The traps to avoid when presenting an insurance claim – Radio Guesting Nov 1, 2021

The traps to avoid when presenting an insurance claim – Radio Guesting Nov 1, 2021

| Insurance Recovery News & Updates

Transcript

00:39

Welcome to the show everyone. I knew it was gonna happen. I’m trying to save my voice here and it’s getting kind of crazy. You know what, we’re live on Facebook. So I want to say hi to everybody out there like us and follow. I hope everyone had a great Halloween we have already here at November. I can’t believe it. If you want to watch us right now in this studio, you can actually go onto Facebook and go to networking, Arizona all spelled out and watch us live, in here doing this show right now. I’m going to go in with my first guest who’s now, he was been a while ago that he was on my show. But he’s back on with me. I have Troy Froderman with me, and he is one of the principals of FR Law Group. Welcome back to the show, you gotta tell everybody a little bit about yourself about the firm, and what we’re going to talk about today.

01:27

Thank you, Carol. Again, thanks for the invitation. We’ll try to keep this from being spooky since we just finished up with Halloween. So I’ve been practicing law in the valley now for almost 33 years. And my partner and I. We formed a law firm, few years ago, and it’s called FR Law Group. Our specialty is business litigation. And within that, we also do primarily construction litigation, as well as representing corporations and small companies on insurance matters, which we can get into here in a minute.

02:01

Well, first of all, I do want to talk a little bit about you too. What I really like is that what you’ve done is you’ve taken your 33 years of experience that also was big, like a big firm looking for somebody who was really going to hire a giant law firm. And you’ve made your firm available for people who, as the average somebody who is anybody could at you know, I say that in business that is gonna need an attorney, so that it’s not like they have to go to some corporation kind of guy.

02:32

Right, we do offer that. It’s unique in some respects. So I spent the vast majority of my career with a national and an international law firm. I think my hourly rate was three times the amount it is now when I was there, because you have to pay all the overhead and the expenses. But through that I achieved a lot of experience and had mentors, colleagues, protegees, all of whom helped me become the lawyer that I am today. And with that we have a lot of knowledge and experience to draw upon, that we can then counsel our clients at a much lesser rate. But they still get the same experience and the same type of sophisticated legal advice that they need.

03:18

Now today, you said that you wanted to talk about the traps to avoid when presenting an insurance claim.

03:26

Yes, and so there are a lot of different traps that you can fall into when you have a loss, the loss for your business could be minor, could be somewhat significant, or could be about the company type of loss. In any event, if your goal is to try to maximize your insurance coverage to cover that loss, you need to be aware of traps that are within the written insurance contract that you’ve signed with your insurance company. And we’ve said this before any insurance policy, the portion of the policy that provides coverage is typically less than one page, the remainder of the policy or exclusions. So in order for you first to have coverage for your loss, you need to fall neatly into what’s called the insuring agreement. So the first thing to do, you have a loss. You either speak with your agent or if you’re large enough to have a risk manager speak with the risk manager to make sure that the presentation of the claim initially falls squarely within that insuring agreement. Because if it doesn’t, for example, one of the terms that requires coverage within the insuring agreement is that there be what’s an occurrence and occurrence is defined within the policy. If your loss does not fit within the definition of an occurrence, you’re already out.

04:49

To me, the loss is already an occurrence.

04:53

Well, it certainly that’s how you should relay it to the insurance carrier. But for example, an occurrence in most policies is defined as bodily injury or property damage to a third person that occurs during the policy period. So if the loss is something that’s let’s say intangible, that may not fall within property damage, which is defined as well, or bodily injury, which is defined as well. So it’s very, it’s just critical that you understand the terms of your policy before presenting the claim.

05:25

Well, most people probably don’t understand the terms of their policy.

05:29

Right, and most people, including small businesses, when they have a loss, they rely on their insurance agent to tender the claim to the insurance company. Nothing wrong with that at all. But make certain that you’ve communicated to the agent exactly the nature of the loss, so that the agent doesn’t just send a notice, which is usually just a one-pager that says, loss occurred on X date, you need to be prepared to respond to the insurance company’s follow up questions. Sometimes what we will find that the carrier will do is they’ll first argue that they did not receive prompt notice. And so they will deny the claim based on the fact that let’s say that the incident occurred on July 1st of 2020. You didn’t put the carrier on notice until July 1st, 2021. Most people might think well, yeah, that is a long period of time to wait for one year. But under Arizona law, that one-year period does not deny you your claim. Under Arizona law, the insurance carrier has to prove that somehow they’ve been prejudiced by not having been on notice for that one-year period of time. And that’s a very difficult burden for the insurance company to make. 

06:46

Well, here’s what I think I might have asked you this once before, people I think need to be proactive, by making sure that their insurance, the paperwork is been done correctly in the first place.

07:03

Most companies and certainly individuals never receive a copy of their insurance policy. Before online policies were available, you had to actually request a copy of the policy. Now you can go online and see your policy, but who really does that, who’s gonna read that, no one’s doing that. They might do it to ensure that they’ve got the policy. But no one’s reading the terms and conditions of the policy, except for coverage lawyers, claims adjusters and judges. So it’s very important that you understand that when you have a loss, that you’ve got everything ready to go.

07:40

Obviously, when to call an attorney? Is it before to make sure that I have all my paperwork in order and everything is done correctly in the first place? Also, now? Okay, a loss occurred now, How do I call an attorney? When is the right time?

07:56

Well, normally, it’s after the loss that has occurred, because you’re not going to want to invest time with a lawyer with unknown risks, okay, but say, let’s just use as an example, a sophisticated construction company, they’re going out to bid on a project. That’s the time for them to then speak with either their agent or insurance counsel to say, here’s the scope of the project. What types of coverages do we knew, because there’s a variety, sometimes it may make sense to have a builder’s risk policy for that project. Other times not.

08:28

Let me ask you something, do you work with any kind of company or certain types of companies?

08:33

Well, pretty much we’re specialized with construction companies, and then businesses that have more than just simple risks that are a part of their business. But we’ve had a number of clients come to our door, who we hadn’t met before, who suffered a loss, say it’s in the mining business, it’s in the restaurant business, and they’ve been denied coverage they’ll come to us and what we do, which, which is what I like, is that if we think that there’s no coverage, we will tell the business. Sorry, but I don’t think you have coverage for this loss. On the other hand, if we see that the insurance company has denied it without taking into consideration all of the facts and all of the things that are available for them to review, then we certainly will push.

09:20

They do free consultations. Their phone number is 602-566-7425. You’re rated with the Better Business Bureau. It’s frlawgroup.com. And you can also check them out. They also work nationwide. Here’s the thing about this. You might be working in a restaurant and somebody can get hurt with, you know, one of the big machines that are back there in the restaurant, we’re in the kitchen or what have you. It could be anything you never know. Check them out on their website, it’s frlawgroup.com

13:00

So welcome back, everyone. We’re talking with Troy Froderman, and he is one of the principals of FR Law Group. And it’s funny because I always try and think of a you know, for the audience and things like this. And I, as you’re talking I came up with something and you said, you know, it was great that you said that Carol because I have a story to expand on it. So I want to go ahead and let you do that.

13:23

Sure. And so this was a Microbrewery that also had a restaurant. And about a year and a half ago, they had vandalism to the brewing equipment. So they weren’t able to prove their beer. And it was a specialty novelty type of beer, obviously. And that was what really brought people into the restaurant. And so without the ability to make their own beer, their losses, you know, they suffered significant loss of their revenue. So they initially tendered it to their insurance carrier because their property carrier also provided like most policies to do business interruption. The insurance carrier initially denied the claim based on the way that it was presented. The Microbrewery came to FR Law Group, met with us, we reviewed the policy, we reviewed the circumstances behind the loss, we retendered the claim to the insurance carrier. And fortunately, they went back, rescinded the denial, and then started providing monthly payments to the client so that the client could get back on its feet. Because in a small business, not only the suffering, the loss of revenue, they also have to incur the expense of fixing the equipment, right? So it’s very difficult without insurance in that particular instance for them to get back up.

14:44

What I’m hearing you say and you said it a couple times is how the insurance company initially denied the claim. And I guarantee you that happens quite a bit. And that might be where you come in, obviously, to have that it’s almost like a second opinion, the way I’m hearing it,

15:02

It is, and I certainly don’t mean to denigrate all insurance companies, but typically what will happen is that they will find a basis to deny the claim. And I would say probably six out of 10 times, the policy holder just accepts the denial. Exactly. And for a variety of reasons, they don’t have time to deal with it. They think lawyers and they don’t know. So that’s really what we ended up doing. And as I said, Before the break? Well, I’ll be the first person to tell a client that they just don’t have coverage, or it’s a long shot, probably not worth pursuing. But you know, I’d say, certainly the number of clients that we have come to us, they do have a legitimate claim that we can then present back to the insurance company. Most of the time, there’s a resolution because insurance companies like to close their cases. And the clients, the policyholders really are desperate to be made at least somewhat whole. So you get the two of them together, you should be able to work out a compromise.

16:10

Well, I think that the main thing is to, you don’t know what you don’t know. So it’s good to find out that that’s the first thing, is to find out, right.

16:18

So let’s go back to that one trap we talked about already, which is notice. So I had a client that was in northern Arizona with a large paving project, it turned out that as part of the paving project, they used the wrong sub base for the pavement. The owner of the project demanded that they go back and correct the issue. Our client then was out getting bids to do it. And likewise. So they contacted me and said, you know, what should we do? I said, Well, I do believe that there’s coverage on your policy for the variety of reasons that we discussed. And we tendered the claim, the initial response for the insurance carriers that there was late notice. And we said, Well, how could there be late notice? The client didn’t know that there was going to be an issue until the owner brought it to its attention within three weeks of the notice letter. Now, without the lawyers involved it very well could be that the policyholder would think well, I guess we should have put them on notice earlier. Right? And that’s an example that happens all the time. I’m absolutely positive about that. And it’s also important to understand the types of coverage you have. Because for notice, it’s different for what we call a commercial general liability policy, versus what’s called a claims made policy. A claims-made policy, it only covers you for an error or negligence during that finite period of time. And you put the carrier on notice during that period of time.

17:52

So there’s quite a bit you have to do and you have to make sure it’s done correctly.

17:56

Right. Understanding what you have is key. And a follow-up with what you said earlier. Before you even have a loss you should have in the cloud. Or if you don’t like the cloud in a file, all of your documentation, your certificates of insurance, your insurance policy, writers, endorsements, premium checks, all of that should be in one place. So that if you do have a loss, you’re not scrambling.

18:25

Here’s a question that I have to let’s say somebody was denied. Okay. And I’m, again, I don’t know, so you can answer this question for me is that let’s say they were denied. And it was a year ago, let’s say, can they go back to there’s no statute of limitations, if that’s the right word to use? Or if to sit, let’s say, well, somebody listening to this, say, You know what, I had something where somebody turned around and they and I said, okay, because I didn’t know any difference, maybe I have a claim. Can that happen?

18:59

So an insurance policy is nothing more nothing less than a written contract between the policyholder and the insurance company. In Arizona, written contracts have a six-year statute of limitations. So if ABC insurance company denies your claim, and they do it on July 1st of this year, technically, you would have until July 1st of 2027. To bring a lawsuit, I wouldn’t recommend waiting that long. One thing to be aware of, though, is that every contract, including insurance policies in Arizona, have what’s called the covenant of good faith and fair dealing. You and I enter into a contract together, we have to treat each other fairly. We can’t breach the contract and do it in a way that we know is going to be harmful to you or act in a manner that’s not consistent with your contractual obligations. The statute of limitations, arguably for good faith and fair dealing, is two years because it really is.

20:01

But there’s still time? Yes, you know. And so the way I look at it is you never know. Right? 

20:07

Right, you never know. But, again, what’s most critical is that you understand what your rights are under that policy, because all you’re going to hear from the insurance company, what you have to do for the insurance company, you have to give us notice, you have to cooperate, you have to do this. And you do have rights,

20:26

You do have rights. And you know, what else they do is that they’re trained to make you feel a certain way. All right. And pretty much they just want to close out the deal as fast as they can on their side.

20:40

That’s correct. And whenever you get a letter from an insurance company, it’s almost like you’ve done some horrific act by putting them on notice. And that’s not the way that it’s intended to be.

20:51

Now that they do free consultations. 31 years of experience, right? or 32, I forgot what you said.

20:58

Sadly, 33. Oh, 33

21:00

I don’t know how to change it. I’ve known a little while here. So 33 years of experience. And here’s the thing is, you don’t know until you have that consultation with them, they will tell you, they’ll be right up front with you and let you know what they can do for you or not. They’re rated with the Better Business Bureau, they work nationwide, they do free consultations, that phone number to call us 602-566-7425 and the website is frlawgroup.com. Real quickly, do you want to go over anything else before we go down? Because I know this is something that you kind of want to go over about and kind of get, really get people to understand.

21:38

Yeah, we’ll have a theme for the next few shows that really go into some depth about trap falls in presenting your insurance claim, you know, business interruption

21:49

is huge. And when you have a business, and you said it earlier, you have to, you know, pay for all of the damages that happened, right. And, you know, it might not be, maybe it’s a construction business, maybe it is like we said a brewery, a restaurant, what other kind of business.

22:13

Every business just like you has auto insurance, I’m sure, and homeowners insurance. Every business has its own type of insurance. So it goes from the banks, to mining companies to farmers. There’s no business that doesn’t have insurance.

22:30

Here’s the thing though. Some of them start businesses and they don’t get that business insurance and sometimes it’s too late.

22:38

Well, they have insurance, they may not have the right insurance. That’s another thing, they don’t have the right limits and they don’t have so it’s really critical. I guess that how I would end it is don’t take no as the final answer until you’ve consulted somebody. 

22:55

That phone number to call is 602-566-7425. They do free consultations. They work nationwide you’re right here in Phoenix real close by here right across Xavier high school but can work with anyone anywhere rated with the Better Business Bureau, the website is frlawgroup.com, or give him a call. Again. I agree with you don’t ever take no and especially when you hear something like this. You’ve got at least two years if not more, you know to look back on it again, that phone number to call is 602-566-7425, it’s frlawgroup.com.