Allstate Accused Of Leaving Homeowners Dry

Calif. Homeowners Say They Were Misled Into Being Underinsured - And Weren't In "Good Hands"

(CBS)  When wildfires swept through Jack and Patricia Bennett’s Rancho Bernardo home last October, everything they owned was reduced to ash.

"So many treasures that are gone," Patricia said.

But since they were insured with the "good hands" of Allstate, they thought they’d be able to rebuild quickly, CBS News correspondent Sandra Hughes reports.

"When the demolition crew told us and said, 'you are underinsured,' I said how can we be? We called a year ago to make sure this would not ever happen to us," she said.

Although Allstate has paid the policy limits, the Bennetts say they are still going to be $150,000 short in re-buiding their lives.

And they are not alone. To rebuild their home, Mark Emery and Jeanette Stratton will have to dig deep.

“We really didn't want to have to dig into our savings just to rebuild the way it was before,” Emery said.

They contacted their agent to make sure their policy would reflect recent upgrades.

"I called them and told them about the recent changes to make sure that we had the best policy that they had," Emery said.

But their "deluxe plus homeowners policy" has so far only been worth a check for $234,000 - and local contractors say they need at least $500,000 to rebuild.

Allstate may pay them up to an additional 50 percent "extended replacement cost," which would add up to another $117,000. But they are still $150,000 short.

"We were grossly underinsured, as apparently everybody has been," Emery said.

Consumer advocates claim there is a reason insurance companies want to keep your policy limits and premiums low.

"If they tell you what it really will cost to insure you home you're gonna say, well I'll get back to you. What they'd rather do is low ball. And the person says okay because they trust their agent," said Amy Bach of Policy Holders United.

Fire victims are realizing they are not unique. Time and again, Allstate is accused of leaving customers uninsured and unable to rebuild after disasters.

Allstate has been sued in California, Florida and Texas by policy holders claiming the company uses an unfair business model.

After Hurricane Katrina, Allstate was fined for dropping policy holders illegally. The California Department of Insurance fined Allstate after the Oakland fires of 1991.

"And why did they get fined?" Bach said. "Because so many people were underinsured with Allstate."

Between 1987 and 1996, Allstate paid consumers 73 cents for every dollar on the premium. That dropped to 59 cents between 1997 and 2006, a 19 percent in the value of Allstate's product to consumers. In 2006, the company hit a record profit of $4.9 billion.

Allstate's Bob Daniels says its customers are more valued than profit.

"We work with the customer all the way through the process to make sure we are doing everything we can so that they get the full value of their policy," he said.

According to Daniels, of the 200 homes covered by Allstate that were destroyed in last year's wildfires, every homeowner has been paid something - often up to the policy limits.

"Well the fact that we were able to give them their checks within two to four weeks, we are very proud of," he said.

But the homeowners CBS News talked to say the policy limits aren't enough.

"I'm just getting my second wind," said Jeanette Stratton.

Good thing - this could be a battle that rages well into the next fire season.

[itgranny]

The insurance industry, the banking industy, all these money institutions better clean up their act as should washington for writing laws with loopholes just for these jerks! We had a tornado in our area, i went to my insurance guy and asked to raise my insurance. He couldn''t figure out why i wanted insurance that would "replace" my home and stuff rather than lowballing me with a policy that all told wouldn''t even replace my stuff much less my house.

[edintex]

Come-on now. These people are intelligent enough to earn a considerable income to be able to purchase their homes, but claim that they didn''t know that their policy wouldn''t cover the full cost of rebuilding? Their policy declaration CLEARLY states the amount of their coverage. If they needed more coverage, they could have paid more.
I guess in their world of anything goes, they can pay the very minimum on their policies, then if they have a total loss they can claim that they were "duped" or were taken advantage of and get the balance for free. Sounds crooked to me...

[nssherlock1]

Buy your insurance at Sears and see what you get? lol

[fstop100]

The insurance companies get away with setting their own limits and charging what they want. NJ is the worst state. Geico does not authorize factory o.e. parts.
Only cheap aftermarket parts.
The insurance comapnies write their own rules.
Why aren''t our crooked politicians protecting us from these thiefs?

[fstop100]

Hey nsSherlock1

never thought of it that way LMAO...they deserve it!

[whiskyrocker]

Insurance companies are criminal.

[three-o-six]

In 1970 my car was insured with Allstate. I had the unfortunate experience of being involved in three acidents in a short period of time. Allstate tried to get out of covering the third accident. They said they would have cancelled me after the second accident. I had to threaten to sue to get them to cover the last accident.

It doesn%u2019t appear that they have change much. Yep, you are in good hands with Allstate. They just forgot to tell you that the middle finers of both hands are raised.

PS stay awa from Progressive as well, they are worse than Allstate

[newz4i]

Ah, who cares? The taxpayer will pick up the tab.

We voters need to stop ensuring business CEOs have a bonus by voting for insuring the people, and we CAN do it if we vote out more Republicans.

[nothappyatall]

But their "deluxe plus homeowners policy" has so far only been worth a check for $234,000 - and local contractors say they need at least $500,000 to rebuild."

Gee, so costs went UP- chit- everything has gone up in the last year lady! or your contractor is ripping you off, get another estimate.

"
Allstate may pay them up to an additional 50 percent "extended replacement cost," which would add up to another $117,000. But they are still $150,000 short."

So let''s see, they can get a check for $350,000 to rebuild that overpriced overvalued McMansion they lived in which is in a disaster type area which WILL burn again, they paid how much in premiums a month?

Stop whining rich beech! buy a freaking $100,000 house and shut up already.


"We were grossly underinsured, as apparently everybody has been," Emery said."

No, you weren''t willing to pay the PREMIUMS for full coverage replacement insuarance with built-in inflation increases, you got the $300/mo policy when you SHOULDA had the $1000 policy.
I''m amazed they would even insure a house, er overpriced McMansion at all in an area prone to disasterous WILDFIRES or floods.

[l8c6]

When are folks going to figure it out? The private insurance industry that owns politicians and the insurance commissioner exists to collect everyones money. In good times they have to pay out a little to look like they actually function though in recent years they''ve gotten alot more brazen with their refusals to provide coverage. The theory they subscribe to is that of the libertarian economic plan that neo cons and libertarians adore and a few so called liberals as well like the Clintons and you can imagine Holy Joe Lieberman. The intent of these people is to protect their imperial status by telling everyone else that if the investor class is permitted to get richer, this will lift the wealth of all. You see, by not paying out, this allows the rich to get richer and it motivates everyone to strive to get rich too so we can all self insure. Think it''ll work?

[itgranny]

I''m with you newz4i. With the bankruptcy updates, how many families with a major illness and medical bills have they just jumped in and offered to bail out? For them they just have to deal with it. But they''re right there with the checkbook when its big business that''s messed up.

The insurance industry,stock markets and banking industry are all in it together. I wonder how many of the Presidents, vice presidents and CEO''s remain in these companies after running them down the tubes. I''ll bet there are still quite a few of these bums still drawing multi-million dollar paychecks.

(I''ll bet i get some little moron on here trying to convince me how good ceo''s are "worth it" because they work so hard. (yeah right)

[l8c6]

Why aren''''t our crooked politicians protecting us from these thiefs?

Posted by fstop100

Because many of them are two timers. Take for instance D*ick Cheney. He is loyal to Halliburton and the dismantling of a public government while with stealth working to replace it with a private government that serves the needs of global corporate charters.

[nssherlock1]

Maybe next time, she will go insurance shopping at Wal*Mart. lol

[sistatee-2009]

The Bennetts could have called Allstate and said, "Raise our level of protection," if they didn''t think they could rebuild for the coverage already in place. But the Bennetts didn''t want to pay MORE, so they sat on their -sses and rolled the dice. Now that the dice came up against them, they want to whine their way into a new home and let Allstate hold the bag. I say, screw the Bennetts. Pay them the amount they are due and not a penny more.

[l8c6]

In 2006, the company hit a record profit of $4.9 billion.

Allstate''s Bob Daniels says its customers are more valued than profit.


The numbers tell the story. In 1992 the world had 200 plus billionaires. As of recent years it was 600 plus. The top 1% have more wealth than the bottom 99%. This unsustainable economy is breaking the hopes and dreams of human inhabitants. Life, liberty and the pursuit of happiness has been destroyed by oligarchs who claim to love america but have simply exploited it for private gain. This was not what the american revolution was about. These promoters of an unjust economic system are in fact the ones who have been the greatest threat to america. They claim to love country and God but really wish to control and possess both.

[alpine42]

I love how some these financial and insurance "geniuses" get on here and tell everyone how much they know and then tell us what these poeple should have done. Alot of the people that this happens to are uneducated, senior citizens and immigrants. True, there are some that should know better and do not fall under these catagories. But, for some to act like a genius, by comparing what they did to these types of poeple, in general did, is just sad. Talk about low self esteem.

[fairbalance3]

What a piece of garbage reporting... this story was extremely biased to one side. This is not journalism, it''s a joke. It''s absolutely ridiculous that corporations are always portrayed in a negative light by you people. Not all corporations are evil just because they make profits! No wonder your ratings stink. Typical drive-by media attacks.

[piratecafe]

Anyone insuring with Allstate after everything they''ve done in the Southeast should consider themselves warned. They are not the good hands people; they are the boxing gloves people. Each customer is only a dollar sign for them, no matter what Bob Daniels says.

[cyberus-2009]

----
The intent of these people is to protect their imperial status by telling everyone else that if the investor class is permitted to get richer, this will lift the wealth of all. You see, by not paying out, this allows the rich to get richer and it motivates everyone to strive to get rich too so we can all self insure. Think it''''ll work?
----
Thats called "trickle down economics" .. its a theory that hasn''t worked yet.
What it is in reality is "we are going to stand up here and peee on your head and tell you to enjoy the warm feeling"

[l8c6]

Not all corporations are evil just because they make profits! No wonder your ratings stink. Typical drive-by media attacks.
--- fairbalance3


A fair and balanced report from the bullies of the working class. We''re all just a bunch of whiners. Go to h*ell, don''t pass Go, Go straight to h*ell.

Many have been led astray and work for corporations but corporate unaccountability to communities is definitely at an all time high. Corporations have been absolved of social responsibility and place profits for their shareholders above all else. If this were an individual they were be diagnosed a sociopath.

Read David C. Korten''s latest book. It''s an eye opener.

[finrock56]

As the wife of an Allstate Agent, I am sick and tired of the media always putting the blame on the Insurance Company or the Agent. As a consumer, you have the responsibility to read your policy and ask questions.
In the 15 years, I have worked in his office most people are more concerned about the price of the premium and not the coverage.

[linfinster]

Cooked scabs of society that allows record profits like that? There are some things that should be not for profit, medical .. and don''t say quality would suffer! The money is there! In the elite''s pockets.

[l8c6]

As the wife of an Allstate Agent, I am sick and tired of the media always putting the blame on the Insurance Company or the Agent. As a consumer, you have the responsibility to read your policy and ask questions.
In the 15 years, I have worked in his office most people are more concerned about the price of the premium and not the coverage.

Posted by finrock56


Problem is, if you contact your agent it goes into their computer data base and factors into you being a higher risk. Ask questions and they suspect you are going to make a claim and they raise your rates.

[itgranny]

finrock56: "you have the responsibility to read your policy "

you mean the 30+ pages of smallprint lawyer lingo i get every 3 months that they can change at a whim. The papers that even my agents don''t want to take the time to explain to me? that set of papers?

[l8c6]

Private insurance companies are one example of corporate efficiency. Efficiency of lining the pockets of the super rich.

How else does 1% of the population hold more wealth than the other 99%?

Oligarchs are poised for a hostile takeover of an even greater magnitude.

[liberalme]

As the wife of an Allstate Agent, I am sick and tired of the media always putting the blame on the Insurance Company or the Agent. As a consumer, you have the responsibility to read your policy and ask questions.
In the 15 years, I have worked in his office most people are more concerned about the price of the premium and not the coverage.

Posted by finrock56 at 10:

You''re right, I have had customers with million dollar homes who are too cheap to pay the premium for "replacement cost".

Many of my customers have no idea when the house was built, the square footage, what kind of roof they have or anything else for that matter-bottom line? Cost.

[l8c6]

People are afraid to contact their agent for good reason. There is no personable relationship with huge corporate conglomerates. It''s all a statistical computer data base. This is just how the oligarchs want it. Efficiently collect the money and intimidate the clients to keep them at bay. Someday parents will be reading fables and fairy tales to their children of the mysterious wealthy who live behind their gated enclaves. Just like the old european world kings and castles the economic world the american revolution was opposed to.

[l8c6]

You''''re right, I have had customers with million dollar homes who are too cheap to pay the premium for "replacement cost".

Many of my customers have no idea when the house was built, the square footage, what kind of roof they have or anything else for that matter-bottom line? Cost.

Posted by liberalme


A million dollar home which was probably a 250k home not many years ago. Unfortunate that people''s fiat currency incomes do not keep up with the hyped artificial rise in values and are forced to consider leaving their homes. So much for really owning anything in america when the fiat currency keeps us all down as the fiat treasury notes get watered down.

[favrenot]

As a restoration contractor, we deal with numerous insurance companies on a regular basis. Without naming names, I can honestly say the nearly all of the big players,the ones that advertise nationally, are insurers that have one thing in mind, the bottom line. Their policies are written to deny or limit coverage. The amounts that they pay to return your home to its pre-loss condition are not sufficient to properly do the job. There are also some very good insurance companies. Acuity, West Bend Mutual, Sentry, Society, all truly step up to the plate and do what it takes to properly take care of the insured. Just because the big guys run commercials and tell you how great of a "neighbor" they are, or how you are in helping "hands", I can say from experience, they are big business, and they will do as little as possible to meet their obligations. Just look at Katrina, or other big disasters. Bottom line, they try to deny coverage. Look to your smaller regional Mutual Companies. They will treat you well, they rely on their reputations to keep customers and grow. Homeowners insurance is very reasonable. A few more dollars spent, is money well invested.

[runningralph]

Consumers should buy enough insurance to meet their needs. If they only buy 100k and they need 200k, well, guess what? They will come up short. DUH!

[liberalme]

A million dollar home which was probably a 250k home not many years ago. Unfortunate that people''''s fiat currency incomes do not keep up with the hyped artificial rise in values and are forced to consider leaving their homes. So much for really owning anything in america when the fiat currency keeps us all down as the fiat treasury notes get watered down.

Posted by l8c6 at 10:40 PM : Jul 14, 2008

This is very true, however it''s up to the homeowner to determine the value of his home--get an appraisal--that''s the best way.
Insurance agents only know what the customer tells them and what little information he can get from the property appraiser office.
They don''t know the interior as many customers downplay what they actually have to keep the premium low.

+

[finrock56]

To all that have responded to my post. My wish is that you call your Agent, set an appointment if he or she can''t talk to you on the phone go over your homeowner policy section by section. Does it have replacement coverage on roof, structure, contents...etc. How much coverage is there on jewelry, does it cover my diamond if it falls out somewhere and I can''t find it.
Don''t wait till a disaster occurs to find out that you are not covered or underinsured.

[l8c6]

They will treat you well, they rely on their reputations to keep customers and grow. Homeowners insurance is very reasonable. A few more dollars spent, is money well invested.

Posted by favrenot

Good advice and commentary. Large companies are impersonal and unaccountable to local communities. They exist to meet the "right to wealth" of their shareholders. This does not provide good service to the customer or the community.

David C. Korten''s book should be read by all. We the people must fix our country. The corporate hoes in Washington do not exist to serve the citizens but rather the global corporate oligarchs.

[piercetheval]

...Their slogan should be: "Your in good hands with Allstate, until you need us and then we''ll drop you like a hot potato!"
...as they did me in 1990...screw Allstate!

[randynason]

Allstate is being sued with a class action right here in NM, too. The company has been less than honest with its'' policy holders and deserves to pay the price for its'' total lack of business ethic.

[xraytwonine]

allstate was fined? like it matters to them if the cost of repaying a customer is so much smaller... allstate need to be closed, let people lose jobs and learn that they should never harbor a bad business

[edward1975-2009]

This is similiar to what happened to Florida homeowners, except the insurance company filed for bankruptcy protection. These companies should be put out of business. They have no problem taking premiums, not too good at paying far market and helping clients in need.

[alpine42]

I love how some these financial and insurance "geniuses" get on here and tell everyone how much they know and then tell us what these poeple should have done. Alot of the people that this happens to are uneducated, senior citizens and immigrants. True, there are some that should know better and do not fall under these catagories. But, for some to act like a genius, by comparing what they did to these types of poeple, in general did, is just sad. Talk about low self esteem.

[timdgrim]

Looks like that ''Good Hands'' slogan has been reduced to just the middle finger to their policy holders.
The ''Hands'' part is what''s in the policy holders pockets.

[stn_sage]

According to the article, ''After Hurricane Katrina, Allstate was fined for dropping policy holders illegally. The California Department of Insurance fined Allstate after the Oakland fires of 1991.''

And, ''Allstate has been sued in California, Florida and Texas by policy holders claiming the company uses an unfair business model.''

And,''Between 1987 and 1996, Allstate paid consumers 73 cents for every dollar on the premium. That dropped to 59 cents between 1997 and 2006''.

On the basis of the FACTS, I''d say they''re cheating those they under insure! It''s THAT simple!

My sentiments in the matter mirror Edward1975, they don''t seem to have a problem taking premiums but if they can''t do business fairly, then they should be put out of business! Nationalize the insurance business, let the govt construct simple and straight-forward rules and payouts! Harden the rules against white-collar crime, an administrator guilty of violations gets the death penalty or life in jail!

[okagent]

I am an agent for Allstate,and have been an agent for over 30 years. I''m not sure where the fault lies in these particular claims, but I do have some experience in handling total losses. In our agency we had 20 customers whose homes were completely destroyed in the 5/3/99 tornado in OKC. W/O exception all were promptly paid their pol limits,and all except 1 were extremely happy with their claim settlements. The 1 upset customer, was more upset with herself than with us. A year before the tornado struck,she called us up and insisted that we lower her coverages as she was "over insured and that we were gouging her". We explained that she had a replacement cost policy and according to our calculations her home was correctly covered. She didn''t believe us,and opted for a market value policy, at about 70% of what we were then showing as her true replacement cost. Claims bent over backwards to help her as much as they could,but she was still nearly $30,000 short of having enough money to rebuild her house. After initially protesting and threatening us, she reluctantly admitted to us it was her own fault,when we gently reminded her of our earlier conversation the previous yr. She wasn''t too unhappy with us though, as she is still insured by us. I wish all of these customers the very best of luck on their claims,and suggest that if you are a Calif policyholder, to call your agent each year to review all your coverages,as building values,& replacement costs,are constantly changing.

[trishm722]

I have been a loyal Allstate (auto insurance) customer for nearly 20 years. My husband and I recently built a house in Louisiana. The only reason I could get a quote on homeowner''s insurance was b/c I have an existing policy. Since Hurricane Katrina, though, I have to get a separate policy for wind and hail damage. I would have to pay over $3000 dollars for homeowners insurance. At least they offered to cover us. State Farm wouldn''t write a policy b/c we had a claim from Hurricane Katrina. Many other companies - Met Life, Nationwide, and Liberty Mutual - won''t even write policies for Louisiana residents. Insurance is good until you have a disaster, then they try to find any and every loophole they can.

[hornman120]

I am insured by Allstate, (Home, Auto, Flood). I am surprised to hear the number in the story of $234,000. For a house in Rancho Bernardo? Seems low to me. I have never had any issues with them quoting higher coverage nor being resistant to it. I updated my limits last year with no issues at all. We don''t really know all the facts in this story regarding the discussions between the homeowner and the insurance agent.

[oneworldusa]

Everyone should take a course in property and casualty insurance and life, disability and health insurance. Contact your local licensing board for info on how to find these classes.

Insurance is very complicated. Knowledge certainly is power in this instance.

[missingamerica]

Gee...yet another story like this, just when the possibility arises that private insurance companies may suddenly receive a massive influx of new money due to "universal health insurance".

Assuming, that is, that somebody makes the mistake of allowing them to get their hands on it - it offers the opportunity for Bush-like corruption and profiteering that perhaps could only be exceeded by "privatizing" Social Security.

When decisions are made about which insurance companies can be trusted to play nice with the bonus billions...even trillions...well, you would think Congress and whoever the President is would take each company''s past record of consumer satisfaction over the last few decades into consideration.

Wouldn''t you?

lolll...but maybe not. I mean, after all we did all have the pleasure of watching the Republicans prohibit the government from negotiating prices for Medicare.

When all too recent history documents the fact that one entire Party of a two-Party system is pro-corruption and pro-profiteering, it always makes the future look bleak.

[tmn]

You mean the homeowners of these expensive places in California *really* had no idea what their property was worth until now? They knew nothing of what it would cost to rebuild?

Sounds sort of moronic to me. Were the HOMEOWNERS trying to save a few bucks on insurance? I''ve never encountered an insurance firm that is not willing to sell you more insurance - that''s their bread and butter!

[undrmyboot3]

Sounds sort of moronic to me. Were the HOMEOWNERS trying to save a few bucks on insurance? I''''ve never encountered an insurance firm that is not willing to sell you more insurance - that''''s their bread and butter!

Posted by tmn123 at 02:58 AM : Jul 15, 2008
-----------

You are the moron. You just hate other people who live in "expensive places" and YOU cannot read.

1) These people ASKED Allstate to determine the rebuild cost of their home. THAT is Allstate''s job. They simply f''ed their customers with too-low replacement cost quotes.
2) Allstate UNDERSTATED the value so that they could make the policy sale. They were competing with other carriers on PREMIUMS. How did Allstate reduce the premium? They told the customer that THEY WOULD BE FULLY COVERED, then quoted them the lower premium on an insufficient policy. So Allsate MADE THE POLICY SALE knowing they were underinsuring the customer.

Of course, if YOU HAD READ the article you would know this you slug.

[brianbwb-2009]

"Go and check the hottest mature celebrities'''' videos on ---.com, it is a black dating sites." Posted by wiwi5

Better still, you go, and take your spam with you.

Reported, again.

[greeneyes222]

Allstate did the same thing to Katrina victims, so why is anyone surprised?

[favrenot]

Well, here is how it is supposed to work. Your agent is the professional. He should be selling you the proper policy. Determining value of your home should be relatively easy. Appraisal, or local market conditions, what similar homes sell for. That being said, there are many other costs to consider. These are what makes or breaks a good policy. The cost to raze a home, if badly damaged needs to be considered. Will the company reside your home, if one wall has been damaged but the siding cannot be matched? Or will they just repair that wall and leave the rest to you. Do you have a code upgrade rider? Now, after your agent has sold you your policy, does he revisit it every few years? Or does he simply collect the premium and on to the next customer? One agent bragged about how out of 9 homes the insurance paid out policy limits on 8, no questions. Policy limits means one check, here you go. If you hit the limits, then everything else after that is your baby. This leads me to believe these people had the bare minimum of insurance, or not enough. Cut a check and run. Again, the agent is the professional. As a homeowner you look to them for the proper information and guidance.