Beware the Storm Chasers

Following the recent storms and floods, there have been a number of firms advertising on the radio offering to assist insureds with their insurance claim.

It is understandable that some insureds struggle with the claim process, particularly after they have seen their home or business badly effected.

Sadly, there are some companies and individuals that take the opportunity to exploit people when they are vulnerable. I am seeing more and more cases of home owners in particular entering into contracts which have clauses where the insured is required to pay what to me is an obscene percentage of the insurance proceeds for their service.

An example taken from one such contract is reproduced below.

The Owner agrees to:

1. Provide all documentation relating to the Claim to the Company.
2. Provide the Company with authority to be the representative of the Owner to assist with the scheduling
   and liaising between insurance assessors, builders, loss adjusters, trades people, claim managers and/or
   any other relevant parties throughout the Claim for as long as required.
3. Prior to signing any paperwork, permitting any work to commence, or making any payment of any excess relating to the Claim, confirm the actions with the Company.
4. Upon work being approved, the Company will assign a QLD and/or NSW licensed and insured builder to enter into a building contract with the Owner to complete all work.
5. All work to be completed is to be as per the scope of work approved by the insurance provider.
6. In the event a builder not allocated by the Company is agreed by the Owner to complete work and the
   Company is not given a fair opportunity to continue pursuit of the Claim, a payment of 19% of the value of the Claim is to be paid to the Company, by the Owner for services rendered.
7. 19% of any settlement amount not allocated to a builder assigned by the Company is to be paid to the Company by the Owner for services rendered.

I question whether there is a conflict of interest and or what payments are being made by the appointed builder back to the claims preparer if no payment on this portion of the claim is being asked for by the claims preparer.

Of course, if an insured feels that this is value for money they are entitled to use them. But having handled claims for almost 52 years, I feel this is way too high.

Anyone that is asked to sign a contract for service needs to read it carefully and understand the cost they will be incurring.

I fear that brand insurance will be further damaged when people come to realise the high cost they have incurred to obtain their just entitlement under their insurance policy.

I would ask my broker subscribers and readers to take the time to warn their clients to take care.