Insurance: a Tool to Create Value

Steve Price, CCIM (Moderator)Amy Bach, United Policyholders

Scott deLuise, CCIM, Matrix Business ConsultingRon Throupe, PhD, CCIM, University of Denver

CCIM LIVE – Denver, 2013

Amy Bach, Executive DirectorEmail: amy.bach@uphelp.orgWebsite: www.uphelp.org

October 26th, 2013

United Policyholders2013 © ALL RIGHTS RESERVED

About United Policyholders

• A respected voice and a trusted information resource for individual and commercial insureds in all 50 states.

• We don’t sell insurance or accept funding from insurance companies.

• Not-for-profit funded by donations and grants.• Staff, advisers and volunteers with personal

and/or professional expertise in disaster recovery, insurance claims and insurance law.

20 Years of Experience

• Monitoring the insurance marketplace (sales, claims and litigation)

• Helping people and businesses “Speak UP”• A voice for policyholders’ interests and rights– In the media– In legislatures– With regulators – With public officials

Three Programs:

• Roadmap to Recovery™– Guiding individuals and businesses on solving

insurance problems that can arise after disasters.• Roadmap to Preparedness– Increasing insurance literacy and preparedness by

sharing lessons learned.• Advocacy and Action– Going to bat for insureds in courts of law,

legislative and other public policy forums, and in the media. 75% of our amicus briefs have been in CGL/commercial cases.

Reminders:An insurance policy is a legal contract,

but there are laws on how it gets interpreted

An insurance claim is a business negotiation. If you have leverage and proof of what you are entitled to, most things are negotiable.

An insured has paid for coverage and good claim service, and should not have to pay for expert reports, claim and legal help. But the reality is may people need help getting a fair and full settlement.

From CA to CO to TX to NJ…• Insurance economics and

profit motives affect claim handling, settlement offers and outcomes

• The right experts and professional help can be critically important

• 24/7 help for insureds:www.uphelp.org

We have one goal as CCIM’s:

•Add as much value for our clients as we possibly can add,

•Using all the tools we possess,•Working as smart as we’ve been trained•As efficiently as our experience allows

Use the insurance claim!

• In your “bag of tricks”• As the exclusive real estate pro that “gets it”• When no one else “understands it”• Because your client’s under stress• And they need your help now

Make yourself invaluable

• To your existing clients: Trusted Advisor• Target clients (the one’s you’ve always

courted): Knowledgeable resource• Municipalities, sub-governmental agencies• School districts• Special districts (parks/rec, metro/san)

An insurance claim is a very sophisticated business transaction

• Most have never done this before!• It’s all about the capital to repair• It’s about cash flowing the loss with insco $$• It’s about continuing operations during crisis• It’s about survival

Get the Varsity on the Gridiron

• Identify your team; the insurer will as well– Architect/interior designer– Engineer (structural, mechanical, electrical)– Process consultant– Contractor

• The insurer should pay for these…as part of your claim…if you act first.

It’s all about documentation!

• All communications must be in writing• Be on the offensive: Proactive, Professional• Do not let carrier present claim: you do it!• After everything else: – it’s your loss– It’s your claim– It’s your money!

Commonality: Eminent Domain or Disaster

• Valuation for Damages• Why do you need valuation?• What is the Before vs. After methodology• Value before and Event vs. Value after

Insurance Position: Same position as prior to an event

• “as – is” value, or before the event value: • Is the “as is” value - current use, the Highest

and Best Use (HBU)?• “after” the event value• The difference is the theoretical damages

Does the HBU Affect Settlement Strategy?

• Insurance: typically on the current use • If HBU ≠ current use – May be better to settle and move on

• HBU requires two valuations – As is – As if vacant, if this is your answer it conflicts with

insurance

Examples

• Ex. Flooding of homes or businesses (betterment)– Retrofitting of property above flood elevation– Can create a betterment• Carports• Seasonal storage

• Special Purpose Property– Churches, manufacturing processes– Cost may be the only way, but making sure you get the

“exact replica” in value, not just in use

Why involve a valuation expert?

• Feasibility of potential uses• Understanding of Cost vs. Value• Cost ≠ Value most times• Where does money (cost) create value? • What other local owners decide to do with

property can affect the value equation for you. Interdependence of land use

Q&A: Ron Throupe, PhD

Q&A: Scott deLuise, CCIM

Q&A: Amy Bach, Esq.

Now for the rest of the story…

Scott deLuise, Public Adjuster

ContactsAmy Bach, Esq.United Policy Holders(415) 393-9990Amy.bach@uphelp.org

R. Scott deLuise, CCIM, Matrix Business Consulting(303) 298-1711 or (888) 321-5200sdeluise@matrixbusinessconsulting.com

Ron Throupe, PhDUniversity of Denver – Burns School(425) 681-6602rthroupe@du.edu

Steve Price, CCIMPrice Properties, Inc.(719) 338-8303steve@stevepriceccim.com