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We talk with Matthew Goldstein, SPPA, an independent public insurance adjuster with the Greenspan Company/Adjusters International. We talk about what he does and how he can help you navigate the process of an insurance claim after disaster strikes.
Transcript
Episode 6 Homeowners Insurance and How It Works
Jana:
Welcome back, home builders and remodelers. Today, we are going to tackle the challenging world of homeowners insurance and how it works when you have a major claim. It is truly a necessary evil for which I am personally grateful as I got to rebuild my home after a giant eucalyptus tree fell on it, although I remain traumatized by the process even several years later.
As an interior designer, I have helped many clients determine the values of their losses through the years and have had no fear being the one to help work with their insurance companies, but this time, it was me in the center of the traumatic event, and I knew I was way too emotionally involved to see the forest through the trees.
Just as we could not have faced our insurance negotiation on our own, I can’t imagine talking about the process without the public adjuster we hired two days after the tree fell. Matt Goldstein, SPPA is my guest today. He is a licensed public adjuster with the Greenspan Company Adjusters International.
When you hire a public adjuster, they represent YOU, not the insurance company, and unless you are an insurance expert, they can be the difference between a fully covered settlement and a confusing mess. Matt, the first question is what does SPPA stand for?
Matt Goldstein: It stands for Senior Professional Public Adjuster. It’s a designation given by the National Association of Public Insurance Adjusters based on tenure, knowledge, and passing a couple of exams. It’s the highest designation that a public adjuster can attain.
Jana: Okay, great. How long have you been in that position?
Matt Goldstein: This is my 30th year as a public adjuster.
Jana: Wow, that’s amazing. You must have started when you were 12!
Matt Goldstein: I was going to say 13.
Jana: How do you explain what the Greenspan Company and you do?
Matt Goldstein: Normally, I tell people that we are an advocate for an insurance policyholder. Our position is to represent the policyholder only. We don’t represent insurance companies. Sometimes we say we level the playing field, we make sure that the adjuster for the insurance company and the insurance company in general is playing fair.
There’s a lot of things inside your insurance policy that you don’t necessarily know about or understand. As far as your coverages without prior knowledge or intimate knowledge of an insurance policy, you might miss valuable aspects of your coverage, so that’s what we do. We navigate that process for you and make sure that the policy works in your benefit.
Jana: That is exactly what I experienced in working with you. How did you start in this
challenging career?
Matt Goldstein: Sort of by accident. I was doing a different job, and the president of Greenspan is a personal friend, like my second father. He needed someone to come in and learn the business, so I said I’ll do it for a year and see what happens, and 30 years later, I can’t seem to leave.
Jana: Yeah. Well, I think you definitely found your calling. I can’t imagine doing what you do every day. It’s challenging. What kind of training prepared you for this kind of work? What did you do at the beginning?
Matt Goldstein: There’s really no formal training. Most of the people in our industry come from the insurance company side, they’ve been an adjuster for an insurance company, so they see that side of it, and then they come over and switch teams, as we like to say.
I’m one of the few people who never worked for an insurance company, so the training is more hands-on. You start in the inventory department, which is where you actually get really dirty and count debris and figure out claims, but while it’s a learning experience, you’re also listening.
You go to every meeting; you follow the adjusters around, ask questions, learn how to put claims together, and sit in while they negotiate. It’s sort of a trial by fire, and that’s how you learn. I was thrown into it a little quicker, I started in ’91, and then in ’94, the Northridge earthquake hit and –
Jana:
That’s trial by fire?
Trial by earthquake.
Matt Goldstein:
Trial by earthquake, sure. We needed more people, so I had already gone to Miami for Hurricane Andrew, and LA had experienced the riots. The riots may have been after the earthquake. I don’t even remember. It’s been so many disasters, but there were fires in Malibu, there were fires all over the place, so I had gotten a lot of hands-on experience, so I was ready to make that transition in ’94 to being an adjuster.
Jana:
You mentioned something briefly in that description about the inventory. I just want to explain from my experience, that unless it’s completely a total loss, very often there’s a bunch of crap pulled out of your house that’s in horrible condition and it’s stored somewhere until you and your adjuster and the insurance companies adjuster decide whether or not it’s something that can be repaired or needs to be disposed of and then valued.
That’s a whole other process, that could be another whole episode. We dealt with several different insurance adjusters throughout our 14-month ordeal. We had one assigned from our insurance company. We had the hired gun the insurance company sent to check out the process, and we thankfully had you. What are the differences between each kind of adjuster?
Matt Goldstein: Well, it depends upon the insurance company and the claim’s level, meaning the claim’s value. Some of the larger carriers have their own in-house adjusters, so they’re going to have their own people to handle their claims on behalf of their company. Depending upon the size of the claim and the monetary value, it’ll be a different level of adjuster with a different level of experience.
In your case, they assigned an in-house adjuster, and I honestly don’t recall the reason why. Maybe it was because we were involved, maybe because of the value of the claim that they substituted the company adjuster for an independent adjuster who is just that – he works for his own company. Still, he represents different insurance companies, and he adjusts the claim on behalf of the insurance company.
Jana: Have you ever considered working on the insurance company side?
Matt Goldstein: No.
Jana: You like the side of the people?
Matt Goldstein: I do. I like being an advocate for the policyholder and making sure that they’re taken care of. Yeah, I can’t see myself working for an insurance company.
Jana: Interesting. So, when an event happens, when should the potential client call for your services?
Matt Goldstein: Immediately. Unfortunately, it’s not something that a lot of people know about unless you’ve had a loss before, so people don’t know what we do.
It’s not exactly easy to pre-solicit business. We can’t go out and go door to door and say, “Hey, one day you might need me because your house may burn down or a tree may fall on your house,” in your situation. Usually, it’s word of mouth.
If someone’s had an experience before, they tell you to call a public adjuster. Still, it’s imperative that we’re involved from the outset because what gets done at the first couple of meetings, or even the initial meeting with your insurance company, can often dictate how the balance of the adjustments going to go and if an untrained policyholder says something or does something that doesn’t benefit them, it’s very difficult to unring that bell once it’s done.
Jana: Fortunately, I knew just enough. I really didn’t have a total understanding of your services. Still, I did understand enough to know that after one phone conversation with my insurance company where they didn’t understand the magnitude of what had happened to my house. It was a really big tree, it did a huge amount of damage. I needed to be more powerful than I could be on my own.
I know you’ve worked with your clients during some major events like the Northridge earthquakes, the Los Angeles riots, Hurricane Katrina, and recent mudslide, I can’t even imagine what that entails.
Matt Goldstein: Mudslides, hurricanes, tornadoes. If there’s a natural disaster, I’m rooting for it on the weather channel, and then I’ve got my suitcase back.
Jana: Can you tell us how the process of working with the insurance companies may differ from one kind of event to another?
Matt Goldstein: It depends upon the event. For example, when I started with the Northridge earthquake, you would look at a building or a house and couldn’t necessarily tell it was damaged. It wasn’t until you had a structural engineer come out and maybe run a manometer, which is like a level to see if the house had fallen off of its foundation, or if you open up a wall to see, the framings racking or it’s falling apart.
Whereas in a fire, it’s pretty obvious what’s happened and what’s damaged. Same in your situation. A tree fell on the house so that you could see that damage. It did take a little extra because you have to have an engineer come in and look at the house’s structural integrity and see if it’s moved off of the foundation or see how the impact has affected the framing and the overall structural integrity.
Jana: I was thinking about that this morning, remind me, did you actually bring in the engineer to my house?
Matt Goldstein: Yes, we did bring in a structural engineer.
Jana: That’s right. It actually made a huge difference in our settlement. I knew some of the extent of the damage because I knew my house. Even the countertops in the kitchen, which were on the other end of the house, were away from the wall. They had never been like that before. It took the structural engineer to explain to the insurance company what the extent of the damage was, which was crucial in negotiating the settlement properly. We were living in the house until the structural engineer determined it was unsafe.
How do your clients’ needs differ from one event to another?
Matt Goldstein: Well, the type of event doesn’t necessarily dictate that. Maybe it’s the type of claim. If it’s a residential claim, you’ve got a homeowner who’s now displaced, and they need to find a temporary living space, get new clothes, and get new essentials that they live with on a daily basis. You tend to forget when you’re not at home that all of a sudden, you don’t have access to your home, you don’t have access to your clothing, your medications, your computers, all sorts of things that run your daily life that you’re so used to having.
Whereas if it’s a commercial or industrial building, then it’s getting the equipment back up and running and finding a temporary location. “Is the payroll covered?” and “How are we going to get new supplies or new products?” and that sort of stuff.
Jana: When a person is purchasing their policy and looking for an insurance company, are there any specific things we should look for? What are the things that are going to help us know that the insurance company’s going to be there when it counts?
Matt Goldstein: That’s an interesting question. Every consumer has a different need, and I’ll tell you that most consumers look at the price like anything else. You go to buy a car; you look at the price. You go to an insurance company, and get five or six different quotes, and people tend to go for the cheapest one. Unfortunately, more often than not, the cheapest carrier is the least effective carrier.
Regarding your concern, I always suggest to people that, at the very least, they do a search at the Department of Insurance to make sure that the carrier is an admitted carrier, which means that we’re in California, so the state of California licenses more or less that company to practice and to sell insurance in the state of California.
If they are, then there are certain laws that they have to abide by, there are claims practices that are set into law in the state of California that they have to adhere to, and there’s also some funding set up if, for some reason, that carrier were to dissolve in the middle of a claim, there’s some state funding that’s available to cover their losses.
Whereas you have non-admitted carriers as well, which normally, homeowners don’t… Very rarely are you going to see a homeowner with a non-admitted carrier unless it’s maybe a hillside, in a fire zone, or someone who’s had multiple losses.
Those carriers are a little bit more difficult to deal with and don’t follow the same rules. They’re allowed to sell, and they’re allowed to ensure things in the state of California, but they don’t fall under California laws, so they can take as long as they want to pay, they can not pay. They make their own rules.
Jana: That’s called a non-admitted carrier?
Matt Goldstein: Yeah, non-admitted carrier.
Jana: It sounds like that means it’s in exceptional cases where the property might be uninsurable for many reasons.
Matt Goldstein: Yes. I’m sure you’re familiar with the term assigned risk for auto insurance in California, so it’s similar to that. There’s one carrier in California, California FAIR Plan, which is the assigned insurance risk.
If you live up on Mulholland in a fire zone, for example, in Hollywood, and you’ve got a multi-million dollar home, you may not be able to get traditional insurance through a regular carrier. You can go through the California FAIR Plan. You can go to a non-admitted carrier.
It’s also a price thing. You could get a normal admitted carrier to ensure you, but it may be 10 times someone else’s price.
Jana: Yeah, and I think that’s also the case in some of the older homes in parts of Los Angeles that are beyond the ability to be insured until they’re brought up to code, and so you can go to that higher price, but at least it’s something that absorbs some of the risk.
Matt Goldstein: Exactly.
Jana: With what incidents have you witnessed the most devastating kinds of losses? What really shakes people up?
Matt Goldstein: I would say something that affects a home, whether it’s a fire or a tornado or a hurricane or something, but someone loses a home, that’s their personal space, and that personal space is now disrupted.
It’s almost like a death. The people are in mourning because they’ve spent their entire lives in this home or a considerable amount of time, and they’ve put time, money, and effort into making it what they want, and then all of a sudden, it’s taken from them. That’s usually the most difficult and the most emotional.
Commercial businesses, depending upon the business, depending upon what it is, that too is emotional and devastating, and sometimes, it’s just like, “Okay, well, that’s one out of 10 businesses I own, so no big deal. You’ll get that up and running and I can still make money someplace else.”
Jana: Is the process of working toward a settlement different when an entire region is affected, like in a mudslide or a fire area, versus an isolated incident like ours?
Matt Goldstein: Yes. When you get into a disaster situation, you get an influx of adjusters from all over the country who are in and out relatively quickly.
Depending upon your loss and depending on the size of your loss, normally, in a hurricane situation, the first wave of adjusters who come in really for PR purposes, are going to want to pay out as quickly as they can. They put the minimal claim together. Especially if the home or the commercial business is devastated and it’s blown away, then they’ll put together the minimum that they can, and then they’ll pay out policy limits.
Then, after the first couple of weeks, when the news media has died down or something like that, the next wave comes in. They start doing a more traditional adjustment by putting together comprehensive estimates, putting together inventories, and that takes over.
Then, the longer people wait to settle a claim, which I’m not encouraging. If you want to get your money right away, great. If you want to get what you’re entitled to, you may have to wait a little bit longer, and then it’s a more traditional adjustment process.
Jana: You came to our house several times throughout the process of inspections. We were lucky that you were local. Are you always able to be on-site with your clients?
Matt Goldstein: Yeah. Normally, I’m licensed in about 25 different states, but if I have to travel, I’ll stay as long as I need to to ensure the claim is being adjusted properly, or I’ll make several trips.
For Hurricane Katrina, I think I lived in Louisiana for close to 10 months, almost a year back and forth. The same thing with some of the hurricanes in Texas and Houston; we spent a considerable amount of time down there to adjust claims.
Jana: The next thing I want to go into is the process of what happens and how everything is negotiated. I spent some time on your website recently. Before a homeowner needs your services, I strongly suggest people check the homeowners’ section of the Greenspan Company’s website, which maps out the process you helped us with.
Matt, if you could speak to each of these steps:
The first thing on the list is life and safety issues. After having lived there a couple of days, you arranged for an engineer to determine our house’s safety, which was deemed unsafe for us to stay in.
When it’s not a total loss, what are some of the safety issues your clients face?
Matt Goldstein: Well, when you’re dealing with a residence and there’s a fire, or in your instance a tree going into it, or well, say an earthquake, the house isn’t generally safe. It’s not in a condition that anyone wants to live in.
If it’s a fire, now you’ve got certain smoke that’s floating around, you could have asbestos or lead that’s now become friable and is airborne, and you could be ingesting that. The best thing to do is for the homeowner to get out of the house and get into someplace safe.
Jana: There was a team that you brought in to help us figure out what we could move into, what to look for, and that handled all of the details. The payments went through them from the insurance company. Was that a separate company from Greenspan?
Matt Goldstein: Yes. There are outside vendors who we utilize for housing purposes. They’ll go out and they’ll determine the fair rental value of the home that you lived in, and they’ll take that figure, and then they’ll search the general area based upon your needs and parameters, and they’ll find you a temporary residence for you to move into.
Oftentimes, they’ll work with the insurance company and they’ll take care of the rent, and the insurance company will reimburse them. This is out of the insurance coverage that you have, but it keeps you from having to come up with money that you may or may not have, or it’s more peace of mind that you have someone else dealing with it and you can focus on other things and not worrying about paying rent and your mortgage and everything else that you need to do.
Jana: Yeah, that’s exactly right. Adding anything else to our process at the time would’ve been somewhat more overwhelming. It was a great service, and it really helped a lot.
The next category is the mitigation of damages. Our insurance company fully secured the house and tarped our roof prior to the heavy rains. We actually had a rainy season that year. What is the policyholder’s responsibility in mitigating damages, and what’s the insurance company’s responsibility?
Matt Goldstein: The insurance company really doesn’t have a responsibility per se. The policy states that the insured is responsible for protecting their home and mitigating any future damages. Had you contacted your insurance company and they not referred you to a contractor or someone, it would’ve been your responsibility to find someone to come out and board up the property, secure the property, and put a tarp on it.
When we get involved, if that work hasn’t been done, we can refer a policyholder to several contractors we work with that do just that. The policy is very clear that it’s the policyholder’s responsibility to, and we’ll use the term, mitigate their damages. They’re the ones who are responsible for that.
If you leave the building wide open and people come in and steal things that weren’t damaged from the incident, that may not be covered because you didn’t do anything to protect yourself and your property.
Jana: Uh-huh. I see. The insurance company did do some valuable things, but it ultimately would’ve been our responsibility to do them had they no?
Matt Goldstein: Yes. Not every insurance company will refer you to someone. When you report a claim, especially a homeowner, depending upon the day of the week, the time of the day, and the carrier, you’re going to talk to someone at an 800 number who’s simply filling in an online form.
They have some resources at hand for them that they can refer you to. Otherwise, they’re just simply going to say, “Okay, great. Your claim number is 12345, and you’ll hear from an adjuster in 24 to 48 hours,” and that’s all they tell you.
Jana: All right, so there was a good advantage to our company, we were out of town for the first 2 days after the tree fell. They did that well, and paid for it!
The next category of consideration is to establish a primary recovery plan. What does the primary recovery plan entail?
Matt Goldstein: When we get involved in a claim, we come out, assess the damage, and see what has happened and how best to put the claim together. Whether that’s a structural engineer, or a licensed general contractor who’s going to come out and write an estimate of repairs.
If it’s structural damage, then yes, we would have an engineer come in and take a look at that and draw repair plans. You need to have someone come in and inventory the personal property, or if it’s all destroyed, help work with the business owner or the homeowner to put together a comprehensive list of what was damaged or destroyed so that portion of the claim can be submitted as well.
Jana: What are the ranges of time that the restoration process can take in different kinds of events?
Matt Goldstein: It simply depends upon the type of the loss. Right now, things are taking longer with COVID because the building departments aren’t fully staffed and everything’s online, so some situations where planning, checking, and permitting used to take 30 days, now it takes 90 days.
I recently had a situation in Hemet, California, where they only work four days a week, and if you turn in the plans, they quarantine the plans for three days. Then they hand it off to the next person, who then quarantines the plans for three days before they even look at it, so you’re two weeks in before somebody even opens up the permit request and the plans.
Then, when they’re done, they review it and send it back to the city; the city sits again for another three days (which seems fruitless because COVID is not traveling on these plans), but this is just the way they’re doing things, so something in this instance that should have taken about 60 days took six months.
Jana: So, we were covered for six to eight months of housing in our policy, you negotiated up to 12 months, and then we needed 14 for the work to be completed. In the end, we paid for the last two months out of pocket to be able to accomplish additional things that we needed to. In that case, are you constantly negotiating for more safe housing for people?
Matt Goldstein: Well, the way it works, most homeowner’s policies are going to be written in two different ways. You’re either going to have actual loss sustained, which is whatever your housing and living expense loss is for a period set forth in the policy. A standard policy is 12 months. California has passed laws that if you have a loss as a result of a disaster, a wildfire, for example, that 12 months instantly becomes 24 months. I should say that it’s up to that amount of time. It’s the shortest amount of time it takes to fix your house up.
There are also policies that have a stated dollar limit, and that negates the timeframe, so you could go beyond the 12 months, but when you get to that stated limit, there is no more funding available to you. Even if you’re in a disaster, they’re not going to extend it beyond the dollar amount.
In your situation, I think that they initially assessed that it should have taken eight months to repair the house. When we got close to that time, and we saw that it wasn’t going to happen due to settlement issues or permitting issues or payment issues, we were able to negotiate that and extend that to 12 months
But then it may have taken longer than the 12 months, and then, unfortunately, you’re on your own for the last two months. Sometimes, depending on the reason why it took 12 months, some insurance companies are sympathetic to that, and some are not.
Jana: Yeah, I’m sure it completely varies. Between those two kinds of coverages, do you get the sense that anyone really has an idea of how they would be covered if they had to leave their house?
Matt Goldstein: Most people don’t read their insurance policy. Again, most people look at the bottom line: they pay the policy, put it in a drawer, and never need it. When it does come up, and they do have a loss, that’s when they either understand what they’re doing or what they purchased or ask people questions about what they’re looking at.
Again, when you’re looking at an actual loss sustained, you’re pretty well limited to 12 months unless you are in a disaster, and then the policy doubles to 24 months. Whereas, if you’ve got a $100,000 living expense limit, and even if you’re in a disaster, that 100 doesn’t become 200. That 100 stays the same. When you exceed that limit, you’re done.
A homeowner should prefer to have an actual loss-sustained policy because that has an unlimited amount. If you have a stated limit and you’re going to be out of the house for an extended period of time, you still have to start budgeting, “Okay, I’ve got enough to spend $5,000 a month, and can I reestablish the quality of life that I had before for $5,000 a month?” Some people can; some people can’t. With an actual loss-sustained policy, you’re pretty well set for the entire year and shouldn’t go out of pocket.
Jana: The total rebuilds that my interior design firm is just completing are from the Woolsey fires in November of 2018, which is two and a half years ago. Many properties from that event have not even broken ground. One of mine got back into the house exactly at the two-year mark, and the other one is just getting at the two-and-a-half-year mark.
It can take years to design and permit a new home. How is the out-of-your-home timeline handled when it’s a total loss like that, especially when it’s in a whole area of need?
Matt Goldstein: Well, that’s why people complained to the state, and the law was changed in a disaster to not get from 12 months to 24 months. Admittedly, there are a lot of people who can’t get their house built in that amount of time, depending upon the devastation depending upon the new codes.
I handled a lot of claims from the mudslides up in Santa Barbara and in Montecito, where people’s homes were just wiped away. They were stuck for a good eight, nine months, not knowing if they were even going to be allowed to rebuild because the city had to do all these assessments, and they had to figure out where the floodplain was and what sort of foundations and support you were going to need, and that bogged down the process. Again, they were allowed 24 months of living expenses, but some people, like your examples, never even broke ground before that expired.
Jana: I have to say that I understand the devastation of fire because I’m working with people who literally left their homes with what they had on and what was in their cars, and as you work with them over the course of the year, you understand that. Still, the mudslide thing, I just feel like that has got to be complete devastation in such a messy, messy way.
Matt Goldstein: Yeah, it’s different in that it wasn’t expected. You know a fire is coming, and you’re told, “Hey, get out.” That mudslide in Montecito is something I’ve never dealt with before. It’s a one-of-a-kind event. One second, it’s not happening, and the next second, it’s happening, and you have no time to prepare for that.
Jana: I’m sure that the loss is unbelievably devastating.
Matt, I feel like we’ve just laid the groundwork in understanding what a public adjuster can do to help a client with a major insurance property claim. Thank you for agreeing to come back next week to continue the conversation about negotiating the settlement and the timeline of your claim with the insurance company.
As always, you can tune into each episode on your phone or computer through our website, fromdisastertodreamhome.com.