Recovery & Resources: A GUIDE TO...

Most people who lost homes in this week’s tragic fires aren’t in the insurance business. And that is their biggest disadvantage when it comes to negotiating with people who are.

Many policyholders also aren’t aware of their rights under new guidelines insurance companies must follow when processing claims. The guidelines were created last year by the state Insurance Department. “It’s difficult for most people to even understand their policy,” said Bill Rake, president of Greenspan Co., a Los Angeles firm that represents insurance claimants on a contingency basis. “But the insurance company’s representative will understand it, as well as the new regulations, and that creates an uneven playing field.”

The first problem many Southern California homeowners hit by the fires will have is simply obtaining a copy of their policy if the original has been lost or destroyed.

“A sample of your generic type of policy isn’t good enough,” Rake warned. “You want to see an actual reissue of your policy. It’s the only way to see what additional riders you have, how much your coverages are.

“It’s like entering into a very serious business deal. It’s unwise to do it unless you know the rules of the game. And the rules are set out in your insurance policy.”

Firms like Greenspan--called public adjusters because they represent individuals instead of insurance companies--are licensed by the state Insurance Department to deal with insurers on behalf of people who don’t want to do it themselves. While their fees are negotiable, they typically get 5% to 10% or more of any settlement paid by an insurer for their efforts.

Public adjusters often go out to solicit business in neighborhoods struck by disaster. Rake recommends that homeowners check out an adjuster’s credentials with the Better Business Bureau as well as the Insurance Department. Adjusters are supposed to carry their state insurance licenses with them.

Meanwhile, teams of insurance-company adjusters are already walking burned-out neighborhoods. “They need to know where to get hold of you, which might be toughest of all if you don’t have a house,” said Gene Weisberg, a partner in the Los Angeles law firm of Cummins & White.

If there is anything left that can be salvaged, “you have an obligation to protect it, which could include hiring a security guard,” Weisberg said.

Sanford Gage, a Beverly Hills lawyer who specializes in representing clients with insurance losses, advises homeowners to make their claims “in a timely fashion, but make sure you take enough to identify everything that has been lost.

“If you discover that your list isn’t complete, add to it immediately,” Gage said. “If you do it later, it’s always suspect.”

Without a videotape or records of your possessions made before the fire, it is best to start compiling a list as soon as possible, “while your memory is fresh,” said Weisberg. He suggests that relatives might have family photos that include valued lost items. “A lot of personal property may be in those photos.”

Don’t worry about it initially if you don’t have the proper insurance forms, he added. “It’s important to get your claim in the works as soon as possible. And for that, any kind of list is good enough. There’s nothing magic about the forms the insurance company supplies you, though eventually, you will have to submit a so-called proof of claim” (which usually must be notarized).

California state law clearly sets out the kind of timetable homeowners can expect to have to live with after submitting the forms. Under new regulations enacted last year, an insurance company is supposed to contact a policyholder within 15 days after receiving a proof of claim, Weisberg said.

The insurance company then has 40 days “to say whether they will pay you or not, whether they will pay you completely or whether they need more time to investigate your claim. If the insurance company does need more time to investigate, they have to tell you why, though they can keep asking for additional information.”

Ultimately, “they have to tell the insured what they’re going to pay and if it’s not everything claimed, what they aren’t going to pay and why,” Weisberg said.

Once the amount of loss is agreed on by the homeowner and the insurance company, many insurers pay within 30 days, said Weisberg. Other insurance companies pay within 60 days.

Whether it makes sense to hire a lawyer to deal with an insurance company on your behalf depends, of course, on the size and complexity of your claim.

“If the amount involved is not too large, say, under $25,000, it’s probably not necessary to get legal advice,” he said. “But if it appears there is going to be a significant dispute over your coverage, that’s a good reason to get an attorney.”