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Ask Dave

Storm Damage Arbitration

Linda had storm damage to her home. The insurance company refuses to pay for some repairs and claiming it was pre-existing. She's been advised to go into arbitration. Does Dave have any insight?

QUESTION: Linda in Cincinnati had some storm damage to her home in 2011. The insurance company paid for the roof and cosmetic repairs on the inside. They’re refusing to pay for other repairs, though, and claiming it was pre-existing. She’s been advised to go into arbitration. Does Dave have any insight into what to do?

ANSWER: The larger the insurance company, the more times they’re in arbitration—the bigger the brand name—and the less chance you’ll have of winning. That’s my experience. If they’re not up there very much and they don’t have friends on the commission and all that and they’re not in there all the time, then maybe. But this sounds like it’s open and shut. I believe before I did that, I would just hire an attorney.

I think I might go ahead and hire an attorney, but before I did that, I would hire them for $300 to write a letter and say we’re getting ready to smash your face in. If the $300 letter doesn’t move them, then you can decide between arbitration and whether or not you give the attorney a third to attack it or not. I’m a little afraid they won’t be impartial. That’s been my experience.

It just depends on what’s going on. There is a level of politics often in those kinds of things. It’s not really intentional politics, and it’s not really anything underhanded. It’s just they’re familiar and they all know each other. That sets the tone poorly. It’s not to say they would not still come to the correct judgment. I’ve been through it with clients, and I’ve not always seen it work well. I’m not a big fan. I would consider that. Before I did that, I would pay $300 to threaten them with a legal letterhead and see where we go. Then you may need to follow through and actually do a lawsuit. Lawsuits are a pain in the butt though. You’ve got to do them sometimes, and you’ve got to be willing to do them. If you’re not willing to do them, everything you do is a bluff. You’ve got to be willing to say hey, this is what we said we were going to do, and if you don’t do it, then you have a problem.