Read Insurance Policy and Have Plan before Disaster
- Sep 30, 2010
San Diego–Ron Reitz is president of San Diego-based Quality Claims Management Corp., a nationally licensed public insurance adjuster, providing hazard-claim recovery services to investors, apartment owners, mortgage servicers, homeowners and businesses.
Reitz talks to MHN about the basics of property insurance and what apartment owners need to keep in mind while choosing an insurance policy.
MHN: What does a public adjuster do?
Reitz: A large part of what we do is representing mortgage companies when they have a vacant property that has suffered damage. With the downturn in the market, there are a lot of foreclosures these days, and when they go through foreclosures they are found lying vacant with significant damage. We determine the amount of loss and file claim on behalf of a mortgage company. We are also involved in representing homeowners, business owners and apartment owners when they have some type of loss, whether it’s a widespread fire that devastates an area or when there is a sprinkler leak or something like that specific to a property. In these types of cases, we represent them against their insurance company. Our goal is to determine the total amount they are entitled to under the terms of the policy and to work as hard as we can to pursue those recoveries as quickly as possible. We are an advocate for insured.
MHN: What percentage of your clients are multifamily?
Reitz: There are a fairly large number of multi-unit properties that we handle through the mortgage companies we represent. In addition, we also have a small percentage of apartment owners as clients. But with multifamily properties, generally there are larger losses because numerous units or several buildings are affected in case of a fire or flood.
MHN: In case of a fire or flood at a property, what does the property owner need to know and do?
Reitz: Ideally, they should have reviewed their coverage beforehand and not be looking at it when the loss occurs. They should invite the agent or broker to walk the property with them and get their suggestions for any risks or anything out of the ordinary at the property.
Do not focus on the premium. People fear that if they ask the wrong question their premium will go up. Well, even if it does, the premium increase is small, compared to the significant increase in coverage that the policy would offer. It’s very common in a loss, especially a total loss, that people are underinsured. Pay keen attention to the co-insurance clause. Often times, owners will be entitled to loss of rents.
One of the first things that a property owner should do after an event has occurred is to figure out where to put displaced residents. They might have units available in their other properties, but these are things they need to think about in advance. You should know what the surrounding area rents and vacancies are. It’s cheaper than putting residents up in a hotel.
When they have a loss, they will have to make decisions—they will be approached by numerous public adjusters and that’s not the best time to make an important decision like that. I would advise them to do this in advance. Go through that process and select someone ahead of time. Make sure you have a plan when you do have a loss.
I always recommend to owners that they require their tenants to acquire renters’ insurance. It’s cheap and readily available. And it will cover their personal possessions.
MHN: When should the insured party/individual come to you?
Reitz: I would say at the very beginning. It is sometimes significantly more difficult when the claim has already been in progress. Part of the challenge is looking at what has already been presented by the insurance company. If the insured agrees with certain things that the insurance company has set forth and we have a different opinion, it’s difficult to re-negotiate.
The more sophisticated the insured is and more used to hiring professionals they are, the more likely they are to look for the best advocate, and they would do that in the beginning. People who are unfamiliar with a public adjuster don’t want to pay out an X number of dollars and they feel like they can go at it themselves. By the time they realize they can’t get the insurance company to pay what is fully owed to them, it’s either too difficult or too late.