Going It Alone
Handling short-term housing internally might result in not-so-temporary downsides.
Today, budgets are tight. Many companies are focused on increased productivity and decreased spending, and the insurance industry is no different. There often are incentives to keep costs down, and it may seem like a good idea to have adjusters, or even policyholders, coordinate temporary housing while claims are being handled in order to save money. However, what sounds like a good idea can end up costing more money, creating more hassles, and leading to poor customer service.
Search for Perfection
The temporary housing process begins with a search for a rental property near the damaged home, followed by a laundry list of requirements. Children need to remain in their school districts, and the familiarity of frequenting the same shops and restaurants helps keep families as comfortable as possible during stressful times.
Thus, the temporary dwelling should be of similar size and have similar amenities to the damaged permanent home. To further complicate the issue, the comparable dwelling needs to be available immediately, and the landlord must be willing to allow a short-term lease with flexible extension options in order to accommodate any construction delays that may arise.
The search for the right rental property takes time and requires the use of a variety of resources. It also involves making a lot of phone calls and having the ability to receive calls back as landlords become available. This is a time-consuming process that includes searching for rental properties and making inquiries, duties that many claims adjusters find difficult to manage on top of all of the other demands of their claims files.
Policyholders need to minimize time away from their jobs and accommodate extracurricular activities for themselves and their children in order to make a living and maintain some sense of normalcy. However, that can be difficult when they are simultaneously coordinating the needs of their insurance company, contractors, and restoration companies. When insurers place the burden of learning about the rental market on the insured and expect them to make dozens of calls and visit handfuls of properties, it takes away from the level of customer service that most seek to achieve. A temporary housing company’s sole purpose is to take this burden off of the adjuster or policyholder and make the transition easy.
Like Kind and Quality
Making sure the temporary rental property is comparable to the damaged home is critical. General statistics regarding the damaged property—such as the number of bedrooms, square footage, coverage limits, and location—are important to know before beginning a search for a temporary alternative.
Additional factors include family dynamics. It is important to know if Grandma lives with the family and cannot maneuver stairs, or if there are special needs such as a child who requires a pool in the backyard for daily rehabilitation exercises.
Additional living expense (ALE) limits are critical to know and understand as well. Gathering information from the insurance company and building a relationship with the insured allows a temporary housing property specialist to locate a property priced within policy limits, which will simultaneously make the policyholder comfortable and happy. Once policyholders have a roof over their heads, a general sense of security and well-being often is the result. This can engender faith in the insurance company and assist in making the entire process smooth for everyone.
When it comes to locating a property, overburdened claims adjusters might miss a detail that could cost them dearly in the long run. Policyholders left to their own devices may choose homes with disproportionate property values or an overabundant amount of amenities than what is within their coverage limits. Having a temporary housing professional control options presented to an insured will avoid getting their hopes up regarding a property that is not appropriate or available. Only suitable properties will be presented by an experienced temporary housing company, which controls costs and saves time for the adjuster and policyholder alike.
Market Knowledge and Leases
The rental market is tight right now due to a combination of foreclosures, an influx of investors, and a general preference to rent rather than buy. Properties available for immediate rental are often scarce, and landlords are, therefore, reluctant to lease properties for less than one year.
Seasoned property specialists know how to convince landlords to rent on a short-term basis, and they know how much additional rent is fair to accommodate short-term leases given market conditions. Some property owners can be swayed by the ability to assist a neighbor in need, while some can only be enticed by financial gain. Others can be convinced by a combination of the two. A rental premium for short-term leases is not uncommon in order to persuade landlords into offering lease terms outside of their standard practices. However, it also should be within reasonable market limitations. Policyholders could unwittingly be convinced to agree to an exorbitant amount by unscrupulous landlords taking advantage of a novice renter who appears to have the financial backing of an insurance company. In addition to paying more than necessary, a worst-case scenario can lead to running out of coverage before the insured’s damage is repaired.
Once a temporary property is located and agreed upon by both the insurance company and the policyholder, rental furniture, housewares, and appliances must be ordered to transform a house into a home.
Renting furniture versus moving the insured’s items back and forth prevents unnecessary wear and tear and avoids moving costs and restoration rush fees. An experienced temporary housing company will have the connections necessary to get the best rates and accommodate short-term rental leases on furniture for immediate delivery.
If the family has special needs or requires baby-specific items—for example, medical equipment or a protective pool fence—a temporary housing company can take care of that by coordinating everything and consolidating billing.
A variety of situations can arise during a stay in a rental property, and most insurance professionals and insureds don’t have the time or familiarity of each state-mandated landlord-tenant act to make sure landlords handle issues in a timely manner. Temporary housing companies stay abreast of these laws and can handle any problems that arise, from a minor disagreement to major maintenance issues.
A good temporary housing company also will stay in tune with construction end dates and correlating move-out dates. Most landlords require a 30-day minimum notice to vacate. A temporary housing professional understands the importance of verifying the move-out date with time to spare in case insurance company approval for a lease extension is needed for something like a construction delay.
When policyholders forget to give proper notice to vacate due to the chaos of last-minute home repairs, they may end up owing an additional month’s rent at a minimum. When a temporary housing company is hired, they assume that burden and manage the move-out process.
Finally, every state has different guidelines regarding security deposits. Temporary housing companies are aware of these guidelines and follow up with landlords to ensure that deposits are refunded in a timely manner and that only appropriate deductions are made. If disputes come up, a neutral and educated representative can mean the difference between receiving and losing a security deposit.
ALE is a small part of each claim that can turn into a huge hassle. However, hiring an expert to handle this part of the process allows claims adjusters and policyholders to focus their energies on other aspects of the claim and getting insureds settled into a home and putting their lives back on track.
This article was written by Sales & Marketing Director, Stephanie Moore and originally appeared in Claims Management Magazine. You can also find it here: http://claims-management.theclm.org/home/article/Handling-temporary-housing-internally-insurance-claims