The American Adjuster Association has a clearly defined message for what they are trying to accomplish for policyholders: Fairness and Balance. In short, equitable solutions for policyholders that have been underpaid on claims.
Our message has been heard by members of the Illinois legislature, a very challenging state to get pro-consumer legislation. State Farm, Allstate, and Country Financial have deeply connected political relationships in the statehouse and their corporate headquarters nearby.
In the face of a very challenging legislative complexion, a courageous house representative La Shawn Ford (D) has introduced HB0142, and if passed, would allow policyholders to seek reimbursement of costs incurred to substantiate a claim if the claim was denied by insurers.
The passage of HB0142 would be a huge win for policyholders. We would like to thank La Shawn Ford for taking on this cause and joining us in protecting policyholder interests. Read on to learn how this bill will help those impacted by property damage claims and how you can help get involved.
Passage Of HB0142 Would Ensure Fair & Balanced Payments
When a property damage claim is wrongfully denied or underpaid, policyholders must either accept the low-ball payment or, as a direct consequence of the underpayment, payout of pocket for third-party experts to correct mistakes made by the insurance carrier. In Illinois, the costs to use these experts are non-recoverable, even when the carrier is at fault. Policyholders who have to pay out of pocket to get a claim paid fairly are not made “whole”, even when the claim is paid according to the coverage limits. HB0412 would change that. Click here to read the draft legislation.
If a property damage claim was wrongfully denied, policyholders would be able to seek reimbursement of the costs associated with getting a claim fairly paid.
Reasonable costs include, but are not limited to, those associated with engineers, appraisers, public adjusters, risk managers, third party administrators, and other subject matter experts who work on behalf of the policyholder.
The cost to hire these experts can add up quickly and may be out of reach for some policyholders leaving them to choose between an underpaid claim or a fairly paid claim that is significantly reduced due to the costs of hiring experts. The ‘law of diminishing returns’ becomes a reality for most consumers, especially if the claim size and economics do not support the ability to absorb some of these very real costs. This situation has created a market failure for consumers not just in Illinois, but in many states around the country.
Cost Balancing Is Equitable
When you pay your insurance premiums, a portion of those premiums goes to pay the adjusters, experts, lawyers, lobbyists, and other carrier representatives who protect the carrier’s financial interests in a claim. None of those premium dollars go to the consumer representatives. Loss Adjustment Expenses (LAE) only pay the people who have a direct financial conflict of interest with the consumer. This is the source of the imbalances in claims.
HB0142 is similar to the existing provision that allows policyholders to recover attorney fees when insurance carriers act in bad faith or breach the promise of a contract/policy. If this bill is passed, insurance carriers would be responsible for all reasonable fees associated with correcting mistakes that led to a denied or underpaid property damage claim. Cost balancing or fee-shifting is a common-sense approach that protects consumers and levels the playing field against big insurance carriers.
About American Adjuster Association
State laws, policies, and inaction from insurance companies hurt those who need help the most: policyholders trying to recover from a catastrophic and unplanned situation. These often result in moral hazards and economic disaster for the most vulnerable people. At American Adjuster Association, we believe it is our responsibility to fix this.
HB0142 and laws like it are a step in the right direction in ensuring policyholders have cost-balanced representation in the claim process. Click here to learn more and apply online to become a member.
