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Editor's ViewpointMeditations Of A Minnesota Mossback |
Seven Blunders of the World … Foot-Dragging … When The Mold Moves In
On their final day together, Mahatma Gandhi gave his grandson, Arun Gandhi, a list written on a piece of paper.
The list was entitled, “The Seven Blunders of the World,” and it included what Gandhi considered seven acts of passive violence, developed during his life-long search for the roots of violence in society: Wealth without work; Pleasure without conscience; Knowledge without character; Commerce without morality; Science without humanity; Worship without sacrifice; and Politics without principle.
Later, Arun Gandhi came up with an eighth blunder: Rights without responsibilities.
In the wake of last week’s meeting with Hugo families whose homes sustained damage during the May 25 tornado, the “commerce without morality” statement struck me right between the eyes.
Many of these families are unable to begin reconstruction on their homes because they cannot reach agreement with their insurance companies on the amount of compensation they are owed.
Admittedly, I am not privy to all of the particular details of each insurance policy. It may be that some homes were underinsured; it may be that depreciation policies impacted claim payouts more than homeowners ever imagined.
But there were comments made at that meeting that made me cringe in sympathy with families who want nothing more than to begin the rebuilding of their homes.
Some can’t get their insurance company to return their phone calls.
Some lost their copy of their insurance policy in the disaster and have waited for weeks for a duplicate to arrive from their insurer.
Some have been offered 50 cents on the dollar—which won’t even cover construction materials.
Some have finally resorted to calling the Minnesota Department of Commerce—which regulates the insurance industry in our state—for help. The fact that a single phone call to state regulators suddenly motivates insurance companies to return phone calls leaves me feeling cynical.
One of the single biggest transactions any adult will undertake in life is the purchase of a home. Numerous laws and regulations have been enacted to protect home buyers and sellers during a period of financial vulnerability.
But there are few individuals more vulnerable than those who have lost everything.
At the meeting last week, there were tales of loss ranging from damaged roofing and siding, to complete destruction of homes and contents. A common theme was that of foot-dragging on the part of those companies who are in business to help people get back on their feet. And for those companies, it’s easy to blame the system. “Well, that’s what the computer says you’re owed,” more than one homeowner was told.
But one insurance representative told me that his company hadn’t upgraded their computer estimating programs in ten years.
You can’t build a home in 2008 at 1998 materials prices. Recent increases in the price of oil have affected the cost of petroleum-based building materials such as roofing shingles and tar paper, PVC piping, vinyl siding and windows, laminates, carpets, adhesives and paint products.
Disasters like Hurricane Katrina have also contributed to escalating costs.
I certainly hope that insurance companies have figured out that the continuous monitoring of the unit costs of building materials is absolutely essential to conducting business in a morally defensible way.
In fact, I suggest that the proper way to do business would be to pass on these increases in replacement costs to the people who pay the monthly premiums, not to surprise disaster victims with less-than-adequate settlement offers following a life-changing loss.
The proper way to do business would be return phone calls from customers who are relying on their insurance contracts to help them patch their lives back together.
The proper way to do business would be to set a company policy that requires catastrophic losses to be resolved—and, if necessary, arbitrated-before the mold moves in.
And, in hindsight, the proper way to buy homeowner’s insurance might be to ask some very pointed questions about the process involved in replacing items lost under the company’s standard “replacement cost” insurance policies.
It might be to research the company’s track record for resolution of claims disputes.
And the proper way to improve the insurance industry would certainly be for voters to call their elected representatives and ask them to pass legislation that requires homeowners’ insurance policies to be more explicit when specifying the terms of timely resolution of disputed claims.
The law should require insurance companies to make a “reasonable” match to current materials prices at the same time they’re making a “reasonable” match to the siding color.
Homeowners should be able to tell what they’re getting when they buy a policy.
And they should be willing to share their stories when the hearings begin.