Allstate Accused Of Leaving Homeowners Dry
Calif. Homeowners Say They Were Misled Into Being Underinsured - And Weren't In "Good Hands"
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Underinsured With Allstate
After having their homes reduced to ash, California homeowners are finding that insurance giant Allstate had underinsured their homes -- making rebuilding a near impossibility. Sandra Hughes reports.
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A California resident wets down a roof in May 2008 as brush fires surrounded the home. With reports of insurers such as Allstate leaving homeowners stranded, there's increased reason for homeowners in fire zones to worry. (AP/Florida Today, Craig Rubadoux)
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Patricia Bennett’s Rancho Bernardo home was demolished by a wildfire last year. But they were delivered a shock when told they didn't have enough insurance to rebuild. (CBS)
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Photo Essay
California Fires Persist
Crews across state strain to cover hundreds of blazes. More than 1,000 square miles burned.
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Photo Essay
Fires Char California
Stretched thin, firefighters forced to strategically choose which ones to battle.
"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.
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See all 94 CommentsI 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...
Only cheap aftermarket parts.
The insurance comapnies write their own rules.
Why aren''t our crooked politicians protecting us from these thiefs?
never thought of it that way LMAO...they deserve it!
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
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.
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.
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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.
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)
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.
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.
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?
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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"
--- 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.
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.
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.
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?
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.
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.
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.
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.
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Don''t wait till a disaster occurs to find out that you are not covered or underinsured.
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.
...as they did me in 1990...screw Allstate!
The ''Hands'' part is what''s in the policy holders pockets.
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!
Insurance is very complicated. Knowledge certainly is power in this instance.
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.
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
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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.
Better still, you go, and take your spam with you.
Reported, again.
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