Latest / The Art of Adjusting® Podcast / Episode #60: Navigating Policy Challenges During California's Wildfire Crisis

Transcript

Episode #60: Navigating Policy Challenges During California's Wildfire Crisis · The Art of Adjusting® Podcast

• 0:06
  William Auten: Hello, I'm Bill Auten of Auten Claims Management.
• 0:09
  Chantal Roberts: I'm Chantal Roberts of CMR Consulting and welcome to the Art of Adjusting podcast.
• 0:14
  William Auten: Today we're going to talk about life as an insurance adjuster from the perspective of property, auto liability or workers' compensation adjusters.
• 0:22
  William Auten: Our goal is to bring interesting topics in the world of claims adjusting to people who are working as an adjuster now and to people who are considering a career as a claims adjuster.
• 0:31
  William Auten: Hey Chantel, how are you today?
• 0:34
  Chantal Roberts: I'm doing well.
• 0:35
  Chantal Roberts: How are you?
• 0:36
  William Auten: Pretty good.
• 0:36
  William Auten: A little worried about California today.
• 0:39
  Chantal Roberts: Yeah, I am too.
• 0:40
  Chantal Roberts: I feel for those people.
• 0:42
  Chantal Roberts: It is amazing.
• 0:44
  William Auten: Yeah, I saw drone footage this morning of more than a neighborhood it was a community, it was a town and just acres and acres of neighborhoods just burned to the ground.
• 0:59
  Chantal Roberts: It is amazing because I cannot fathom the amount of loss.
• 1:05
  Chantal Roberts: I remember one time I was flying to I guess it was Seattle or something like that and I could see up in the mountains because I had a window seat all of these little bitty fires and I guess you know you have these sorts of things.
• 1:20
  Chantal Roberts: But I can't imagine, because I looked on the New York Times map and there are four, I think, fires going on in the Los Angeles metro area right now.
• 1:34
  Chantal Roberts: We just happened to hear about the Palisades because that's the biggest one, which really, really surprised me that there's that many in such a congested area.
• 1:44
  William Auten: Yeah, and the financial scope also.
• 1:46
  William Auten: I mean, I think I heard 9,000 or 10,000 homes.
• 1:50
  William Auten: Let's say there's at the end of this that there's $10,000 million houses that have burned.
• 1:57
  Chantal Roberts: It's funny that you mentioned that.
• 1:59
  William Auten: That's $10 billion.
• 2:01
  Chantal Roberts: It is funny that you mentioned that because the insurance journal just released a what is it?
• 2:08
  Chantal Roberts: A notice, a special notice, this morning that said insured losses from Los Angeles wildfires rising $8 billion to $20 billion, that's B of A billion billion to 20 billion dollars that's b a billion.
• 2:27
  Chantal Roberts: And damage assessments from a handful of destructive los angeles area blazes are sure to become clearer and it's going to be a billion dollar plus loss.
• 2:37
  Chantal Roberts: And these, it says, is the.
• 2:41
  William Auten: The fire is only three days old, yeah, so there you go Well, the math checks out, I guess it's definitely going to be in the billions.
• 2:50
  William Auten: And then when you start talking about commercial properties, if it starts hitting major industrial sites or things like that, I mean it's just going to be.
• 3:00
  William Auten: It already is catastrophic.
• 3:02
  William Auten: The question is, how much worse can it get?
• 3:05
  Chantal Roberts: Yeah, so I thought it would be a good idea for us to discuss some of the things that are going around in the insurance stratosphere, such as on Reddit and on Facebook.
• 3:24
  Chantal Roberts: I am seeing a lot of adjusters ask is this thing going to be covered?
• 3:30
  Chantal Roberts: And specifically in regards to because I think it's become kind of famous this bulldozing footage that has?
• 3:38
  Chantal Roberts: Have you heard about this?
• 3:40
  William Auten: I have.
• 3:40
  William Auten: Briefly, why don't you go ahead and tell us what happened?
• 3:43
  Chantal Roberts: Tell us all about it.
• 3:43
  Chantal Roberts: So there are, of course, just like in any kind of other wildfire situations, a mandatory evacuation and these people are leaving, and they're leaving in their cars, of course, with all of their possessions.
• 3:58
  Chantal Roberts: But for whatever reason, there is an accident, there are other road closures, these people can't get out, and so you have gridlock on these streets.
• 4:10
  Chantal Roberts: With these gridlocks and these cars not being able to be moved, the police and the fire departments are coming down these roads saying, hey, you need to get out to the people, get out, grab your stuff, leave the car, go over here, we'll take you somewhere safe.
• 4:27
  Chantal Roberts: And all of these roads are being blocked by these abandoned vehicles.
• 4:32
  Chantal Roberts: Well, fortunately, these abandoned vehicles are, of course, blocking the roads so that our fire departments cannot get to where the fires are to put them out.
• 4:43
  Chantal Roberts: So the fire departments are taking bulldozers and moving the cars, which of course damages them.
• 4:52
  Chantal Roberts: And the question is is this gonna be covered?
• 4:56
  Chantal Roberts: And Bill Wilson points out and of course I didn't think about it, but he is absolutely correct Bill Wilson points out that it is not going to be covered in your standardized personal auto policy.
• 5:10
  Chantal Roberts: And, as we always say, look at your policy to make sure, but I thought I would read the exclusion real quick to the personalized auto policy that we're talking about to the personalized auto policy that we're talking about.
• 5:26
  William Auten: And before you do, just so people know who Bill Wilson is if they don't already, he's the author of a book called when Words Collide, and if you're in the insurance claims business, I think anybody in insurance should read it, because it's a very good book on how to really understand what you're reading in these policies.
• 5:46
  Chantal Roberts: Absolutely.
• 5:46
  Chantal Roberts: And I would say, if you don't follow Bill Wilson on LinkedIn, do so right now.
• 5:53
  Chantal Roberts: In fact, put us on pause.
• 5:54
  Chantal Roberts: I never say that, but put us on pause.
• 5:57
  Chantal Roberts: Go find him and hit that follow button and then come back and then hit the follow and like and subscribe button on linkedin or on spotify and youtube.
• 6:09
  Chantal Roberts: Yeah, so you can be sure to get all of our little nuggets of wisdom and what have you?
• 6:16
  Chantal Roberts: But going back to?
• 6:18
  Chantal Roberts: And again, your policy may differ, but I'm just going off of the standardized policy, which is what Bill was going off of, of the personalized auto policy.
• 6:30
  Chantal Roberts: It says exclusions we will not pay for.
• 6:34
  Chantal Roberts: And then number six a total loss to your covered auto, which is in quotes, or any non-owned auto also in quotes, which means that it's defined due to destruction or confiscation by governmental or civil authorities.
• 6:50
  Chantal Roberts: And so if the fire department is bulldozing a street and your car is damaged because it has been abandoned, even though they told you to do it, that car damage would not be covered.
• 7:04
  Chantal Roberts: I bring this up because there are going to be a plethora of claims being filed and you, as adjusters, need to, of course, send out that reservation of rights letter or whatever that you want to call it and then send out the declination letter.
• 7:27
  Chantal Roberts: Uh, after you have done your investigation because you do need to do an investigation make sure that it wasn't just someone t-boning it or or whatever.
• 7:37
  William Auten: But well, it's interesting that I mean you can words mean things right.
• 7:41
  William Auten: So, uh, it says total loss.
• 7:43
  William Auten: So if you had a partial loss by that bulldozer, would that be covered?
• 7:50
  Chantal Roberts: I still think you would have some issues because it is a governmental.
• 7:55
  Chantal Roberts: Well, here's the deal.
• 7:57
  Chantal Roberts: Your car may be engulfed in flames.
• 8:01
  Chantal Roberts: Maybe there's a partial loss there.
• 8:02
  Chantal Roberts: I have no idea engulfed in flames.
• 8:06
  William Auten: Maybe there's a partial loss there.
• 8:07
  William Auten: I have.
• 8:07
  William Auten: Yeah.
• 8:07
  William Auten: Well, I mean, if the bulldozer pushed the car and damaged it but did not, told it's not a total loss, because what you read said if your car is suffers a total loss, I think is what it said from the videos that we have seen.
• 8:16
  William Auten: These I know they, they look like they're pretty damaged, but they do look like, but no, you're absolutely right that begs the question.
• 8:23
  William Auten: that begs the question.
• 8:24
  William Auten: That begs the question and I would say that you know, you know how vehicles declared of total loss after you know if the damages exceed a certain percentage.
• 8:34
  William Auten: But is that technically a total loss?
• 8:37
  William Auten: Is it the insurance carriers you know prerogative to just say you know, we draw the line at 70% of damages and if it's over that it's a total loss?
• 8:46
  William Auten: Well, who's to say it's not 80 or 90 of damages, maybe there's 10 of the car that didn't need to be repaired?
• 8:53
  William Auten: That's not a total loss, is it anyway?
• 8:56
  Chantal Roberts: words mean things that that can be, uh words do mean that could be fodder for the plaintiff's bar, I suppose it can be and and thank you for bringing it up it is very true because you did bring up a very good point that you know we're talking about a quote-unquote total loss, even though the word total loss is not in the.
• 9:18
  Chantal Roberts: It's not defined.
• 9:20
  Chantal Roberts: It's not defined.
• 9:20
  Chantal Roberts: And so what happens when something isn't defined?
• 9:24
  Chantal Roberts: I'm looking at the policy right now.
• 9:28
  Chantal Roberts: You got to take the normal quote unquote meaning of the word.
• 9:32
  Chantal Roberts: So I don't think in that particular instance I would look up the word total loss in Webster's dictionary, like I normally would, because I think I would fall back on what the standardized meaning is of the word quote total loss or words total loss.
• 9:54
  William Auten: End of quote.
• 9:54
  William Auten: Well, I've heard.
• 9:55
  William Auten: The reason I bring it up is I've heard carriers different carriers use different standards to declare a total loss.
• 10:01
  William Auten: Yeah, I've heard 50%, I've heard 70.
• 10:04
  William Auten: I've heard 90.
• 10:05
  William Auten: Not 90, but I know I've heard 80.
• 10:07
  William Auten: And it begs the question where does that line get drawn and by who?
• 10:15
  William Auten: And I think not only in this issue, but across all issues relating to property claims, claims for damage that people are making under their own insurance policies in this fire, I think insurance carriers have to be very, very cognizant of the fact that they are on display now for the world to see, and this is going to really set the tone for how people view insurance.
• 10:43
  William Auten: Let's face it, it's been a rough few months for the insurance world these days and the reputation that we have as insurance, my clients have as carriers, is severely at risk and there's not a lot of people that want to come into this business because it's like the big bad insurance company and that's tough.
• 11:05
  William Auten: It puts the insurance companies in a tough spot when you're faced with billions of dollars in losses and this could this could destroy some insurance companies oh, absolutely.
• 11:16
  Chantal Roberts: Uh.
• 11:16
  Chantal Roberts: I also want to point out there is an exception to the exclusion and this might upset a lot of insurance the exception to the exclusion, which means there is coverage for a lost payee, because the exception to the exclusion says this, exclusion meaning that total loss from actions completed by governmental authorities does not apply to the interest of the lost payee in your covered auto.
• 11:46
  Chantal Roberts: So if you have.
• 11:47
  William Auten: So your loan gets paid off, but you don't have any equity left.
• 11:51
  Chantal Roberts: Yeah, absolutely.
• 11:52
  Chantal Roberts: So you have absolutely no money.
• 11:53
  Chantal Roberts: So thankfully, I mean, if you have a loan, it gets paid off.
• 11:57
  Chantal Roberts: Now it would not be good for my husband and me.
• 12:00
  Chantal Roberts: We don't have any loans on our cars.
• 12:02
  Chantal Roberts: My husband and me, we don't have any loans on our cars, so we would have to buy a brand new car with with no money from our insurance company.
• 12:10
  Chantal Roberts: In that particular instance and and I hear what you're saying about the total loss aspect it does differ from carrier to carrier.
• 12:19
  Chantal Roberts: I've heard 75 percent.
• 12:21
  Chantal Roberts: Usually it's 70, 75 percent.
• 12:23
  William Auten: Yeah, and 75% yeah, and there's somebody at the insurance company Pardon my language, but there's some egghead at an insurance company who's deciding what percentage that is before you call it a total loss.
• 12:35
  William Auten: And normally I mean it complicates the person's life who has this total loss, because now they've got to.
• 12:45
  William Auten: If they repair it, then they get a salvage title and it's a whole mess to deal with there.
• 12:50
  William Auten: But in this situation it's very important when it's called a total loss or not, and it'd be interesting to see how that's handled.
• 13:16
  Chantal Roberts: There's going to be a lot of attention on you yes, on you and everything that you do, so anything that you can do to help pay this, which is what we are supposed to do in the first place.
• 13:29
  Chantal Roberts: I mean, that is the whole purpose of the insurance company.
• 13:33
  William Auten: Right.
• 13:33
  Chantal Roberts: I think we've forgotten it is that we are supposed to pay covered claims.
• 13:38
  William Auten: And it's so hard because this is, like I said, this is a situation where it's, when it comes to the insurance landscape and the companies involved in these losses, it's going to be survival of the fittest fittest and you know, it could mean the closure of insurance companies which to the detriment of all the people who have claims.
• 14:02
  Chantal Roberts: Well, let's talk about that real quick, or maybe not real quick, because I mean you know it's you and me.
• 14:06
  Chantal Roberts: Nothing's real quick, you know anyway, but when we experienced I think it was what 2023, when we experienced all of the hurricanes that hit Florida and all of what, 11 carriers went into bankruptcy and I think there were eight in Louisiana that did that, and we did have some mass exodus out of California, and you and I were talking before we got on the air, so to speak, that State Farm had canceled some policies.
• 14:48
  Chantal Roberts: Now, I don't think it's because of this, I think it happened before, right.
• 14:52
  William Auten: Well, that's the news story.
• 14:53
  William Auten: I've read that 30,000 policies were canceled in 2024 by State Farm and people are saying, well, they must have known something and got out of the market so that they didn't have to pay these types of claims.
• 15:05
  William Auten: Maybe, maybe not.
• 15:07
  William Auten: State Farm is huge.
• 15:08
  William Auten: They may normally, in a year, cancel 30,000.
• 15:11
  William Auten: And this just happens to be another normal year where they cancel or non-renew policies.
• 15:16
  William Auten: I don't know if this is an unusual thing for them to do in that state.
• 15:21
  William Auten: It wouldn't surprise me if the number was larger than normal, because they have some data, because these companies are all working off of big data.
• 15:30
  William Auten: They may have some information that would suggest that the risk of this kind of thing happening in California was much higher this year than any other prior year, and all the algorithms told them to start, you know, moving policies out of that state for that reason.
• 15:46
  William Auten: Either way, I don't see it as a nefarious thing.
• 15:51
  William Auten: I see it as you know.
• 15:54
  William Auten: If they're normally canceling or non-renewing policies at that rate per year, then that's just what they do and there's no correlation.
• 16:02
  William Auten: If they did it because they saw something down the road that could potentially happen, you can't blame them either.
• 16:09
  William Auten: I mean, if all the people who lost homes today knew this was going to happen six months ago.
• 16:15
  William Auten: Chances are they would have left too.
• 16:18
  Chantal Roberts: Absolutely, and I don't necessarily know if it is because they knew or they didn't know or what have you, because, like I said, I read something and I didn't look it up before we started, but I seem to recall something such as progressive pulling out quite a bit, farmers pulling out of California, quite a bit Geico, I believe, and State Farm, so a lot of them did and and then this was 2023, so a lot of them have been pulling out or reducing.
• 16:54
  Chantal Roberts: And, as I teach the students in my class, we start talking about the hardening of the market and, of course, right now we are in a hard market, which means that there is less capacity, meaning there's less insurance companies writing less policies.
• 17:10
  Chantal Roberts: It's more expensive.
• 17:12
  Chantal Roberts: Writing less policies is more expensive and it is because we have had one of the longest soft markets.
• 17:19
  Chantal Roberts: In my insurance book that I teach from, it says that we've had a soft market for about 20 years and that's one of the longest that we have ever had.
• 17:31
  Chantal Roberts: It kind of took a little brief uptick to a hard market up in 2008 or something like that, but not really.
• 17:38
  William Auten: Well, the reasons carriers leave states are multiple.
• 17:42
  William Auten: I mean in Florida and the Gulf Coast there it's a combination of things.
• 17:48
  William Auten: They're hampered by rates.
• 17:50
  William Auten: They have a huge risk of storm damage.
• 17:53
  William Auten: Hampered by rates, they have a huge risk of storm damage.
• 17:58
  William Auten: And also in Florida you've got this huge litigious environment where the public, adjusters and attorneys are working together to file a thousand suits a day against insurance companies.
• 18:04
  William Auten: So it's ugly there for insurance companies.
• 18:06
  William Auten: Well, california I'm not out there very much, but they're regulated by the state of California and if the state is not allowing them to adjust their rates so that they can remain profitable, it's time to pack up and go.
• 18:21
  William Auten: And that may play more of a role to their cancellations and non-renewals than any algorithms about potential wildfires.
• 18:33
  Chantal Roberts: You're absolutely correct, absolutely correct.
• 18:37
  William Auten: So Well, one thing I wanted to talk about was the governmental action.
• 18:41
  William Auten: Oh, okay, go back that exclusion you cited in the auto policy.
• 18:46
  William Auten: Similar exclusion applies to the commercial policy and there's a thing that there's an exception to this exclusion as well that I want to read to you.
• 18:56
  William Auten: That's interesting.
• 18:58
  William Auten: It's a governmental action is a damage from governmental action is excluded, all right, but we will pay for loss or damage caused by or resulting from acts of destruction ordered by governmental authority and taken at the time of a fire to prevent its spread.
• 19:19
  William Auten: Now, that makes sense.
• 19:22
  William Auten: So if the government has to demolish a bunch of buildings to stop the fire from spreading to other buildings and stuff, that's one thing.
• 19:32
  William Auten: Buildings and stuff, that's one thing.
• 19:36
  William Auten: But I'm thinking about, like, if I were to rewrite that auto policy exclusion that you cited, I don't think, um, I mean, I could include some exception like this where, all right, if the bulldozer has to move the cars to prevent the spread of fire, um, we'll cover that because that's like important.
• 19:50
  William Auten: Um, I would say that if they had to do it to save human lives, that should probably be an exception also, and it doesn't sound like it is.
• 20:01
  William Auten: I don't know if that's ever been contemplated.
• 20:03
  William Auten: But that's my two cents there.
• 20:05
  Chantal Roberts: Yeah, I had mentioned this in Bill Wilson's post saying you know, this is actually fascinating because I did not think about it.
• 20:15
  Chantal Roberts: Honestly, it did not occur to me because, like every other adjuster, I think that has ever walked the face of the earth and every insured that's ever walked the face of the earth we would all think that that would be covered without reading the policy, which, of course, again goes to read the policy all of it, every single page, before you make those coverage opinions and tell the insured something leading them down the garden rose path, which is how bad faith happens.
• 20:42
  Chantal Roberts: By the way, guys and Bill had said that they have been after ISO the insurance service offices who write these standardized policies to make it less punitive for quite some time and that hasn't happened.
• 20:58
  Chantal Roberts: So maybe this would be something that will now make the insurance service offices change way that State Farm, who has their own written policy, manuscript policy, or GEICO or USAA or whomever who use their own manuscript policy, have not changed that wording to be more conducive to their insurance.
• 21:29
  William Auten: Absolutely, I think a policy change should be done to make it a little less harsh.
• 21:34
  William Auten: But in the big scheme of things, it's a video with a bulldozer and maybe five cars, maybe six.
• 21:41
  William Auten: If that happened three or four times across the entire state of California, I'd be surprised.
• 21:47
  William Auten: So we're not talking about huge, huge loss.
• 21:50
  William Auten: There's bigger fish to fry in this whole scenario than that.
• 21:52
  William Auten: There's bigger fish to fry in this whole scenario than that.
• 21:54
  William Auten: Of course it's sensational because it's a video of a bulldozer pushing cars down the road and everybody looks at that and says, oh my God, what if that happened to me?
• 22:02
  William Auten: But that's, in the big scheme of things, small potatoes.
• 22:06
  William Auten: We're talking about billions of dollars in losses and those five cars that were damaged and if you own one of those cars, my condolences and I hope it's covered.
• 22:16
  William Auten: If it's not, I'm very sorry for you.
• 22:18
  William Auten: But big scheme of things, that's not the big hairy problem with this fire.
• 22:23
  Chantal Roberts: No, while we're talking about governmental shutdown and what have you?
• 22:29
  Chantal Roberts: There have been in the past.
• 22:31
  Chantal Roberts: I have read a couple of checklists that you're supposed to do in these fire claims and people are saying if you have to leave, turn off your gas.
• 22:57
  Chantal Roberts: And the reason you turn off your gas is so that if your house burns down, you don't have another explosion which will help feed the fire and turn off the gas at like its source at the water heater, at the, at gas main, if you can, yeah, at the gas main, if you can.
• 23:03
  Chantal Roberts: But anyway, shut it off, don't leave your water dripping or anything like that, because the firefighters need that water pressure.
• 23:10
  Chantal Roberts: They did say, which I thought was actually interesting turn on all of your lights and open your blinds and, of course, take down your window coverings in case the fire burst your windows or break your windows so that it doesn't, you know, instantly feed something.
• 23:27
  Chantal Roberts: But turn on all your lights so that the firefighters can see your house because of the smoke.
• 23:32
  Chantal Roberts: The smoke is that thick, which I thought was rather interesting.
• 23:35
  Chantal Roberts: But I have worked hurricane claims and I don't know.
• 23:41
  Chantal Roberts: You may have worked hurricane claims or winter storm or whatever, when I guess it wouldn't be in the winter storm, where the people, the government, has shut down power to help, I guess, conserve energy or brownouts or what have you, and businesses have lost.
• 24:00
  William Auten: Yeah, in hurricane situations in Miami in particular, I remember in 2017, they shut the power off for a while I want to say it was a week or two and the reason was to prevent problems from loose wires that had been downed from the storm.
• 24:18
  William Auten: You know, lives would be at risk, otherwise Fires could happen from exposed wires and all that.
• 24:27
  William Auten: But by doing that, they forced a lot of businesses to be unable to operate.
• 24:34
  William Auten: But by doing that, they forced a lot of businesses to be unable to operate, both from a retail operational standpoint, but also from a standpoint of maintaining the product they had in freezers or refrigeration units.
• 24:52
  William Auten: I even had claims where there were products on the shelves that were that would be fine at room temperature.
• 24:54
  William Auten: Not, they didn't have to be refrigerated, but if the temperature got above 120 degrees or so, then this stuff started to go bad.
• 25:04
  William Auten: and I don't know if you know miami, it gets hot down there so so, uh, these, these little stores and stuff became these little hot boxes, and all the product on the shelves were damaged by the extreme heat.
• 25:18
  William Auten: So those are situations where the government made this decision, and the governmental action exclusion would apply then to damages caused by man-made power outage, where the power being cut off either away from the premises, may be covered, even though the loss of utility services is excluded.
• 26:04
  Chantal Roberts: So in that particular instance it would be real important again for the adjuster to do that investigation, just like the bulldozing thing.
• 26:13
  Chantal Roberts: You know how much damage was caused by the bulldozer, or would it be?
• 26:18
  Chantal Roberts: Some of the total loss would be the smoke damage which could be covered.
• 26:21
  William Auten: Yeah, I don't know.
• 26:22
  Chantal Roberts: Yeah, you know.
• 26:24
  Chantal Roberts: So utility services may be excluded under that commercial property policy, if I think it says if the failure originates away from the described premises.
• 26:37
  Chantal Roberts: But it says power surges, which would usually be like your brownouts or something like that, is usually not covered.
• 26:46
  Chantal Roberts: But you're absolutely right, it can.
• 26:48
  Chantal Roberts: It can create that problem which then leads to a business interruption claim, right that?
• 26:53
  William Auten: problem, which then leads to a business interruption claim.
• 26:54
  William Auten: Right, and that's a lot of the claims that I had were either stock losses or relating to business interruption, and so the power outage for a business interruption claim.
• 27:06
  William Auten: I forget the rule.
• 27:07
  William Auten: I think that if there's a power outage, the damage to the supply has to be on the property or within a certain number of feet, a thousand feet or something like that I don't the the bi policy pulled up, but I do have the cp 10 30 10 12 okay, I got the 2000 uh power.
• 27:28
  William Auten: Let's see what it says here.
• 27:29
  William Auten: Uh, because I have have utility services.
• 27:32
  William Auten: That's the one that's an exclusion.
• 27:35
  Chantal Roberts: And it says the failure of power is not covered but there's an exception to the exclusion which we've talked about previously.
• 27:43
  Chantal Roberts: Exception to the exclusion means there is coverage.
• 27:46
  Chantal Roberts: The loss of power originates away from the described premises or originates at the described premises, but only if the failure involves equipment used to supply the utility services to the described premises.
• 28:03
  Chantal Roberts: So I would think what's that like a generator?
• 28:06
  William Auten: It could be a transformer if you've got one on your property.
• 28:09
  Chantal Roberts: It's true, you could have a transformer on your policy on your property.
• 28:12
  Chantal Roberts: Yeah, so, but but, yeah, any of that would not be it, but if it originates away from your premises.
• 28:23
  Chantal Roberts: So there you go.
• 28:25
  William Auten: Like like the government shuts it off at the power station five miles from your place.
• 28:30
  Chantal Roberts: Would that be governmental authority though?
• 28:32
  William Auten: Well, that would be governmental authority, but yeah, your place would that be governmental authority though?
• 28:35
  William Auten: Well, that would be governmental authority, but yeah, so.
• 28:36
  William Auten: But if a but if a tree hit a power line a mile away and the whole, the whole neighborhood lost power, right then, uh, that probably would not be, that power interruption would not be covered, and I think that no it would be covered.
• 28:48
  Chantal Roberts: No, it wouldn't, yeah, if it was, if it took the tree happened, um, like a block away, even a block away.
• 28:54
  Chantal Roberts: If the tree fell in the woods and nobody was there to hear it, would there be coverage?
• 29:00
  Chantal Roberts: And the answer is yes.
• 29:02
  William Auten: All right.
• 29:03
  William Auten: So I'm reading utility services exclusion.
• 29:06
  William Auten: Here it says the failure of power or other utility service supplied to the described premises, however caused if the failure occurs away from the described premise oh, I'm misreading this shoot.
• 29:19
  Chantal Roberts: Oh well, ignore everything that I have said previously.
• 29:24
  William Auten: Even blue agrees, yeah now if that tree fell on your property?
• 29:29
  William Auten: If it was on the insured premises, that's different.
• 29:32
  Chantal Roberts: That would be covered I'm totally going to take all of this out.
• 29:35
  Chantal Roberts: The failure.
• 29:35
  Chantal Roberts: See, I'm reading, I guess, a more modern one I have 2012,.
• 29:41
  William Auten: You said yeah, this is 2000.
• 29:43
  Chantal Roberts: Okay.
• 29:43
  Chantal Roberts: The failure of power, communication, water or other utility service supplied to the described premises, however called if the failure originates away from the described premises or originates at the described premises.
• 29:50
  Chantal Roberts: However called if the failure originates away from the described premises or originates at the described premises, but only if such failure involves equipment used to supply the utility service.
• 30:02
  Chantal Roberts: Blah, blah, blah.
• 30:03
  Chantal Roberts: Failure of any blah, blah, blah.
• 30:05
  Chantal Roberts: Okay, so I kind of want to start all over again, because I told everybody wrong.
• 30:13
  William Auten: Well, we can edit that out, we'll just edit all of it out.
• 30:18
  Chantal Roberts: Um yeah, so there you go.
• 30:21
  William Auten: No exception to the exclusion well, there there is an exception.
• 30:24
  William Auten: The exception is um, if the failure of power or other utility service results in a covered cause of loss, will pay for the loss or damage caused by that covered cause of loss right so if that, if that tree a mile away falls and disrupts the power and there's no coverage for that loss of power, but if that causes a fire, because fire is covered, they'll cover that.
• 30:52
  Chantal Roberts: Yes.
• 30:54
  William Auten: This exclusion.
• 30:54
  William Auten: I'm going to go burn your brain a little further here.
• 30:57
  William Auten: This exclusion does not apply to the business income coverage.
• 31:03
  Chantal Roberts: Where do you see that?
• 31:04
  William Auten: I'm in the 2000 form.
• 31:05
  William Auten: So it's under utility services.
• 31:08
  William Auten: So the 2012 form, I think, may have some other language about business income losses and power outages.
• 31:18
  William Auten: I don't know.
• 31:19
  Chantal Roberts: This is an excellent example of why you need to know what addition date you're looking at.
• 31:25
  William Auten: Oh yeah.
• 31:25
  Chantal Roberts: Because mine has.
• 31:28
  Chantal Roberts: Failure of any utility service includes lack of sufficient capacity and reduction in supply.
• 31:33
  Chantal Roberts: That's the brownout.
• 31:34
  Chantal Roberts: Loss or damage by a surge of power is also excluded if the surge would not have occurred but for the an event causing a power failure and to swing back to the fires in in california they're having a real problem with water supply yes and um, fires covered anyway.
• 31:52
  William Auten: You don't have to worry about lack of water being not covered because fire is already covered.
• 31:58
  William Auten: But um, what a shame, though I mean, to not have the resources you need there to fight this thing.
• 32:06
  William Auten: It just boggles my mind.
• 32:08
  William Auten: I think it's probably a situation that's bigger than any government could stop.
• 32:15
  William Auten: I think this is Mother Nature really sticking it to us.
• 32:20
  Chantal Roberts: Okay, let's talk about that.
• 32:22
  Chantal Roberts: So there was.
• 32:24
  Chantal Roberts: What is it?
• 32:24
  Chantal Roberts: An m night shallahan movie about how everybody started dropping dead yeah, I remember and um come to find out it was like all the trees and the plants killing us, and humans could only live in like groups of five or something like that, because the plants and everything just decided to start taking to killing us.
• 32:49
  William Auten: That would be a bad day.
• 32:50
  Chantal Roberts: That would be a bad day.
• 32:51
  Chantal Roberts: I'm not saying that that's what's happening, but no, I don't think so.
• 32:57
  William Auten: One thing that this has done is given me the perspective on the climate where I live and to not complain about the cold weather or the snow at all.
• 33:08
  William Auten: We don't have hurricanes here.
• 33:10
  William Auten: We don't have the hailstorms or the tornadoes they have in the Midwest.
• 33:18
  William Auten: We have some flooding here, but nothing like they have out west or midwest rather yeah we certainly don't have wildfires like they do in california no so, um, I have put a kibosh on any complaints about snow or cold, even though it's been pretty cold here this week I am still going to complain about the cold it is.
• 33:37
  Chantal Roberts: It is freaking cold here and we had a blizzard.
• 33:42
  Chantal Roberts: I think this is like my fourth blizzard ever and it was about like 18 inches or something like that, and it's just.
• 33:49
  Chantal Roberts: I can't stand it.
• 33:51
  Chantal Roberts: Anyway, although Blue loves it, blue does, yeah, I'll bet he does.
• 33:57
  Chantal Roberts: He does love it.
• 33:58
  Chantal Roberts: Okay, so there we go.
• 34:00
  Chantal Roberts: Chantel got policy wrong because she can't read, and that's okay.
• 34:06
  Chantal Roberts: Yeah, well, I'm trying to do it fast it's tough when on the fly.
• 34:11
  William Auten: that's well, that that's a good.
• 34:13
  William Auten: That's a good thing to comment about.
• 34:15
  William Auten: Is that?
• 34:15
  William Auten: What I tell adjusters is that if you're going to talk about coverage with a policy holder, um, don't do it while you're trying to talk about coverage with a policyholder, don't do it while you're trying to do the scope of your claim.
• 34:25
  William Auten: That's the wrong time to have a coverage conversation.
• 34:28
  William Auten: You need to be at your desk looking at all the facts and reading these forms, making sure you've got the right forms in place, and that can be frustrating for a policyholder because they want to know is this covered or not?
• 34:41
  William Auten: I need to know, and part of the art of adjusting is to actually have the soft skills necessary to maintain a calm environment in that conversation and to say, hey look, I understand, I empathize.
• 34:57
  William Auten: This is a bad situation for you.
• 35:00
  William Auten: I'm trying to do my best to make it as best, as good as we can going forward.
• 35:04
  William Auten: So, if you'll allow me to do my job, everything's going to go as smooth as possible.
• 35:09
  Chantal Roberts: Absolutely, and you know, to our.
• 35:11
  Chantal Roberts: We now have six listeners, by the way.
• 35:14
  William Auten: Woo-hoo, oh yeah.
• 35:15
  Chantal Roberts: Yeah.
• 35:16
  William Auten: Six, all right, we have more than stop that.
• 35:18
  William Auten: We have more than six.
• 35:22
  Chantal Roberts: It have more than stop that we have more than six.
• 35:24
  William Auten: It's not as funny if they like oh yeah, we got 20 listeners, we have six and we have six, yes, and, and so we have six listeners.
• 35:30
  Chantal Roberts: And so to our six listeners, it would be uh, you should know, that bill and I just pretty much we talk on the fly and we do have an outline, we do have an outline, not that we follow it well, we do.
• 35:42
  William Auten: I've been checking things off here.
• 35:44
  Chantal Roberts: Okay, I have too.
• 35:45
  Chantal Roberts: The last thing I did want to talk about and we did slightly talk about this with our business, interruption would also be similar would be the additional living expense, and this was also a question that I saw on Reddit and or Facebook where it was coming up.
• 36:10
  Chantal Roberts: You know, an adjuster or I don't think it was an adjuster, I think maybe it was an attorney was saying oh yeah, you could get additional living expense for the homeowner if the smoke was too bad and you had to be forced out of your home because the smoke was too bad and you couldn't breathe or for health reasons, or something to that effect.
• 36:27
  Chantal Roberts: And I was like, oh, probably not, Because again, what we're looking at is that direct physical damage to the house, and if there's no direct physical damage to the dwelling, then I don't think the policy would respond to it.
• 36:44
  Chantal Roberts: Now it could change if the Department of Insurance says, hey, you just need to go ahead and offer this for emergencies.
• 36:51
  Chantal Roberts: I don't know, Sometimes they try to do that and the insurance companies don't like it, but that's something to think about.
• 36:59
  William Auten: So my thought on that is if, if it's just bad air outside that's causing you to, you know have a reaction, then no, that's not going to, that's not going to fly.
• 37:12
  William Auten: But smoke is one of those things that can be actually destructive to property.
• 37:17
  Chantal Roberts: Yes.
• 37:18
  William Auten: Smoke has chemicals in it and acids and all kinds of stuff that etches itself, etches itself into materials and if that smoke gets into your house and stinks it up, then you do have damage there.
• 37:33
  William Auten: So I would say that, um, if the smoke caused damage to your home, you're going to have ale coverage.
• 37:40
  William Auten: But if it's just the environment outside is kind of sketchy.
• 37:44
  William Auten: We had wildfires in Canada last year, I think Last year or a year before, and the whole area was wild.
• 37:51
  William Auten: Here it was just like fog, it was like nighttime.
• 37:54
  William Auten: It was really bizarre.
• 37:56
  William Auten: And these fires were hundreds of miles away but the wind stream brought this blanket down and and you, if you went outside, it smelled like a campfire.
• 38:06
  William Auten: Basically it didn't really permeate the house if you had the doors and windows closed.
• 38:11
  William Auten: So in that scenario you're not going to get ALE for that scenario.
• 38:15
  William Auten: If you got to like, leave town because you can't go outside, because but if in these wildfires, chances are the smoke is pretty bad, it's probably getting into areas it's probably causing, even causing coating things on the outside of your house that that would, you know, like a deck I can see a deck being stained by it.
• 38:36
  William Auten: Um, so if you got damage, physical damage to your.
• 38:40
  William Auten: That's where you're going to get the ALE.
• 38:42
  Chantal Roberts: Okay, but again, I'm going to throw this out.
• 38:45
  Chantal Roberts: The issue is, though, that the policy will say and I'm trying to find my policy right now that you have to maintain it has to be damaged, and you maintain your current standard of living, and blah, blah, blah.
• 39:00
  Chantal Roberts: If your kitchen cabinets are just covered with smoke, does that really Well?
• 39:08
  William Auten: okay, so all right.
• 39:09
  William Auten: The question is do you have to leave your house?
• 39:10
  William Auten: You're right, if it's a cosmetic issue.
• 39:14
  William Auten: If it's all the exterior of the house, does that mean you can't live there anymore?
• 39:18
  William Auten: Probably not.
• 39:19
  William Auten: I would say that if that smoke permeates the interior and creates an environment inside the house, along with damage to the house itself, that's where you're going to get coverage for the ALE.
• 39:31
  Chantal Roberts: Right.
• 39:31
  William Auten: That's probably a very important clarification.
• 39:35
  Chantal Roberts: And I think that's kind of I'm sorry, that's kind of.
• 39:37
  Chantal Roberts: What I was talking about is, let's see if I can find it Okay.
• 39:43
  Chantal Roberts: Yeah, here it is Additional living expense If a loss covered under Section 1 makes part of this residence premises where you reside not fit to live in.
• 39:51
  Chantal Roberts: We cover any necessary increase in living expenses incurred by you and your residents.
• 39:57
  Chantal Roberts: And again, remember, this is the increase, so you don't pay for everything as adjusters, you just pay for the increase.
• 40:06
  William Auten: Yeah, and that increase is important.
• 40:07
  William Auten: That's one thing that pops up a lot in these ALE claims.
• 40:11
  William Auten: When it comes to groceries and things like that, people say, well, I have a kitchen, so now you've got to pay me to eat out every night, and here's all my receipts from the restaurants.
• 40:22
  William Auten: Please pay them.
• 40:23
  William Auten: Well, we don't owe that.
• 40:25
  William Auten: We owe the difference between that and your normal grocery bill, because it's the difference that's covered, not the total, and it's got to be reasonable.
• 40:34
  William Auten: If you're out eating at fancy restaurants at $100 a plate or $200 a plate, that's going to be an issue.
• 40:43
  William Auten: Have you seen the guy that's posting these ridiculous meals that he's gotten in?
• 40:47
  William Auten: I think it's New York City and he's paying $200 or $300 and it's this little piece of something and he's complaining about it and he keeps posting them and people keep getting wound up about it.
• 40:59
  William Auten: It's hilarious to read.
• 41:01
  Chantal Roberts: I will say civil authority prohibits use.
• 41:03
  Chantal Roberts: If a civil authority prohibits you from use of a residence premises as a result of direct damage to a neighboring premises by apparel insured against, we will cover the loss as provided in number one, additional living expense and two.
• 41:16
  Chantal Roberts: So let's say you have a neighborhood right next to you that is damaged and you're, I guess, in that area where you need to get out.
• 41:26
  Chantal Roberts: They will cover you even though your house is not damaged.
• 41:31
  William Auten: So if you have to be like evacuated, yeah, if civil authority prohibits you.
• 41:36
  William Auten: Oh, civil authority Okay.
• 41:39
  Chantal Roberts: As a result of direct damage to a neighboring premises.
• 41:43
  Chantal Roberts: If you're reading that strictly, that would be your neighbor's house, not your neighboring neighborhood or whatever.
• 41:51
  William Auten: Right, not three houses down.
• 41:52
  William Auten: Yeah, not three houses, not two houses down, the one next to you.
• 41:58
  Chantal Roberts: But again, what did we just say earlier, like an hour ago?
• 42:03
  William Auten: Words mean things.
• 42:04
  Chantal Roberts: Well, words mean things and everybody's going to be paying attention to what you're doing.
• 42:09
  William Auten: That's right, and there's going to be a lot of gray areas on coverage throughout this whole mess.
• 42:14
  William Auten: I know this because there's gray areas in every claim.
• 42:18
  Chantal Roberts: Oh gosh.
• 42:19
  William Auten: And it's how carriers handle those gray areas.
• 42:22
  William Auten: That's going to maybe make the news, so just keep that in mind.
• 42:27
  William Auten: Yeah, I would say okay, anyway uh.
• 42:31
  William Auten: One other story I'd like to bring up about the the fires is I mentioned that somebody had uh posted a drone uh video of of a neighborhood and, um, you know, as long as they're flying within FAA guidelines, more power to them.
• 42:47
  William Auten: But there's a story about somebody flying a drone and it crashed into one of the planes that is used to transport water and drop water on these fires, and that plane is out of commission and they only had two of them in the area and that one happened to be borrowed from Canada.
• 43:04
  William Auten: That plane is now out of commission.
• 43:07
  William Auten: If you own a drone, keep it on the ground while they are fighting these fires.
• 43:12
  William Auten: It's your.
• 43:14
  William Auten: You don't understand the damage you've done, you know, by taking this plane out of service.
• 43:20
  Chantal Roberts: It's a liability claim right there and that is going to cost what?
• 43:25
  William Auten: hundreds of thousands of dollars and, and don't forget, operation of a drone is not covered under your standard general liability policy.
• 43:32
  William Auten: You have to have an aircraft policy.
• 43:34
  William Auten: So if you're out there flying a drone and you crash it into something, or if you crash it into Now, what if that plane crashed and killed a bunch of people?
• 43:44
  William Auten: I mean, the scenarios are numerous, but it's so easy for people to be dumb these days that it's a little frightening.
• 43:56
  Chantal Roberts: It is.
• 43:56
  Chantal Roberts: I do think I've seen drone exclusions on your homeowners as well.
• 44:02
  William Auten: There's an aircraft.
• 44:03
  William Auten: They don't need one.
• 44:04
  William Auten: There's an aircraft.
• 44:05
  Chantal Roberts: exclusion Are drones considered, quote unquote aircrafts though they are, I don't think I would have considered it.
• 44:13
  William Auten: Ask the FAA.
• 44:13
  William Auten: I'm a certified Part 107 pilot.
• 44:16
  William Auten: It is absolutely an aircraft.
• 44:19
  Chantal Roberts: All righty, then there you go.
• 44:20
  Chantal Roberts: You've heard it first, and Bill is nine times out of 10 more correct than I am.
• 44:25
  William Auten: So hey, well, I don't know about that.
• 44:27
  William Auten: We'll see.
• 44:27
  William Auten: One thing I would like to hear from folks is all the things we talk about here.
• 44:33
  William Auten: We're talking about it off the cuff.
• 44:34
  William Auten: We're looking at policies and we're rambling on as if we know what we're talking about.
• 44:39
  William Auten: If we get something wrong, let us know.
• 44:42
  William Auten: I would love to hear it.
• 44:44
  William Auten: I would love to hear all the mistakes we made and I would be glad to stand up and make a correction.
• 44:49
  Chantal Roberts: Oh yeah, me too.
• 44:50
  Chantal Roberts: Yeah, absolutely.
• 44:51
  William Auten: I am not embarrassed to say that I have been wrong, in fact, all the mistakes that I have made in saying something here, I want to correct it.
• 45:00
  William Auten: So if you catch something that I said that's wrong, please let me know.
• 45:02
  William Auten: So that I have made in saying something here, I want to correct it.
• 45:02
  William Auten: So if you catch something that I said that's wrong, please let me know so that I can correct it, because I don't want to put false information out or incorrect information out Absolutely Okay.
• 45:14
  Chantal Roberts: So have we kind of covered everything?
• 45:15
  Chantal Roberts: I mean, I feel like this is a really important topic and we really need to know about things yeah, I and and get, so we normally record these um ahead of time.
• 45:28
  William Auten: I think this episode we're probably gonna put out there a little earlier than normal, just because it's current and um, yeah, I know everybody's thinking about this right now.
• 45:38
  William Auten: So bonus material it's our very first material it's our very first bonus episode yes, you know what else I had an idea for, and maybe listeners all of our six listeners can give me feedback on whether to do this.
• 45:55
  William Auten: I got for christmas a box of dad jokes oh my god, that would be.
• 46:00
  Chantal Roberts: Are.
• 46:00
  Chantal Roberts: Are we gonna have like the art of adjusting dad joke?
• 46:03
  William Auten: Dad jokes for the one per episode.
• 46:05
  William Auten: What do you think?
• 46:06
  Chantal Roberts: I love that idea.
• 46:08
  William Auten: All right.
• 46:09
  Chantal Roberts: I love that idea.
• 46:09
  Chantal Roberts: Maybe you guys see my Viking helmet soon.
• 46:11
  Chantal Roberts: Why?
• 46:12
  Chantal Roberts: Because you got the Vikings coming to.
• 46:16
  William Auten: My, my, my my you called it Krampus.
• 46:19
  Chantal Roberts: Oh yeah, I thought it was Krampus.
• 46:23
  William Auten: It's here in the office.
• 46:24
  Chantal Roberts: It's a Viking, viking helmet, very cool my daughter got it for me.
• 46:27
  William Auten: I don't know why.
• 46:27
  William Auten: She's just nuts, so I'm gonna have to wear that on some occasion here for the the podcast I think probably we should.
• 46:36
  William Auten: Well, we're almost we'll think on it yeah, we'll think on it.
• 46:39
  Chantal Roberts: but yes, we've, I think, talked a lot about this.
• 46:44
  Chantal Roberts: We're going to have a bonus episode.
• 46:46
  Chantal Roberts: Yay us, and yeah, we'll catch you next time.
• 46:50
  Chantal Roberts: The next episode, I think, would be coming out relatively soon.
• 46:56
  Chantal Roberts: We'll just check it out and we'll go from there.
• 47:01
  William Auten: We have one scheduled to publish on January 30th.
• 47:04
  Chantal Roberts: Yes, and we have one coming up on the 16th.
• 47:08
  Chantal Roberts: That's our.
• 47:09
  William Auten: Yes, we do.
• 47:10
  William Auten: Actually, you're right, we have one publishing on the 16th and then the next one on the 30th.
• 47:15
  Chantal Roberts: Yay.
• 47:16
  William Auten: Right-o, and this will be a bonus.
• 47:18
  Chantal Roberts: This is going to be a bonus episode.
• 47:20
  Chantal Roberts: Woo-hoo, yes, okay, this will be a bonus.
• 47:20
  Chantal Roberts: This is going to be a bonus episode.
• 47:21
  Chantal Roberts: Woo-hoo, yes, okay.
• 47:22
  Chantal Roberts: Well, we will see you at our normal time, I guess.
• 47:27
  William Auten: Yeah.
• 47:28
  Chantal Roberts: Okay.
• 47:29
  William Auten: Have a good day.
• 47:30
  Chantal Roberts: Thanks, you too.
• 47:31
  William Auten: Take care.
• 47:32
  William Auten: Thanks for joining us on the Art of Adjusting podcast, where we talk about life as an insurance adjuster.
• 47:38
  William Auten: Hit that subscribe button real quick and tell all of your adjuster friends to check this out as well.
• 47:42
  William Auten: For independent adjusting services, go to wwwautenclaims, and for anyone interested in working as an independent liability adjuster, go to the contact us tab to join our roster.
• 47:55
  Chantal Roberts: So this wraps up another Art of Adjusting podcast.
• 47:58
  Chantal Roberts: If you enjoyed this podcast or this episode, please give us five stars and a review.
• 48:04
  Chantal Roberts: It does help the algorithm pick us up.
• 48:07
  Chantal Roberts: In the meantime, you can contact me at theartofadjustingcom for consulting and training purposes.