under their policy provisions.  We’re also seeing more people who are underinsured from a dollar-limits perspective.  Others are lacking proper coverage.”

Issues with Some Insurers

It seems many insurance representatives, especially the direct marketing companies who don’t employ dedicated agents, are all too willing to give consumers the low prices they want, without stressing proper coverage or limits given their clients’ risks.  When a loss occurs, policyholders often discover the hard way their monetary limits are too low, or they don’t have the proper coverage to bring them back to pre-loss condition. The outstanding agents who take their fiduciary responsibilities seriously, refuse to write policies that are inadequate for the risk involved. To them, it’s a matter of professionalism. 

Good luck getting the same direct marketing companies to advocate for you in the claims process either, especially when you talk to a different customer service person each time. Frustrated policyholders don’t have anyone to turn to unless they hire a public adjuster or attorney. Contractors like Lindstrom can advocate but cannot legally represent them in the loss settlement process. 

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To make matters worse, contractors often must deal with third-party administrators (TPA’s) on claims.  Most, if not all of those workers don’t have construction or claims adjusting experience and exist to control claims costs.  They don’t look after the customer’s best interests in the opinion of many contractors. 

In some cases, clients are fortunate to have their insurance agent go to bat for them.  Unfortunately, many agents refuse to get involved or are told by upper management to stay out of the claims settlement.  Some are lazy, or more inclined to prioritize writing new business. Others have their job threatened if they get involved. Is it any wonder more agents are referring their clients to public adjusters or attorneys in large loss settlements?  After all, a lot of agents want to retain good customers by giving them value-added service. 

Who Advocates for Insureds and Who Can Legally Represent Them

A distinction should be repeated. Public adjusters and attorneys can advocate and legally represent policyholders in the claims process. Contractors can’t legally represent clients in the claims process, but they can advocate for them with insurance adjusters. Insurance agents, by law, cannot represent clients in a claims settlement, but can also advocate with adjusters unless they are specifically instructed not to by their company. Some agents, especially the big successful ones, throw their weight around and do things like contacting the adjuster’s supervisor. Contractors can make phone calls for the client, but if they get too aggressive and adversarial with adjusters, it comes back to bite them on that claim and future ones.  Contractors have limited leverage in the process, but the good ones do a great job justifying what it takes to do the job right under the coverage and limits available.   

Changes In the Claims Settlement Process

Many agents long for the “good old days,” when claims generally went smoothly and their customers were properly restored to pre-loss condition. To be fair, some carriers are still honoring their commitments while absorbing heavy losses. Insurance has always been based on the concept of returning policyholders to the same condition they were in before the loss occurred (called pre-loss condition) with “like-kind” materials. 

But increasingly, that’s not happening in Minnesota.  Why?  According to the Insurance Federation of Minnesota, our state, next to California, has had the second most extreme weather in the nation recently. Insurers have lost a lot of money doing business here in the last few years. Premiums have skyrocketed and insurance availability has been greatly reduced.  In this environment, carriers have gotten much tougher on losses.

It has progressed to a point where insurance company claims operations are now being referred to as “profit centers,” by many industry members.  This leads some carriers to drive down costs any way they can. Unfortunately, we’ve evolved to a point where some adjusters are more motivated to cut costs rather than doing what is right and coverage appropriate for the consumer. Inexperience and insufficient training factor into this, but many industry observers believe claims executives are browbeating adjusters to stay within their standard operating procedures.

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Some contractors like Lindstrom Restoration are pushing back on that and attempting to do the job right within the coverage specifications. Some contractors don’t fight back and simply kowtow to the adjuster or third-party administrator hoping to do more business with them.  Lindstrom believes this is unethical and not in the best interests of consumers who in good faith bought insurance to protect them from a loss.

Alternative Dispute Resolution

Insureds who believe they haven’t been treated properly have recourse. Alternative dispute resolution is allowed by law in Minnesota to settle claims. Commonly referred to as the Appraisal Process, a claimant and insurance carrier can agree to have their dispute settled by an umpire who hears arguments and evidence from both the insurer’s and policyholder’s appraisers.  The respective appraisers bring their best evidence and arguments to the hearing where an umpire decides what is fair.  

Currently, local professionals who serve as appraisers and umpires report that appraisals are at an all-time high in Minnesota given increased disputes.  Jim Stoops, a long-time retired general adjuster, now owns JAS Appraisals in Bloomington.  He states that appraisals just a decade ago were much less prevalent.  Today, his business thrives on the current environment. A prominent local public adjusting company operator agrees with Stoops. He claims that appraisals in the past were mostly handled by a shortlist of local professionals.  Now, he says that there are many more involved people doing appraisals. 

Consumer Options

What can a consumer do?  Lindstrom advises selecting a high-quality focused contractor you can trust and who will advocate for you. The contractor should be very experienced in dealing with insurance claims and the software (Xactimate) the industry uses to detail and process construction costs such as building materials and labor. Distrust the commonly given advice to get bids.  Definitely interview contractors but be careful about selecting the lowest bid. Cheaper is not necessarily better. Some contractors will cut corners to court favor with insurance adjusters. Others will lowball, and then supplement the claim excessively later to recover costs and profits. This is not only time-consuming and contentious but will exacerbate the process. This isn’t in the best interests of the home or building owner.

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How the Claims Process Works

Consumers should be aware of their rights.  It helps to be knowledgeable of how the claims process typically transpires.  The process of settling an insurance claim typically involves the following steps:

  1. Filing a Claim: The policyholder notifies the insurance company of the loss or damage. This can often be done online, via phone, or through an insurance agent.
  2. Claim Assessment: An insurance adjuster is assigned to investigate the claim. The adjuster will evaluate the damage, review policy terms, and gather necessary documentation.
  3. Documentation and Evidence: The policyholder must provide evidence of the loss, such as photos, receipts, and police reports if applicable. The adjuster may also conduct interviews and site visits.
  4. Determination of Coverage: The insurance company reviews the claim to determine if the loss is covered under the policy terms and conditions.
  5. Settlement Offer: If the claim is approved, the insurance company will propose a settlement amount based on the assessed value of the loss.
  6. Negotiation: The policyholder can accept, reject, or negotiate the settlement offer. It’s essential to ensure the offer adequately covers the incurred loss.
  7. Payment: Once a settlement is agreed upon, the insurance company issues the payment to the policyholder.
  8. Claim Closure: After the payment is made, the claim is closed. The policyholder should keep records of all communications and transactions related to the claim.

Key Factors Influencing Settlements

Several factors can influence the settlement amount and the speed at which a claim is processed:

  • Policy Terms: The specifics of the policy, including coverage limits, deductibles, and exclusions, play a crucial role in determining the settlement amount.
  • Type of Insurance: Different types of insurance (e.g., health, auto, home) have varied claim processes and settlement norms.
  • Extent of Loss or Damage: The severity and scope of the loss directly impacts the settlement amount. Total losses typically lead to higher settlements than partial damages.
  • Evidence and Documentation: Comprehensive and accurate documentation provided by the policyholder can expedite the process and result in a more favorable settlement.
  • Insurance Adjuster’s Assessment: The adjuster’s evaluation significantly influences the settlement. A thorough and unbiased assessment is crucial.
  • Policyholder’s Negotiation: The policyholder’s ability to effectively negotiate can lead to a better settlement offer.

Common Challenges in Claims Settlements

Policyholders often face several challenges during the claims settlement process:

  • Delays: Lengthy investigations and bureaucratic processes can delay settlements.
  • Disputes Over Coverage: Disagreements on whether the loss is covered by the policy can lead to claim denials or reduced settlements.
  • Low Settlement Offers: Insurance companies may offer lower settlements than expected, prompting negotiations or legal action.
  • Complex Documentation Requirements: The need for detailed evidence can be overwhelming for policyholders, especially during stressful situations.
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Policyholder Rights

Policyholders have certain rights in the insurance settlement process.

  • Representation: Policyholders can either represent themselves in the claims process or hire a public adjuster or attorney to represent them in a claims settlement.
  • Contractor Selection:  By state law policyholders can choose their contractor and not be obligated to use the contractor an insurance company recommends.
  • The Right to Alternative Dispute Resolution: By state law, the insured is entitled to use alternative dispute resolution such as the Appraisal Process to settle differences with an insurance carrier.

Tips for Policyholders

To navigate the claims settlement process effectively, policyholders should consider the following tips:

  1. Understand Your Policy: Familiarize yourself with the terms, coverage limits, and exclusions of your policy before a loss occurs.
  2. Hire an Outstanding Contractor. Choose a high-quality, customer-focused contractor who is local, experienced, and proficient in working with insurance companies.
  3. Document Everything: Keep detailed records of all communications, expenses, and damages related to the claim.
  4. Prompt Notification: Report the loss to your insurance company as soon as possible to avoid delays.
  5. Be Prepared for the Adjuster: Cooperate with the adjuster and provide all necessary documentation promptly.
  6. Negotiate if Necessary: Don’t hesitate to negotiate if the initial settlement offer is insufficient. Consider seeking legal or professional advice if needed.
  7. Review Settlement Offers Carefully: Ensure the settlement offer fully covers your loss before accepting it.
  8. Seek Professional Help: If the process becomes too complex or contentious, consider hiring a public adjuster or attorney specializing in insurance claims.

Conclusion

Insurance claims settlements are a critical part of the insurance process, ensuring that policyholders receive financial compensation for covered losses. Understanding the settlement process, being aware of the influencing factors, and knowing how to navigate common challenges can help policyholders achieve fair and timely settlements. By staying informed and proactive, policyholders can better protect their interests and secure the compensation they deserve.