Joplin Globe
5/2/04 - Storms revealed many were underinsured

By Andy Ostmeyer

Globe Staff Writer


CARL JUNCTION, Mo. - The hope of tornado victims such as Alice Baldwin, Lynette and Scott Rector, and Tony Blevins came to rest initially in their insurance companies.

Interviews with dozens of people in five of the communities hit hardest - Carl Junction, Pierce City, Stockton, Smithfield and Franklin, Kan. - turned up some complaints, but most people were satisfied with their insurance company's response. Most also said they were underinsured - sometimes woefully.

Franklin resident Alice Baldwin, whose insurance was with American Family, was happy with the way she was treated.

"He was here within the hour," she said of the adjuster. "They gave me everything they could. I have no complaints."

Tony Blevins, pastor of the Carl Junction United Methodist Church, had an experience representative of many: The insurance company treated the church fairly, but he wishes he had paid more for an expanded policy. Estimated damage to the church came to more than $750,000.

There was an adjuster from Church Mutual, a specialized church insurance company, on site in 24 hours, and the church received a check for $100,000 almost immediately. More money came in later, but Blevins said the church was underinsured.

"If we were insured at another 20 percent, maybe 25 percent, we would have been in really good shape," he said.

Not only that, but there were caps on unanticipated expenses in the policy.

In the aftermath of the storm that hit Carl Junction, there were few places for the church community to gather and worship. The First Baptist Church allowed the Methodists to use their Fellowship Hall for a while, but, Blevins acknowledges, "It was less than an ideal arrangement."

With no building, some members started going elsewhere. Some quit going altogether.

"The church was really dwindling," he said.

So Blevins brought in modular units, but he found reimbursement for those sorts of expenses limited to $10,000. The actual cost of renting the trailers, the freight, hook-up and more came to $60,000, he said.

"They are giving us the limit of the policy," Blevins said, "but for just a few dollars more we could have had $100,000 in coverage.

"I really think we have no complaints with them at all," he said of the insurer. "They have taken care of us. They are taking the most liberal interpretation of the gray area and nuances of the policy in order to give us the maximum allowed in the policy."

Blevins said the church will rebuild, ultimately going from 22,000 square feet to 27,000 square feet.

"We are going to have to do some very serious fund raising. We are going to have to come up with another $400,000 in addition to our insurance," he said. "And in the Carl Junction community, a lot of people have sort of tapped out their resources."

Blevins' story mirrors that of many people. Typically, home and business owners found their insurance companies quick to respond, with adjusters on the scene in a day or two. Most agreed they were underinsured, but they don't blame the companies for that, and most said their insurers worked to pay them all they could.

Feeling their pain

Several Stockton residents were also satisfied with their insurance.

"Our response from the insurance companies was almost immediate," said Bob Hendrickson, who was working on the home where he is rebuilding his frame shop business. Wood shavings and sawdust were everywhere.

Ruth and Ken Noblett, owners of the Squeeze Inn on the Stockton square, lost everything, too. So did a neighbor on the town square, Jerry Snider, whose office was in the same building. Snider was their insurance agent.

In front of the rubble where he began his business 45 years ago, Snider set up an outdoor office out of the trunk of his car, using a lawn chair and a cell phone. Snider's work was later the focus of a short documentary produced for the National Association of Mutual Insurance Companies.

Ruth Noblett said Snider came through for them. An adjuster from Barton Mutual was at what had been the restaurant on Tuesday.

"Within a week, we had a check," she said.

"He did a tremendous job," she said of Snider.

She added, however, that they were not adequately protected. They were told the two-story brick building, "three bricks thick," would take a million dollars to rebuild.

"We had $60,000 on the building. We had $25,000 on the contents. We insured ourselves to cover a fire, not getting blown into the next county," she said.

Stockton homeowners Kelly and Dale Lasley also worked with an adjuster from a local mutual who was on site within a day or so. They estimated that their home had $95,000 in damages, with another $25,000 in damage to the contents.

"We were very happy, and they actually paid for us to rent a trailer to live in," Kelly said.

She said there were a couple of reasons for the good response.

"They were local and I know them, and knowing them makes all the difference. And every insurance adjuster in town lost their business, so they feel my pain."

Tripling benefits

One person who was dissatisfied enough to file a complaint with the Missouri Department of Insurance was Kenneth Goodman, of Stockton. He was unhappy with the initial settlement provided by Columbia (Mo.) Insurance Group.

Goodman's agent, Jerry Snider, notified Columbia of the damage to Goodman's property on May 8. The claim was forwarded to Columbia's storm team. An adjuster arrived and inspected the property on May 13. The estimate was completed, and a check for nearly $3,700 in damages was dated May 14.

But Goodman alleged in his complaint that there was more damage than the adjuster allowed, everything from damage to his deck and siding to damage to a porch swing that was hit by flying debris.

According to Goodman's complaint, the adjuster attributed some of the damage to "normal use."

Goodman also wanted compensation for an oak tree that he said had been hit by lightning, and for raw leather that he used for crafts. The leather was scattered around the property.

Goodman stated in his complaint that he wanted "someone to talk to me, (to) come and see things and work out a just agreement."

In his complaint, Goodman said he was told by an adjuster that he could hire an engineer to assess disputed damages. Goodman wrote to the state agency: "I do not have that kind of money. I'm on a fixed income, a fact I'm sure they know so the claim cost is kept low by default of not being able to fight for what is yours."

After receiving the complaint, which Goodman filed in August, the Missouri Department of Insurance sent a letter to Columbia Insurance, requesting an explanation of the company's position.

On Sept. 4, a representative of Columbia Insurance responded to the state, saying that he had spoken with Goodman and had agreed to send the adjuster back to Goodman's home for further assessment.

The adjuster, on the second visit, found damage not reported in his original inspection, including water damage caused by leaks from rains after May 4.

On the first of October, the company reissued a check for more than $10,000 to cover all damages. This time, Columbia included settlement for the porch swing ($125), an oak tree that had been struck by lightning during the storm ($500) and the leather ($1,000).

The company also apologized for any inconvenience caused by the delay.

The Missouri Department of Insurance closed the complaint file on Goodman in October.

"These were devastating storms that hit quickly," said Jim Cunningham, general counsel for the company. He said Columbia paid more than $14 million for claims from the storm.

"What we do is try to get everybody squared away so they can start repairing the property as soon as possible."

He said adjusters were working nearly 24 hours a day in the aftermath of the storm.

"It's easy, in a catastrophe of that size, to overlook something," Cunningham said.

Referring to Stockton, he said, "It looked like a bomb went off."

He added that, despite the complaint, Columbia made every effort to satisfy its customers, and was recognized by the National Association of Mutual Insurance Companies for its efforts. The company was the subject of three complaints out of 2,878 claims in Missouri.

"We are very proud," Cunningham said. "We are a service business. We care about our policyholders. They are our bread and butter. I think we did a tremendous job."

Rates rising

Most people also indicated that they were not canceled by their insurance companies following the storm. Randy McConnell, spokesman for the Missouri Department of Insurance, said he thinks that's because many companies made an exception for this disaster.

"We entered the storm cleanup phase with some trepidation," he said, because the state had been watching the number of insurance company nonrenewals for claims rise sharply - from 8,600 in 2000 to 22,000 in 2002.

"There was no requirement for companies to continue insuring these folks, but typically that has not been a problem," he said. "Our best reading at this point is that they exempted this storm from their nonrenewal guidelines."

While cancellations were few, rates are rising for some storm victims.

Pierce City residents Lynette and Scott Rector lost both their home and their business, Freda Mae's. Their business insurance, Grinnell Mutual, was quick to respond.

"We had a very positive experience," she said.

Insurance on their home, however, was slow in coming. Their home, a Catholic church that the couple were restoring, was insured by a county mutual. County mutuals are not regulated by the state.

"It took a lot of phone calls to get our total allocation on our building," she said.

Eventually they did get the $50,000 in insurance for the church/home, but Lynette Rector estimates that they were underinsured by about $150,000 for that. Their business insurance was low by about $25,000.

"We were underinsured, but you don't really know that until you go through the disaster," she said.

Since then, they have seen rates rise on their rebuilt business.

"My insurance went up four times, but I have a much larger building," she said. Freda Mae's went from 3,000 to 7,000 square feet.

Some other homeowners and business owners said the same thing. They're paying more, but they rebuilt larger and are insuring a newer, more expensive home. They expected rates to rise. Others are still rebuilding and have yet to see what insurance will ultimately cost.

"We don't know what will happen to rates," McConnell said when asked about trends statewide.

But, he noted, the major companies had passed along an average rate increase of 59 percent in the three years before the storm. How much insurance is rising because of the storm and how much it is rising because of inflation and other factors is impossible to determine.

Franklin neighbors Jayne Cooper and Alice Baldwin both had an unexpected benefit from the tornado. Both women lost their homes, and Cooper spent more than a week in the hospital with injuries. In fact, Cooper's insurance agent gave her a check while she was in the hospital recuperating.

Both women also rebuilt with modular homes and, after the new homes were in place, saw their rates drop. Cooper is with Farmer's Alliance, and Baldwin is with American Family.

Cooper was paying $502 a year to insure a 700-square-foot home that was 60 years old. Now, she has nearly twice that amount of space, but says, "I'm paying $50 less.

"I am very pleased with insurance," she said. "I didn't have a bit of problems with them."


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