Misguided Trust with Property Insurance Companies for Joplin tornado claims?

Two weeks ago I was in Joplin, Missouri working on Joplin tornado claims. Joplin reminds me of a town copied directly from a Norman Rockwell painting.  The people are genuine, the youth are respectful and I can tell that a handshake is a readily accepted form of transacting business.  While the people of Joplin seem ready and willing to trust that their property insurance company has done the right thing for them following the devastating tornado that ripped their town apart in May, I found a much darker picture as I began to examine claims.

As my work on claims progressed, I began to notice some very disturbing trends on the Joplin tornado claims that no consumer seemed to be aware of. 

  1.  The first problem I noticed is that every property I examined appeared to be underinsured.  Underinsured means that the amount of insurance coverage selected by either the agent or the insured is not enough to cover the real cost of replacement.   At first I thought this was an anomaly, but not only did it appear consistently, it appeared consistently with two companies in particular.
  2. The next issue that I noticed was that all the estimates I examined from one company had made no allowance for overhead and profit.  Overhead and profit is a markup allowance added to the bottom line of an insurance damage estimate to allow for the overhead and profit of a general contractor.   Again, this phenomenon appeared on every estimate I examined that was written by the same insurance company.
  3. Next, I noticed that sales tax was missing from Joplin tornado claims estimates by the same company who had omitted overhead and profit.  Almost every city in America requires that business collect sales tax for their goods and services.
  4. Finally, the unit pricing allowed in the estimates by several insurance companies appeared to extremely dated and much lower than I would have expected.  I need to mention that the problems I noticed are prevalent with two insurers who are probably two of the largest insurers in Missouri.

I cannot tell you that every company has handled Joplin tornado claims in this fashion, but every estimate I examined was handled this way. Joplin seems to be recovering slowly, but I can imagine how many properties are underinsured, how many claims are missing overhead and profit, how many claim payments omitted sales tax, and how many folks are only now learning of these facts as they try to rebuild.

Time Running Out for Joplin tornado claims

Unfortunately Missouri has limited time frames to take formal action for any wrong doing, and at the same time most policies issued in Missouri specify that you must claim recoverable depreciation within 6 months or less in some circumstances.  These two factors, combined with a truly catastrophic situation make for the perfect storm when it comes to the consumer losing in the end.

I suspect that a huge percentage of Joplin claims were handled as I have described above.  If you have a loss from the Joplin tornado, I would strongly urge you to have a professional public insurance adjuster to examine your claim. Even if you were paid policy limits for your Joplin Tornado Claim, I suspect that you were not paid fully to replace your property even though your adjuster may have said that they have done everything they can.