Kerry Lutz and attorney Parag Amin discussed the critical importance of disaster preparedness for businesses in the wake of hurricanes in Florida, emphasizing the need for proactive planning and adequate insurance coverage, particularly business interruption and flood insurance. Amin highlighted the ongoing insurance crisis in the state, driven by the increasing frequency of hurricanes, which has led many insurers to exit the market. He expressed concern over recent legal changes that hinder homeowners from recovering attorney's fees in disputes with insurance companies, arguing that this creates an unfair disadvantage for policyholders.
The conversation also touched on the balance between regulation and capitalism in the insurance sector, with Amin advocating for more regulation to ensure accountability and consumer protection, while Lutz shared positive experiences with certain insurance providers. Additionally, Amin stressed the importance of thorough documentation for insurance claims, including maintaining organized records and a clear timeline of communications, and provided resources for further assistance. The meeting concluded with a reminder of the unpredictability of disasters and the necessity of being prepared.
Find Parag here: lawpla.com
Find Kerry here: FSN and here: Inflation.Cafe
Insurance companies like all other businesses are in the business to make money and with it, the likelihood of them losing money exceeds the likelihood of them making money. They choose generally to stop doing business. And that's, I think, what we're saying in Florida with the increased number of hurricanes and the devastation caused by the hurricanes. You're listening to Carrie Lutz's financial survival network, where you get valuable information you just can't find anywhere else. To thrive in today's trying times, you need the financial survival network now more than ever. Go to financialsurvivalnetwork.com and get your free newsletter and gift, Financial Survival Network, now more than ever. And welcome and you are listening to and watching the Financial Survival Network. I'm your host, Carrie Lutz. Well, in Florida here, north to southeast, we have had quite a mess to straight hurricanes hit. Hurricane Milton, the latest just down the block for me nine miles. The tornado hit and ripped up like a relatively new neighborhood is amazing. It did a lot of damage, but the houses were still standing afterwards, which I guess says something about our building code, or maybe it wasn't that bad a hurricane. But the question is, when you have these mass disasters, how do you recover? Small business, large business, medium size. What are the steps you need to take put in place before it happens so that you can recover? Arag Amen is with us now. And Arag, it's great to have you on the show. So tell us here, you're an attorney, business expert. First, disaster recovery. It's all about the planning, isn't it? 100%. And the best time to plan is before disaster happens. Now I know that's convenient to say once a disaster happens as well, it would have been nice to have a plan. But of course, these kinds of things, unfortunately, will occur more frequently. So having the plan of exactly what you need to do, having your insurance in place to make sure you can get along with your recovery is so critical before a disaster happens. And after a disaster happens, it's also a good opportunity to be able to plan for the future of how you prevent something unfortunate like this from happening to you or your business. And if it does, how do you recover from it? All right. So like I assume you've gone through this before. What have you done? Have you worked on it? Yeah. So when it comes to business owners, for example, a good way to make sure you're out ahead of it is just making sure you've got proper insurance. For example, a lot of business owners will have something known as commercial general liability insurance that will protect them from things such as slip and falls at their property, general kind of things such as potentially an employee driving a vehicle and get into a crash, things like that. But they also want to look at business interruption insurance, which is insurance that covers you and your business in the event of something catastrophic happening that interrupts it and prevents it from being able to generate revenue. A great example of this is a hurricane. So if a hurricane comes and destroys your business and you're unable to earn revenue for a while, business interruption insurance is something that can cover you. In addition to that, and by the way, that's a separate coverage. So these are the types of things that I encourage all business owners to talk to their insurance brokers about is what kind of coverages are available to me and my business in the event of something like this happening. There's also special riders for things such as flooding. Now, a lot of places such as Florida will exclude flooding from general kind of disaster relief insurance. So it's a special rider or endorsement, meaning it's something extra you have to pay for their additional premium for it. And if you don't have it, the insurance company is going to exclude any and all damage that's caused by it. And maybe unsurprisingly, the insurance company is going to probably claim that a lot of the damage was caused by the flooding as opposed to the winds from the hurricane or something else. So insurance companies have a knack for finding ways to say look, this was a part of the coverage you didn't have. So of course, you want to be sure you're prepared for it ahead of something like this happening. Right. So yeah, the recently state of Florida passed a rule that if you have citizens insurance, you must get a flood insurance policy, which just seemed to me to be pretty outrageous, whether you're in a floodplain or not. And you know, they are just looking out for my benefit. Why would they do something like that? Well, it's interesting. The way you have to have ever carried away insurance works is it's pulled over risk. So you have to have a certain number of people who really aren't within a risk period or place to be able to support the ones that are in a higher risk place. The idea is is that with everybody pooling their resources, it makes it better for everybody because statistically, not everybody is going to be adversely affected by something like this. And so it brings down the premiums for people who are more likely to be affected by something like this. And the idea of if there's too few people paying into the policy or to the insurance company, it really does increase the risk for everybody because it increases the risk of a potential default by the insurance company because they don't have enough premiums collected to be able to ensure the risk. So states like Florida and other places adding in these requirements are to help ensure the liquidity and viability of the insurance company to help ensure that everybody can be potentially protected. Okay. So in Florida, we either having what they call an insurance crisis and, you know, basically, insurance companies have stopped writing policies in Florida. What's this coming from? How did we wind up in this situation? So insurance companies, like all other businesses are in the business to make money and with it, the likelihood of them losing money exceeds the likelihood of them making money. They choose generally to stop doing business. And that's, I think, what we're saying in Florida with the increased number of hurricanes and the devastation caused by the hurricanes, not just in frequency, meaning that the number of hurricanes Florida is seeing every year, but also the significant severity of these hurricanes and how much damage they're causing. So ultimately going back to what we were talking about earlier, the problem becomes these insurance companies are paying out far more than they're paying or receiving in premiums is their projection. And so based on that, they're saying, look, it really doesn't make sense for us to continue ensuring in Florida because we're going to lose money. And I think that's what we're saying now. Well, there's, they were claiming that there is a lot of fraud going on with new roofs, things like that. I mean, how much does fraud really impact insurance company's bottom lines? I have no doubt that there's some aspect of fraud when it comes to these things. But in terms of the overall macro perspective, the overall big picture perspective, I don't really foresee a majority of the claims are anywhere close to a majority of the claims and bang fraudulent claims. A lot of insurance companies like to talk about fraud on the insurance company, but they don't really talk about the reverse when the insurance company is denying legitimate claims to individuals and business owners, even though they should be covered. And recently, Governor DeSanta has signed a law that prevents homeowners from being able to recover their attorney's fees when they have to sue their insurance companies when an insurance company doesn't pay out when they're supposed to. So said differently and explained differently. Previously, the law allowed homeowners whose claims were wrongfully denied to sue the insurance company. And to recover, not only the money that was should have been paid to them, for example, if a roof needed to be replaced and the insurance company improperly denied it and claimed it was fraudulent. And then the homeowner can sue to not only to get the roof replaced, but also to cover their attorney's fees for the roof replacement, because obviously the attorneys aren't doing the work for free. And it really is cost prohibitive a lot of times for homeowners to pay for the attorney out of pocket. And of course, an individual homeowner is going to be at a significant disadvantage to a multi-billion dollar insurance company. So the law was intended to design to help homeowners and try to even the playing field. Unfortunately, now with these changes, insurance companies can deny it. And if the homeowner sues and wins, sure, they can get the money to replace the roof, but then now they have to pay for the attorney's fees out of pocket. So if you imagine if a roof replacement is going to cost $50,000 and the attorney's fees cost $20,000, well, now the homeowner only has $30,000 to replace their roof. And you can't get it done for that now. So the issue becomes that the increasing number of denials of claims, I think, will create additional problems for homeowners who already have the odd stack against them when they're facing large insurance companies. Interesting, interesting. It's kind of hard to feel bad for insurance companies, though, isn't it? I agree. I mean, we all of us, we, we dutifully pay in our premiums to insurance companies with the hope and expectation that they'll do the right thing when it comes time for them to actually pay out. Of course, the insurance company is betting that they won't have to pay out or that the number of premiums that they're going to collect from the number of people they're going to collect them from are going to exceed what they end up paying out. But the issue becomes when the insurance company puts their thumb on the scale and says, well, look, we bet we took the bet that we won't have to pay out and we lost at that. But now, we're going to just deny the claim or make homeowners go through additional loops or business owners go through additional hoops. And then I ultimately deny the claim when they know that the claim really properly should have been paid out. A lot of times, unfortunately, these can become wars of attrition, meaning insurance companies just simply waiting things out for either the homeowner or the business owner to give up because they have so much going on. There's all this devastation in their own lives. And then they've got a deal with a multi-billion dollar insurance company in their council. Yeah, well, certain states regulate their insurance companies more strictly than others. Florida is kind of, it's like a less a fair state, you know? Yes. And I'm all for capitalism, but I'm all for capital capitalism done in the right way. Capital capitalism done in the right way creates value for everybody. It creates a benefit for everybody. So there is an issue of potential government overreach, but there's also the dark side of capitalism when companies are taking advantage of their position and power to abuse the everyday person or business owner. Yeah. So there's a balance here somewhere, but like New York goes much more strict than their insurance companies. And it seems like the insurance companies in New York state are much more solvent than the insurance companies here in Florida. And part of this could be in terms of the regulations, the flip side of regulations are that they can add time burning and expense, but they can also set companies up to be more proactive about the way they approach things because those companies have to be more cognizant of those rules and regulations, including rules and regulations relating to their liquidity and how they're handling claims and how quickly they're handling claims, as well as how much potential profit they're allowed to earn from compared to what they're collecting in premiums versus what they're paying out in claims. And those kinds of additional regulations can be very beneficial to both homeowners and business owners. Yeah. Yeah. Well, it doesn't feel like it at the time. So we better off with a regulatory free for all here, or are we better off with a more regulated marketplace where insurance companies are held more accountable? Well, when it comes to insurance companies, I think the more critical the infrastructure or the company that's involved in the day-to-day American life, I think additional regulation is helpful in those circumstances. Because when you imagine insurance companies, homeowners, businesses around the country rely on insurance. We have so many different types of insurance. We have health insurance. We have car insurance. We have homeowners insurance. We have business interruption insurance. We have commercial general liability insurance. And these companies have tremendous sums of capital. They have a tremendous amount of power, and they pay a lot of lobbyists in Washington and locally to help protect their interests. And you do see the results of that with increasing legislation helping insurance companies, many times, unfortunately, at the expense of homeowners and business owners. So in my opinion, that's cop capitalism gone wrong, where it's almost like a reverse regulation where insurance companies are having laws passed that are to their benefit into the detriment of the everyday American citizen. All right. Well, interesting situation here that we find ourselves in currently and your best bet is to plan ahead, find the more solvent and responsive insurance companies. Certain companies like Chub and AIG who have used in the past, you never get any problems with them. As long as it's a legitimate claim, they pay it rapidly, and others not so good, right? Yeah, that's right. In a big part of this carry is anybody making an insurance claim, it would be highly beneficial for them to make sure they document the claim properly, including with photos, videos, making sure they've got written communications with the insurance companies. Because the downside of phone calls is while you might be able to get somebody on the line, a live person eventually, all of the recordings, all of that data about what was discussed is with the insurance company. Now contrast that to sending an email, making sure that you get an email or even sending a fax. You've got written documentation that shows what you sent and when and making sure that you've got that is so critical to show if there is an improper delay by the insurance company that one, you sent that information. And two, if there are additional problems or damages caused by the insurance company in processing your claim, that you can make those claims later. Because having litigated these kinds of cases, I could tell you, Kerry, when it comes to an insurance company saying, look, it really wasn't our fault. That's a very common defense and the best counter to that is saying, look, here's the clear timeline. Here's when we sent the initial documentation to you, showing what all the damages were, and we asked you, if there's any additional information, please let us know. We're happy to send it over to you. And then sending the photos and the video and any other documentation such as receipts that you have is very, very helpful. And in that regard, making sure that you've got electronic backed up copies of your photos, videos, and receipts is very, very helpful. Because a lot of times, unfortunately, when you've got something like a hurricane and a lot of flooding, you could have immaculate receipts and drawers and drawers full of paperwork. That's very easy to access. But if it gets washed away or it gets flooded and the documents are water damaged, it's going to be very difficult for you to be able to use that information later. So I recommend that everybody who's listening to this, start that documentation process now, keep it organized and keep it backed up. Things as simple as photos, videos of the things that you have in your possession, including model numbers or serial numbers, is very, very helpful. Even the condition of the rooms or the condition of the property in both photos and videos is very helpful when it comes to a claim later. All right. Well, I like you're saying preparation in anything being prepared is always the key. Even if your plan doesn't work, at least you had a plan. So you can change. But if you don't have a plan, then things can go south very quickly. People want to find out more about you connect with you on the web. How do you do that? Yes. So they can visit my website at www.lawpla.com, www.lawpla.com, they could follow me on Instagram at prag, P-A-R-A-G, Amine, A-M-I-N-B-S-Q, or they could check out my YouTube channel where we provide a lot of great tips and tricks for individuals and business owners that could help them with their business. All of the legal things that a lot of times business owners simply don't know and they wish that somebody had provided that information to them ahead of time. I wanted to make sure that everybody has access to that. So we created a website and a YouTube channel where we have that information available. If they Google my name or lawpla.com, they'll be able to find it there. All right. Excellent. Well, if you've got a question for a paragraph myself, shoot me an email at kl@carrylets.com. Link to perog site is in the show notes of this interview on financialsurvivalnetwork.com. And while you're there, sign up for your free newsletter, perog. Thanks for filling us in, helping us out. Hopefully, all of you out there will find some value in this. Always be prepared because disasters happen, even in places where you never expect them to happen, like in the mountains, the Blue Ridge Mountains, the Smoky Mountains of North Carolina, as we've seen over the past few weeks. Appreciate you coming on perog, and talk to you again soon. My pleasure, Gary. Thank you. Thanks for listening to Carrie Lutz's Financial Survival Network, your solution to today's trying times. For the latest, go to financialsurvivalnetwork.com. Financial survival network. Now more than ever.
