Dan's Papers - October 13, 2006 - A Claim? You're Cancelled

It is no secret that people on the East End, particularly those near the ocean, are worried they might lose their homeowner's insurance. This past spring, two insurance companies, Allstate and Nationwide Mutual Insurance Company announced they would be pulling out of the Hamptons market. In July, several others followed suit. The worry is that we might get hit by a mammoth hurricane or other natural disaster.

Personally, I have not worried too much about it. I live on the side of a hill, facing out across Three Mile Harbor Road to a view of the boats. It would take quite a blow to do anything to my house. One of the reasons is that the harbor rarely has any waves at all and here I am with my ground floor twenty feet up. Another is that my back is to the southeast, where a hurricane might come from, and the hill goes up behind me. And still a third is that we've had hurricanes, though none of any consequence in twenty years, and even then there was no damage to my house.

In fact, me and my house have a long history of paying money to the Chubb Insurance Company without asking anything of them in return. I've never made a claim. They are at least forty thousand dollars richer because of me. The only work they've had to do is cash my checks and maintain my file.

One yeat ago, however, my insurance agent developed medical problems and was forced into retirement. He's a local East Hampton boy. I spoke to his wife. She told me that the policy would continue, but for service I should call a company called Morstan, located in Port Washington. I had never heard of Morstan. My policy was with Chubb. But I did call them, just to say hello. And they told me they were an insurance wholesaler and until I got another agent, they would help me as best they could.

As it happened, just a week later, I had a problem. A pipe beneath my kitchen sink had been quietly dripping. It had remained unnoticed, largely because water from this leak over the months had been collecting in the sheetrock and insulation of the finished ceiling of the basement rec room below. On that day a week later, the whole ceiling in the rec room came down, making a big soggy mess. It looked huge.

I felt I had to, for the first time, call my insurance company. What was my coverage? What were my limits? Was this to be a claim? (There was also the precedent about car accidents. Get into an accident, always report it to the police so they have a record of it.)

I called Morstan, but did not get an immediate return call. And so, I called Chubb. I had a number. There would surely be someone there I could talk to.

The phone was answered by a woman named Rachael Daniels. We talked. I told her there had been a leak. I didn't know what it would cost to fix everything up. And I didn't have my policy anywhere I could find it. My agent had retired. I was between agents and so I had called her for information. She said she would get back to me with the parameters of my policy. And then she said this.

"Let me give you a reference number."

I was suspicious. "I am just making an inquiry," I said. "It's not a claim."

"We get lots of calls," she said. "This will lead you directly to the information about your call."

My reference number was 047505067424.

A few days later, she called back to tell me I had a $1,000 deductible policy. By this time, I also had the sink line repaired and carpenters over to assess the damage. They said it looked worse than it was. It would cost about $600 to fix it all up and repaint it.

"Well, thank you very much," I said to Rachael Daniels. "The repairs don't even reach the level of the deductible, so there will be no claim. Thanks for the information."

"You're welcome. Feel free to call Chubb at any time. And if you need to talk about this matter further, your claim number is 047505067424." Then she hung up.

The words "claim number" had gone through me like a lightning bolt. I tried to call her back, but could not get through. I left her a message but she did not return it.

And so I wrote her a letter. The back story, of course, was that I was concerned that Chubb would now penalize me for having made a "claim." Maybe even, God forbid, cancel my policy. We all know they do this. But I was polite. Here is what I wrote.

Regarding claim #047505067424, I called you several times but have not been able to get through to you. Thank you for holding this matter as a possible claim. After looking into the matter, we have found out that we can make the repairs on the house for under $1000. Therefore, we have decided not to proceed to make this claim.

Sincerely, Dan Rattiner

When I got no response, I wrote her a second letter. Here that is.

There was a misunderstanding about this matter. I called to inquire about making a claim. And, subsequently, learned that the damage caused did not reach the deductible. I then received a letter with the claim number and wrote you that there was to be no claim. This may be semantics but I don't want to find at a later date that I'm penalized for making a claim that was never made, or was the result of miscommunication.

I've left repeated messages about there not being a claim. Please respond in writing acknowledging receipt of the above.

And then she did write back. She would not budge.

You submitted a claim to our office on 10/18/2005 regarding water damage to your home. After submitting the claim you confirmed that the loss would be less than your $1,000.00 deductible and asked us to close your claim, which was done on 10/25/2005.

Unfortunately, we are unable to delete your claim. Once a loss is reported, even if the claim is below the deductible, it will not be removed from our records.

If you have any questions, please call me at (800) 252-4670, ext. 4036.

Property Claims Adjuster

This may sound hard to believe, but several other letters went back and forth between us. I would not give up on this. She had to acknowledge the difference between a call requesting information and a call to make a claim. But she wouldn't. Her last call to me was on February 03, 2006. Here is a summary of that call from my secretary, Penny Ross.

Rachel Daniels replied to your query. She will be happy to talk to you, but the company policy is that when a policyholder reports a loss, it is documented as a claim, whether or not it was pursued. Many claims are reported and not pursued like yours, because it is important to get the loss reported before getting an estimate. So, even though it was reported only, there is a record of a loss. 800-252-4670. Copy on your desk.

I think you know what is coming. In the middle of the July Fourth weekend, this year, after paying them $40,000 and holding this policy for twenty years without ever having made a claim, I received a letter announcing the end of our relationship. My policy would expire on August 22, 2006. In one passage of the letter, they urged me to take note of the quickly arriving date of the termination. They told me I should quickly look to a state agency to provide me with the names and numbers of other "private insurance companies" who might insure the property. It would be terrible to have it sitting there uninsured, after all. Certainly I would agree with that. To that end, in the letter, they went to the trouble of giving me the telephone number of this state agency. On the other hand, there was something else odd about the letter. As I turned this letter over and over, I noticed that nowhere on it was there any way to contact THEM. They had no return address, and they had no telephone or fax number anywhere. I had their phone number of course, but the fact that in their letter they would not give out either a phone number of an address where I could call or write them made me very angry.

I walked around the house. It was two stories high with lots of bedrooms and bathrooms. There were sliders and decks. There was a swimming pool with a bricked patio and a garden and a garage. There was a dining room and a library. Wouldn't it be my luck, on August 23, right in the middle of this year's hurricane season, just about 50 days away from my receipt of this letter, there would surely come a hurricane, the first since 1938 capable of flattening a house anyway, that would swoop in and, well, I didn't want to even go there. I'd have to get another insurance policy, if there were any way I could get one.

By this time, I had retained a new broker, of course. I told them what happened. And I told them about the "claim."

"They DID that to you?" my agent said.

"You've heard of this before?"

"On rare occasion. It's not nice."

"Don't even worry about it. You have three different insurance policies with Chubb. Your credit is good. You pay your bills. We will find something before the week is out. But I am going to call them. This is pretty short notice."

She asked that I look at the letter again to see if they gave a reason why they were terminating the policy. There were many sections. I hadn't looked.

UNACCEPTABLE WIND EXPOSURE, DUE TO SCIENTIFIC CHANGES TO THE WIND MODEL WE USE TO ASSESS OUR LEVEL OF EXPOSURE.

I don't believe this for a minute. On a harbor? And if it is true and they can prove it then why not just raise my rates?

Elsewhere in this letter - and I am sure they hated to write this though by law they had to - it says that it is against the law for them to redline you on account of geographical location or the risk of the producer. I am not quite sure of what this means, but here is what I am going to do about all this.

I am writing letters to all the people who live on my street going up ten houses one way and down ten houses the other way to see if they have had problems with homeowner's insurance. I am filing a complaint against Chubb with the State of New York Insurance Department Consumer Service Bureau. I will have a hearing. And I will present the exchange of letters.

That's for starters. I will keep you informed.

Isn't it strange how we treat our insurance companies? There was a time, some years ago, when it was very hard to get a housekeeper to come over to clean your house for a day or two a week. The joke was that you'd never ask her to do anything. You'd actually clean up and make the beds and so forth before she came so she wouldn't be confronted with a mess. You would just pay her, and if she didn't show up you'd not even mention it. Just smile. She might leave.

Now we do this with our insurance companies. We pay them and pay them, and we don't even want to make a phone call to them. Not even an inquiry. It might cause them to cancel. Or raise the rates astronomically. Shhhh!

Interesting, wasn't it, about Harvey Silverstein's claim for damages done in the destruction of the World Trade Center. He had $2.1 billion in insurance "per event." He filed a claim for two events and his insurance company denied it. They said it was all one event. The two attacks on the two buildings were just part of one big plot. Silverstein went to court and won. It was two events.

I read that last year was the most profitable year ever for insurance companies in America. It came as something as a surprise to hear this, what with the increase in the number of natural disasters.

But you know what? If you only insure that which you know won't happen, you can laugh all the way to the bank.

I would be much more comfortable about all this if the insurance companies put themselves in the same boat as the rest of us, lost money covering big disasters for their customers, and then got government disaster relief money to make up for it.

And if it turns out I am wrong about what just happened to me, I shall apologize.