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Monday, February 16, 2009

Dave Says: Staying on top of the insurance

by Dave Ramsey

Dave Ramsey's Email | Dave Ramsey | Author Biography

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Dear Dave,

A tree fell on our house yesterday and did quite a bit of damage. We’re talking with the insurance company now. Is there anything we should watch out for where they are concerned?

Ian

Dear Ian,

For openers, the insurance adjuster is not your pal. He works for a huge company which got that way by paying as little as possible. You have lots of rights under your policy, and you should insist on all of them. Let them know that you expect your house to be put back in exactly the same shape it was before the accident, and that you expect the work to be completed in a professional manner, and as quickly as humanly possible, by contractors whom you get to approve. This is your home we’re talking about! You’ve paid premiums for years, and now it’s time for the company to make good on their promise to protect you.

Adjusters are loyal to the company that pays them. There’s nothing wrong with that. Will some of them lie? You bet! Will some of them give you bad advice or send you down the wrong path? Oh, yeah! Certainly there are honorable adjusters, but there are some that will stretch the truth and more. Don’t be combative, but don’t be a wimp, either. And don’t sign a release until both your head and your heart know that you have been treated fairly.

- Dave

(burned by the bonus!)

Dear Dave,

My husband always gets a bonus at work around the first of the year. The problem is that his company never takes enough out in taxes, and we get clobbered at tax time. He makes $150,000 a year, and this time his bonus was $105,000. They withheld 18 percent, but that’s not enough. What should we do?

Karen

Dear Karen,

If you guys make $150,000 a year, that puts you in the 33 percent tax bracket – with or without the bonus. That means 33 to 38 percent of his bonus money will end up in Washington. Continued...

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About The Author

Dave Ramsey is a personal money management expert, popular national radio personality and the author of three New York Times bestsellers.

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Tom Location: MO

Reply # 1
Date: Mar 8, 2009 - 10:03 PM EST

Adjusters

Nice to hear from the guy in LA about honest adjusters. I worked for a company for almost 40 years and was NEVER told not to pay a claim or to pay too little. I was ALWAYS told to pay the fair market value for the claim. The prevailing theory of my company, and all the others whose adjusters I talked to, was that we got and kept our business by satisfying our customers, and that meant paying fair value for their claims. In my experience, the vast majority of those who said we paid too little were those who were trying to get too much - in essence, cheating.

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PVZ Location: LA

Reply # 2
Date: Feb 17, 2009 - 6:55 PM EST

MISERLY INSURANCE COMPANIES

There is no question one needs to know his rights in making an insurance claim. Ronald Reagan's aphorism, "Trust but verify," is always sound advice. However, the gratutious and insulting charactarization of insurance companies as "huge compan[ies] tha got that way by paying as little as possible" is silly. I have had several personal insurance claims, from the multiple hurricanes we have had here in Louisiana lately, from a hail storm last year and from other miscelaneous events. In each case, my insurers (and they weren't all the same) actually paid me more than it cost to fix the damage, did not care what contractors I used and treated me with respect. Most people I talked with after the hurricanes in particular reported similar experiences.

Insurance companies do exist to make money for their shareholders or policyholders, depending on whether they are stock or mutual companies. They have a legal, fiduciary duty not to pay bogus claims or for damages not covered, and not just to give away money willy-nilly. Sometimes whether or how much is owed is not altogether clear. Good faith disputes will happen. However, they an insurance company will not be in business long and surely won't expand its business--and will be in constant trouble with the ubiquitous insurance regulators--if they really make a habit of denying or shorting policyholders on legitimate claims.

There are some fly-by-night companies and some asinine adjusters, but the vast majority of insurers and adjusters just want to do right by both claimants and the company owners and to avoid litigation if possible.

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