Tag: homeowners insurance

State Farm’s $1.4B Claim Savings: What Homeowners Must Know

State Farm’s $1.4 Billion in Claim “Savings”: Why Homeowners Should Pay Attention

A case out of Oklahoma should get the attention of homeowners everywhere, including here in Arizona.

Recently unsealed court documents show that State Farm calculated approximately $1.4 billion in claim-payment savings during the first full year of a program involving wind and hail claims.

The documents are part of lawsuits accusing State Farm of changing its claim-handling process to reduce payouts. State Farm disputes those claims, and the case is still being litigated. The court has not determined that the $1.4 billion represents money that should have been paid to policyholders.

But the documents raise a question every homeowner should be asking:

When an insurance company “saves” money on claims, how are those savings being achieved?

According to the court documents, State Farm calculated that reducing the roof replacement approval rate by just one percentage point would save the company approximately $78.8 million annually.

One percentage point.

That number shows the financial impact claim-handling decisions can have for an insurance company. For an individual policyholder, a repair-versus-replace decision, an omitted item, or a coverage determination can change a claim by thousands of dollars.

When those decisions are applied across thousands of claims, the financial impact adds up quickly.

Your Premium Is Only Part of the Story

For Arizona homeowners already facing higher premiums, deductibles, and changes in coverage, this case is another reminder to look beyond what you’re paying and understand what your policy actually covers. Don’t judge your insurance by the premium alone.

You can pay a higher premium this year while having a higher deductible or less coverage than you had last year.

Changes can include:

  • Higher deductibles
  • Separate wind or hail deductibles
  • Changes to roof coverage
  • New exclusions or limitations
  • Changes to replacement cost coverage
  • More restrictive policy language

Price matters when choosing insurance, but it shouldn’t be the only factor.

A lower premium isn’t necessarily a better deal if a difference in coverage leaves you responsible for thousands of dollars after a loss.

The Insurance Company’s Estimate Is Not Automatically What Your Claim Is Worth

An insurance estimate is based on the scope of work included.

Change the scope, and you change the claim amount.

If damaged materials or necessary repairs are left out, the estimate is lower. If damaged property is considered repairable instead of replaceable, the estimate is lower. If the insurance company determines the damage is wear and tear rather than covered storm damage, it may not pay for it at all.

An estimate can be mathematically correct and still be too low if the scope of work is incomplete.

What Should Homeowners Do?

When your renewal arrives, keep last year’s policy nearby and compare the declarations page, deductibles, and endorsements. Don’t assume the coverage stayed the same because you stayed with the same insurance company.

If something changed and you don’t understand it, ask your insurance agent to explain it in writing.

If you have a significant property loss, understand who represents whom.

The insurance company’s adjuster represents the insurance company. A licensed public adjuster represents you, the policyholder.

At AJR Public Adjusters, we prefer to become involved at the beginning of a claim. This lets us review your policy, document the full extent of the damage, and develop and present the scope of loss before key claim decisions are made.

The Bottom Line

The State Farm case gives homeowners a look at something they rarely see: the financial impact that claim-handling decisions can have when applied across thousands of claims.

The $1.4 billion figure is what made headlines. For homeowners, the bigger lesson is what happens one claim at a time.

Know what your policy covers. Know what changed at renewal. And when you have a loss, make sure the full scope of your damage is being considered.

Because what you pay for insurance matters. What happens when you need to use it matters more.

AJR Public Adjusters
We represent the policyholder, not the insurance company.
602-795-5227
publicadjusteraz.com

About the Author

Stacy K. Horowitz is co-owner and manager of AJR Public Adjusters, an Arizona public adjusting firm serving homeowners and business owners with property insurance claims. Stacy writes about insurance claims to help policyholders better understand the process, their coverage, and the importance of having someone representing their interests when dealing with an insurance company.

Image Disclosure: The image used in this article was AI-generated for illustrative purposes and does not depict a specific State Farm office or location involved in the matters discussed.

Arizona Wildfire Insurance: What Homeowners Need to Know

Washington Is Burning. Here’s What Every Arizona Homeowner Should Know Before a Wildfire Happens.

As we watch communities burn across Washington State, many Arizona homeowners are asking themselves one question:

Could this happen here?

It could.

Arizona has experienced destructive wildfires in places like Flagstaff, Prescott, Payson, Greer, and throughout the White Mountains. Even if you live in Phoenix, Scottsdale, or elsewhere in the Valley, you’re not immune. Smoke and ash can travel for miles, affecting homes that were never directly threatened by the flames.

The biggest mistake many homeowners make isn’t failing to buy homeowners insurance.

It’s waiting until after a wildfire to find out what their policy actually covers.

If a wildfire affected your home tomorrow, would you know what to do? Would you know what your policy covers? Would you know whether you have enough insurance to rebuild your home at today’s construction costs?

Those aren’t questions most people think about until they’re standing in front of a damaged home.

Many homeowners assume that once they report a claim, the insurance company will simply take care of everything.

In many cases, homeowners insurance provides coverage for wildfire damage. But every policy is different. What your insurance company pays for depends on what your policy says and how the damage is documented.

One question we hear often is, “What if my house doesn’t burn down?”

That’s a great question because many wildfire claims involve homes that are still standing.

Imagine returning home after an evacuation. At first, you’re relieved because your house is still there. Then you notice the smell of smoke. After a closer inspection, you discover smoke and ash inside the attic, air conditioning system, insulation, furniture, clothing, and electronics.

Suddenly, you have a significant insurance claim even though your home never caught fire.

Over the years, we’ve seen Arizona homes miles from a wildfire experience smoke contamination like this. One thing we’ve learned after handling property insurance claims for decades is that some of the biggest problems aren’t the damage you can see. They’re the damage hidden inside insulation, attic spaces, air conditioning systems, and other areas of the home.

Another question homeowners ask is, “Where am I supposed to stay if I can’t live in my house?”

Many homeowners policies include coverage that may help pay for a hotel, rental home, and some additional living expenses while your home is being repaired. Insurance companies often call this Additional Living Expense, or ALE, coverage. Understanding these benefits before you need them can make an already stressful situation a little easier.

People also assume the insurance company’s first inspection settles the claim.

It doesn’t.

The first inspection often shapes everything that happens next. If damage isn’t identified or documented early, it can be more difficult to include it later. As repairs begin, contractors sometimes discover hidden smoke damage or other issues that weren’t visible during the initial inspection.

Another question we hear is whether homeowners have to use the contractor recommended by the insurance company.

In most cases, the answer is no. You generally have the right to choose your own contractor. Before signing any agreement, make sure you understand what work will be performed and ask questions if additional damage is discovered.

One mistake we see after almost every major wildfire is people cleaning up too quickly.

Once local officials say it’s safe to return, take photographs before throwing damaged items away or beginning major cleanup. Smoke, soot, ash, and damaged belongings can become important evidence supporting your insurance claim. Once those items are gone, it may be much harder to show the full extent of your loss.

Another concern many homeowners have is whether their insurance will be enough to rebuild.

Rebuilding a home costs much more today than it did just a few years ago. If your insurance coverage hasn’t kept pace with today’s construction costs, you could end up paying part of the rebuilding costs yourself. That’s why reviewing your policy before a loss is so important.

A wildfire claim is about much more than repairing walls and replacing a roof. It may involve cleaning or replacing smoke-damaged belongings, creating a detailed inventory of everything that was damaged, reviewing repair estimates, tracking hotel and meal expenses, and understanding exactly what your insurance policy provides.

Finally, people often ask us when they should hire a public adjuster.

Many believe they should wait until they disagree with the insurance company.

Most homeowners don’t realize they can hire a licensed public adjuster before the insurance company even inspects the property. The first inspection often becomes the foundation of the claim. Decisions are being made about what was damaged, what can be repaired, and what the claim may be worth. Having someone represent your interests from the beginning can help ensure the damage is thoroughly documented before those decisions are made.

A public adjuster is a licensed insurance professional who works for you, not the insurance company. Their job is to understand your policy, document the damage, prepare repair estimates, assist with personal property inventories, and negotiate with the insurance company on your behalf.

Not every insurance claim requires a public adjuster, and some claims move smoothly from beginning to end. But every Arizona homeowner should know they have the right to hire one if they want someone representing their interests throughout the claims process.

As wildfires continue to threaten communities across the West, now is the time to ask yourself a few simple questions.

Would my insurance pay enough to rebuild my home today?

Would it help pay for a hotel if I couldn’t live in my house?

Would smoke damage be covered if my home never caught fire?

Do I know who I would call besides my insurance company if I needed help?

Those are questions worth answering before a wildfire, not after one.

At AJR Public Adjusters, Bruce Horowitz has more than 38 years of property insurance claims experience, and AJR has represented Arizona policyholders for more than 13 years. We work exclusively for property owners, never insurance companies.

Wildfires don’t give homeowners time to prepare after they start.

The time to understand your insurance policy is before you ever need it.

If that day comes, remember that the insurance company isn’t the only professional you can call. You have the right to have someone representing your interests from the very beginning.

About the Author

This article was written by Stacy Horowitz, co-owner of AJR Public Adjusters. Stacy works closely with Arizona property owners throughout the insurance claims process and is responsible for AJR’s consumer education and outreach. Her goal is to help homeowners and business owners better understand property insurance claims so they can make informed decisions before and during a loss.

Disclaimer: This article is provided for general educational and informational purposes only. It is not legal advice, insurance advice, or a substitute for reviewing your individual insurance policy. Every insurance policy and every property loss is different. Coverage depends on the specific language of your policy and the facts of your claim. If your home or business has been damaged, consider consulting a qualified professional to discuss your specific situation.