As the preeminent attorney when it comes to prosecuting major insurance companies following natural disasters, John Houghtaling knows what it’s like for homeowners and contractors to have to deal with manipulative adjusters and greedy insurance companies.
While many homeowners throughout the years have acquiesced to the poor settlement offers, they have received from their insurance companies, Houghtaling insists that as consumers, homeowners should not be resigned to having to deal with fraudulent behavior.
At the same time, Houghtaling also acknowledges that the system currently in place is extremely flawed.
“The problem is the system is broken, and it starts way before the claim is made. There is propaganda that is pounded into the policyholders,”
Houghtaling says in explaining one reason why homeowners are constantly mystified when their insurer does not cover them in times of need.
“The propaganda machine of the insurance industry is very well-oiled. If there’s one thing that Americans do well, it’s that they market well, but marketing is a form of propaganda,”
he adds.
Houghtaling goes on to explain that marketing is inherently manipulative, and part of a strategy designed to entice consumers into buying products.
Having people influenced to buy candy bars is not necessarily evil or problematic, but in the case of massive companies like State Farm and Allstate, through clever branding and advertising, they create the illusion that they have their policyholders’ best interests in mind during times of duress.
“In the insurance industry, they [insurance companies] continuously provide propaganda to policyholders and homeowners that makes them extremely vulnerable in times of need,”
says Houghtaling.
A few common phrases that we all know:
“Like a good neighbor, State Farm is there.”
“Allstate: you’re in good hands.”
While these catchy slogans sound good, the reality is that policyholders are being manipulated by profit-driven corporations.
“What they [insurance companies] are telling people is that they’re on their side of the claim. Now, if they are getting sued, they are, but if they lose their home, then it’s a lie for them to say they’re on your side,”
emphasizes Houghtaling.
“If they [insurance companies] are the ones determining their own liability, they have a legal and financial conflict of interest in being the one that adjusts that claim, and the problem that we have in America is that all of our policy premiums go to one side and empower them against the victim.”
This is also why after big storms the insurance companies will go after contractors and mercilessly portray them as greedy. Doing so detracts from the core issue, which typically involves adjusters shorting homeowner claims to save their company money.
When this happens, the homeowner is in a bind because contractors aren’t willing to work for the price of the insurance check handed out by the adjuster. Consequently, the adjuster will tell the homeowner that the contractor is selfish and trying to take advantage of the insurance company, when really what is happening is that the contractor cannot make a profit for the amount that the adjuster has estimated.
“The reason that they [insurance companies] focus on the contractors is because the contractors are the only ones that truly know the rebuild costs,”
notes Houghtaling.
In these instances, some homeowners are quick to blame the contractor for why their home cannot be repaired, and this is part of the insurance companies’ strategy, one meant to influence the homeowner into thinking that the contractor is not on their team.
“What the carriers do is they go into the Attorney General’s office and they lie and say the contractors have a conflict of interest, but the truth is it’s the carriers who have a conflict of interest,”
says Houghtaling.
This disconnect boils back to the marketing strategies of the insurance company that have already convinced the homeowner that they and their carrier are partners.
Unfortunately, in many cases, adjusters are incentivized to short homeowner claims, resulting in a chaotic frenzy that leaves homeowners desperate for repairs and quality contractors unwilling to do work that won’t net a profit.
To combat the insurance companies, Houghtaling recommends that homeowners make themselves aware of how their carrier operates, and also that they partner with a contractor they feel has the best interests of their home in mind.
“Get somebody, whether it be a contractor or claims management company, to do the adjustment who is truly on your side,”
he advises.
“You can’t be in the hands of somebody who has a conflict of interest.”
“That’s the biggest mistake people make and it’s also the biggest mistake that roofers and contractors make.”
This is because often contractors will show up to adjusters meetings without having already inspected and estimated the property, leaving them susceptible to whatever the adjuster has calculated.
Houghtaling is adamant that contractors have to be diligent and mindful so that they can more properly prepare for those ever-so-critical meetings.
“If that roofer isn’t showing them [adjusters] how much it costs to fix it, then they [adjusters] call in a number that’s too low and they set the reserve too low,”
Houghtaling explains.
When this happens, it will be highly difficult to get an adjuster’s price to change because it is at this point that any dispute will result in an engineer being brought in.
Sadly, that engineer is typically on the insurance company’s payroll, thus putting the contractor in a precarious position.
All things considered, if you’re a contractor or a homeowner, your best play is to understand an insurance company’s motivations and be prepared to react accordingly.
Doing so will make the entire claims process go a little bit smoother.
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