| INSURANCE CLAIM |
Disclaimer The information, forms, and techniques herein represent the author's opinions only and is not legal advice. Any and all advise given herein is not legal advise. The information and forms provide general educational information only. If legal or other expert advice is required by the reader, the services of a competent attorney, accountant, insurance agent, or other professional should be sought. The information, forms, etc. come without warranty of any kind, either express or implied, including but not limited to implied warrantes for quality, performance, merchantability, or fitness for any purpose. The author shall not be liable to the user or any other person or entity with respect to any liability, loss, or damage caused or alleged to be caused directly or indirectly by this information, forms, etc.
Copyright © 1992 Michael L. Smith, Revised 1998, 2000 All rights reserved. No part of this publication (except forms) may be reproduced or transmitted in any form or by any means, electronic or mechanical, without permission in writing from the author. The forms may be printed out for private, one time, use only. Any and all commercial use of this site, without prior agreement, is strictly prohibited. All copyright infringements may result in severe penalties.
The settlement process actually begins at the moment you first meet with the adjuster and does not end until the restoration is completed and paid for. However, most of the negotiations will begin after you have submitted your Proof of Loss.
Remember, an insurance adjuster will want to settle the claim immediately if he feels that to do so will be cost effective. Do not accept any settlement offers until you have examined all the damages and evaluated the costs of repairs. It makes negotiating a settlement fair. Be sure you understand the art of negotiating your claim, how appraisal works, and protecting your rights. When you have negotiated a settlement, agree on the method of payment. If any part of the claim was not covered by insureance you may be entitled to a tax deduction.
Negotiating a settlement with an insurance adjuster demands a business like attitude and a good understanding of the claims process. And of course, it takes preparation. To prepare for such negotiations there are three things to remember: know your rights, have thorough documentation, and be able to verify your claim. By being prepared in this way your negotiating skills will be utilized most effectively.
The dynamics of good negotiation are characterized by six interrelated elements; preparation, common sense, objectivity, principle, communication, and compromise.
Preparation is a must! Have all your documentation close at hand in order to substantiate your claim.
Common sense or good sound judgment will always be your best ally. Recognize what is relevant vs. irrelevant, material vs. immaterial, fact vs. fiction.
Be Objective. Objectivity is the concentrated effort to see things clearly and without bias or prejudice. By being objective you can easily identify whether statements are made in good faith. How do you maintain this objectivity? The most effective way is by sticking to the relevant issues of the claim, recognizing how your views are similar or dissimilar to the adjuster's, avoiding the sway of emotion or pressure, not relying on unsubstantiated statements, and verifying statements through qualified sources.
At times it can be very challenging to maintain an objective attitude while negotiating. Your objectivity will be borne out by your open-mindedness toward the issues and your ability to recognize others perspective.
When settling your claim use a principled approach. Be sure that you, the adjuster, and others involved maintain a professional attitude. Be straight forward in your communications and do not become emotionally affected by unreasonable assertions. Do not yield to pressure, intimidation, evasion or unreasonable negotiation procedures.
Effective communication is a product of accessibility, having a positive attitude, and concentration. Accessibility is maintained by first finding out the adjuster's daily routine. Adjuster's work schedules are open. They do not punch a time-clock and are usually available at any reasonable hour.
Speak optimistically as though your every statement is simply a breath away from happening. Show confidence, carry a look of success, and espouse an attitude that the claim will be resolved only through fairness, honesty and reasonableness.
Compromise is not compliance! It is the ability to recognize two differing viewpoints, finding the most reasonable value for each and comparing them. The following example describes how to approach a compromise on the value of personal property, in this case an antique clock.
The antique clock is 102 years old. It is located in an area of the home where it was seldom seen. The adjuster may contend that its usefulness is very little, therefor its value is low. Your view of the antique clock is based on characteristics of the antique clock itself. It is of Swiss origin, was a limited production, is a collectors item, and has been a family heirloom for generations.
Having identified the issues a reasonable value can then be placed on each. Those issues that are irrelevant or remote should be set aside. In this case the adjuster's opinion of the usefulness, and your view of it's sentimental value can be eliminated since they are not relevant to the value.
Since the issues are clear and accountable the value attached to each can easily be determined by simply attaching a reasonable value to each. At this pint you and the adjuster can go over the prices together and calculate the results. You are entitled to have the actual cash value of an antique clock with the same options as the original and the adjuster is assured that their will be no sentimental value considered in the process.
What happens when agreement over the value of property cannot be reached?
Most policies have a provision which sets out a method to resolve such disputes. It is called the Appraisal Clause. It is used to decide those value issues that you and the adjuster cannot resolve between yourselves. It does not resolve any other type of disagreement such as liability, policy interpretation, etc.
It is unlikely that you or the insurer will opt for an appraisal. However, it is useful to you in the event that a disagreement in price is so significant that you would be less than fairly indemnified.
The procedure for appraisal is where you and the insurer each select an impartial individual. These two people are referred to as appraisers. They can be any competent and disinterested person so long as they exercise good judgment and impartiality. For example, a contractor or someone who is familiar with construction would act as a good appraiser since they have knowledge of the costs for materials, labor, licenses, etc. However, a contractor who has submitted a bid to you for restorations would not qualify since they have a financial interest in the outcome of the appraisal. The same holds true for an agent or employee of the insurance company. If you have reason to believe that an appraiser is not qualified, competent or impartial, provide written notice to that affect to the insurer immediately.
Once you have accepted the insurers appraiser and they have accepted yours, the two appraisers will then select one other person. If they cannot agree on someone you or the insurer can ask a local judge to select someone. This third appraiser is called an umpire. He will be used to break any deadlocks between the two appraisers.
You and the insurance adjuster will provide a list of the unresolved items to the appraisers and they will determine a fair price and resolve the dispute.
If you or the insurer request an appraisal timely notices must be made. Firstly, a written notice of intent must be sent by the party initiating the appraisal to the other. Secondly, within 20 days after receipt of this notice each party must provide the other with the identity of their appraiser. Thirdly, providing there is no disagreement regarding the qualifications of either appraiser, the appraisers must select an umpire within 15 days. Once that is done the two appraisers, with the help of the umpire if needed, will resolve the issues and notify you and the insurer of the results.
If it has been more than sixty days since you filed your Proof of Loss and the insurance company has not notified you of any dispute they have with your claim they waive their right to the appraisal process and are obligated to pay the full amount as you indicated in your Proof of Loss.
The costs for the appraisal are shared by both you and the insurer. You pay for your appraiser, the insurer pays for theirs. And the umpire costs are split between you and the insurer. The three are normally paid on an hourly basis plus expenses, and never on a commission basis.
Insurance agents sell insurance by advertising fairness, security and protection. As a claimant you are entitled to certain rights. Among them are the right to have your claim handled in an effective, reasonable, and timely manner. Your insurance company has a duty to properly respond to your claim by having its adjuster assess damages accurately, provide clear information, negotiate fairly, and settle within a reasonable amount of time.
If you are not satisfied with the way your claim is being handled there are several things you can do. The type of response should always be weighed according to the severity of the problem. If the problem arises from an honest oversight on the part of the adjuster it may be resolved with a quick phone call. If the problem becomes one where there is a consistent and deliberate failure to act reasonably, then other measures should be taken. Combined with your documentation your responses may include witnesses, grievance notices to management, unfair claim practices statutes, state insurance departments and their addresses, National Association of Insurance Commissioners, Better Business Bureau, National Insurance Consumer Organization, arbitration/mediation, small claims court, or attorney.
The information you gathered for the Proof of Loss is very valuable during negotiation. Your Statement of Loss, including Photographs, Contents List, Contractor's Bids, and other documentation all taken shortly after the loss verifies the legitimacy of your claim.
The insurance company has the right to request an informal statement or an official sworn statement from you. This administrative procedure is useful to both you and the adjuster. If the adjuster requests that you provide him with an informal statement you can respond in a positive affirmative approach by indicating that your Statement of Loss includes everything you are aware of at the present time. If more information is requested ask the adjuster to write his questions and you will be glad to respond to each.
If a recorded statement under oath is requested by the adjuster do not be intimidated; however, have your attorney present. This statement can and does have legal implications for you as well as for the insurance company.
Witnesses are valuable when used to verify damages, describe details and provide other proof. They can be invaluable whether it is just to provide moral support when the adjuster arrives or to verify issues in your claim. If at all possible, always have someone with you when negotiating a settlement. They do not need to be part of the conversation, their presence is enough.
If you are having difficulties with the adjuster contact the supervisor. In the case of independent adjusters contact the insurance company directly.
Insurance departments are a creation of state legislatures and have the mandate to monitor and control the insurer's actions. They are usually administered by retired insurance executives or executives taking a hiatus from the private sector. The Insurance Department can be very useful to your cause. However, remember that it is a government department that is intimately linked to the insurance industry.
Unfair Claims Practice Statutes
As early as 1973 the National Association of Insurance Commissioners had proposed legislation that defines what is an unfair settlement practice. These statutes were enacted, in part, to protect the claimant from an adjusters unfair tactics. They are referred to as Unfair Claim Settlement Practices Acts. The first statute was enacted in California in 1973 and revised in 1975 to read in part:
Section 790.03(h) KNOWINGLY COMMITTING OR PERFORMING WITH SUCH FREQUENCY AS TO INDICATE A GENERAL BUSINESS PRACTICE ANY OF THE FOLLOWING UNFAIR CLAIMS PRACTICES:
1) Misrepresenting to claimants pertinent facts or insurance policy provisions relating to any coverage at issue.
2) Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies.
3) Failing to adopt and implement reasonable standards for the prompt investigation and processing of claims arising under insurance policies.
4) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss requirements have been completed and submitted by the insured.
5) Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.
6) Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds.
7) Attempting to settle a claim by an insured for less than the amount to which a reasonable man would have believed he was entitled by reference to written or printed advertising material accompanying or made part of an application.
8) Attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of, the insured, his representative, agent or broker.
9) Failing, after payment of a claim, to inform insureds or beneficiaries, upon request by them, of the coverage under which payment has been made.
10) Making known to insureds or claimants a practice of the insurer of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration.
11) Delaying the investigation or payment of claims by requiring an insured, claimant, or the physician of either, to submit a preliminary claim report, and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information.
12) Failing to settle claims promptly, where liability has become apparent, under one portion of the insurance policy coverage in order to influence settlement under other portions of the insurance policy coverage.
13) Failing to provide promptly a reasonable explanation of the basis relied on in the insurance policy, in relation to the facts or applicable law, for the denial of a claim or for the offer of a compromise settlement.
14) Directly advising a claimant not to obtain the services of an attorney.
15) Misleading a claimant as to the applicable statute of limitations.
ARTICLE 8. PROHIBITED PRACTICES, PENALTIES R4-14-801
A. Applicability. This rule applies to all persons and to all insurance policies, insurance contracts and subscription contracts except policies of Worker's Compensation and title insurance. This rule is not exclusive, and other acts not herein specified, may also be deemed to be a violation of A.R.S. 20-461, The Unfair Claims Settlement Practices Act.
B. Definitions
1. Agent means any individual, corporation, association, partnership or other legal entity authorized to represent an insurer with respect to a claim.
2. Claimant means either a first party claimant, a third party claimant, or both and includes such claimant's designated legal representative and includes a member of the claimant's immediate family designated by the claimant.
3. Director means the Director of Insurance of the State of Arizona.
4. First party claimant means an individual, corporation, association, partnership or other legal entity asserting a right to payment under an insurance policy or insurance contract arising out of the occurrence of the contingency of loss covered by such policy or contract.
5. Insurance policy or insurance contract has the meaning of A.R.S. 20-103.
6. Insurer has the meaning of A.R.S. 20-106(C).
7. Investigationmeans all activities of an insurer directly or indirectly related to the determination of liabilities under coverage's afforded by an insurance policy or insurance contract.
8. Notification of claim means any notification, whether in writing or other means, acceptable under the terms of any insurance policy or insurance contract, to an insurer or its agent, by a claimant, which reasonably apprises the insurer of the facts pertinent to a claim.
9. Person has the meaning of A.R.A. 20-105.
10. Third party claimant means any individual, corporation, association, partnership or other legal entity asserting a claim against any individual, corporation, association, partnership or other legal entity insured under an insurance policy or insurance contract of an insurer.
11. Worker's compensation includes, but is not limited to, Longshoremen's and Harbor Worker's Compensation.
C. File and record documentation. The insurer's claim files shall be subject to examination by the Director or by his duly appointed designees. Such files shall contain all notes and work papers pertaining to the claim in such detail that pertinent events and the dates of such events can be reconstructed.
D. Misrepresentation of policy provisions.
1. No insurer shall fail to fully disclose to first party claimants all pertinent benefits, coverage's or other provisions of an insurance policy or insurance contract under which a claim is presented.
2. No agent shall conceal from first party claimants benefits, coverage's or other provisions of any insurance policy or insurance contract when such benefits, coverage's or other provisions are pertinent to a claim.
3. No insurer shall deny a claim on the basis that the claimant has failed to exhibit the damaged property to the insurer, unless the insurer has requested the claimant to exhibit the property and the claimant has refused without a sound basis therefor.
4. No insurer shall, except where there is a time limit specified in the policy, make statements, written or otherwise, requiring a claimant to give written notice of loss or proof of loss within a specified time limit and which seek to relieve the company of its obligations if such a time limit is not complied with unless the failure to comply with such time limit prejudices the insurer's rights.
5. No insurer shall request a first party claimant to sign a release that extends beyond the subject matter that gave rise to the claim payment.
6. No insurer shall issue checks or drafts in partial settlement of a loss or claim under a specific coverage which contains language that releases the insurer or its insured from its total liability.
E. Failure to acknowledge pertinent communications.
1. Every insurer, upon receiving notification of a claim shall, within ten working days, acknowledge the receipt of such notice unless payment is made within such period of time. If an acknowledgment is made by means other than writing, an appropriate notation of such acknowledgment shall be made in the claim file of the insurer and dated. Notification given to an agent of an insurer shall be notification to the insurer.
2. Every insurer, upon receipt of any inquiry from the Department of Insurance respecting a claim shall, within fifteen working days of receipt of such inquiry, furnish the Department with an adequate response to the inquiry.
3. An appropriate reply shall be made within ten working days
on all other pertinent communications from a claimant which reasonably suggest that a response is expected.
4. Every insurer, upon receiving notification of claim, shall promptly provide necessary claim forms, instructions, and reasonable assistance so that first party claimants can comply with the policy conditions and the insurer's reasonable requirements. Compliance with this Paragraph within ten working days of notification of a claim shall constitute compliance with Paragraph (1) of this Subsection.
F. Standards for prompt investigation of claims. Every insurer shall complete investigation of a claim within thirty days after notification of claim, unless such investigation cannot reasonably be completed within such time.
G. Standards for prompt, fair and equitable settlements applicable to all insurers.
1. Notice of acceptance of denial of claim.
a. Within fifteen working days after receipt by the insurer of properly executed proofs of loss, the first party claimant shall be advised of the acceptance or denial of the claim by the insurer. No insurer shall deny a claim on the grounds of a specific policy provision, condition, or exclusion unless reference to such provision, condition or exclusion is included in the denial. The denial must be given to the claimant in writing and the claim file of the insurer shall contain a copy of the denial.
b. If the insurer needs more time to determine whether a first party claim should be accepted or denied, it shall also notify the first party claimant within fifteen working days after receipt of proofs of loss, giving the reasons more time is needed. If the investigation remains incomplete, the insurer shall, forty-five days from the date of the initial notification and every forty-five days thereafter, send to such claimant a letter setting forth the reasons additional time is needed for investigation.
c. Where there is a reasonable basis supported by specific information available for review by the Director for suspecting that the first party claimant has fraudulently caused or contributed to the loss by arson, the insurer is relieved from the requirements of Subparagraphs (a) and (b) above. Provided, however, that the claimant shall be advised of the acceptance or denial of the claim by the insurer within a reasonable time for full investigation after receipt by the insurer of a properly executed proof of loss.
2. If a claim is denied for reasons other than those described in Subparagraph (a) above, and is made by any other means than writing, an appropriate notation shall be made in the claim file of the insurer.
3. Insurers shall not fail to settle first party claims on the basis that responsibility for payment should be assumed by others, except as may otherwise be provided by policy provisions.
4. Insurers shall not continue negotiations for
settlement of a claim directly with a claimant who is neither an attorney nor represented
by an attorney until the claimant's rights may be affected by a statute of limitations or
a policy or contract time limit, without giving the claimant written notice that the time
limit may be expiring and may affect the claimant's right. Such notice shall be given to
first party claimants thirty days and to third party claimants sixty days before the date
on which such time limit may expire.
1. No insurer shall make statements which indicate that the rights of a third party
claimant may be impaired if a form or release is not completed within a given period of
time unless the statement is given for the purpose of notifying the third party claimant
of the provision of a statute of limitations.
AL: 205-269-3550 KY: 502-564-3630 OH: 614-644-2658
AK: 907-465-2515 LA: 504-342-5900 OK: 405-521-0071
AZ: 602-912-8400 MA: 617-727-3357 OR: 503-378-4271
AR: 501-686-2900 MD: 410-333-6200 PA: 717-787-5173
CA: 916-445-5544 ME: 207-582-8707 PR: 809-722-8686
CO: 303-894-7499 MI: 517-373-9273 RI: 401-277-2223
CT: 203-297-3800 MN: 612-296-6848 SC: 803-737-6160
DE: 302-739-4251 MS: 601-359-3569 SD: 605-773-3563
DC: 202-727-8002 MO: 314-751-2640 TN: 615-741-2241
FL: 904-922-3100 MT: 406-444-2040 TX: 512-463-6464
GA: 404-656-2056 NE: 402-471-2201 UT: 801-538-3800
GU: 671-477-5144 NV: 702-687-4270 VT: 802-828-3301
HI: 808-586-2790 NH: 603-271-2261 VI: 809-774-2991
IA: 515-281-5705 NJ: 609-292-5363 VA: 804-371-9741
ID: 208-334-2250 NM: 505-827-4500 WA: 206-753-7301
IL: 217-782-4515 NY: 212-602-0203 WV: 304-558-3394
IN: 317-232-2385 NC: 919-733-7349 WI: 608-266-0102
KS: 913-296-7801 ND:
701-224-2440 WY: 307-777-7401
Alberta 403/422-1592
British Columbia 604/660-2947
Manitoba 204/945-2542
New Brunswick 506/453-2540
Newfoundland 709/576-2594
Northwest Territories 403/920-8055
Nova Scotia 902/424-4690
Ontario 416/250-6750
Prince Edward Island 902/368-4564
Quebec 418/643-5783
Saskatchewan 306/787-7881
Yukon 403/667-5257
Contact the National Association of Insurance Commissioners and request a copy of the Unfair Claims Settlement Practices Model Regulation. This document has information that state insurance departments use in regulating the practices of insurance adjusters and carriers. Call or write to:
National Assn. of Insurance Commissioners
12 Wyandotte Plaza
120 W. 12th St., Suite 1100
Kansas City, Mo. 64105 (816) 842-3600
Better Business Bureaus are designed to provide information about a company's status in commerce. In order to have a consumer complaint record created by the B.B.B. it requires three independent complaints be made about the company within a certain period of time. Once it has received three complaints it will create a file on the company and provide the public with the history of complaints it has received.
The Better Business Bureau is not in the business of identifying complaints only. Indeed, its primary function is to enhance the reputation of businesses. Therefore, if they have no adverse information on a particular company it in no way implies that the company is reputable. It only indicates that it is not keeping a record of complaints at the present time.
In order to file a complaint and have it on record with the B.B.B. the complaint must be in writing. The address of your local Better Business Bureau can easily be found in the telephone book or by contacting the local Chamber of Commerce.
The National Insurance Consumer Organization (N.I.C.O.) maintains a repository file on homeowner's insurance claims. It is used to provide documentation for promoting fair legislation and oversight of the insurance industry.
N.I.C.O.
121 N. Payne St.
Alexandria, VA 22314
Arbitration is an effective and time saving-procedure for resolving disputes with an insurance company. Most homeowner policies have an arbitration clause within the policy. Before deciding on the use of arbitration, look into how it can best suit your particular interests.
Listed below are several very informative brochures available through the American Arbitration Association. They are free and can be obtained by writing or calling:
American Arbitration Association
Publications Department
140 West 51st Street
New York, NY 10020-1203
Tel: (212) 484-4011
Fax: (212) 765-4874
Ask for:
1. Resolving Your Dispute - A short introduction to the AAA and alternative dispute resolution
2. Dispute Resolution Procedures for Insurance Claims
3. Dispute Resolution Program for Insurance Claims: A Procedural Guide
4. The Uniform Arbitration Act
Many communities have volunteer mediation services that provide an opportunity for people to meet and resolve their problems with the assistance of a community mediator. Normally the service is free and administered by trained mediators. Since mediation is non-binding it should be used with special care. If you feel that the adjuster would respond in good faith to a mediation it can be worthwhile. However, if you have suspicions that he might enter into mediation solely for the purpose of information gathering then provide information that relates only to the amount you expect from your claim. Do not disclose any information relating to your other tactics.
If you have a claim for less than $1,500 (depending on the state) small claims court may be a viable alternative. Most small claims courts are relatively simple and not intimidating to the layman. However they are not fast. After filing a simple complaint with the court it will take a little more than a month to get a court date.
You may want to have an attorney write a letter to the insurance company explaining your intentions. The letter itself may be enough to persuade the insurer to settle the claim before legal action is taken.
However, if the problem is so significant that the only means of reaching a fair settlement is through legal counsel, find yourself a good insurance lawyer. Local bar associations can help by referring lawyers who have the expertise and good track records in insurance litigation. For the Local Bar Association in your area contact:
The American Bar Assn. (315) 895-7801
A competent attorney will force the insurer to comply with laws that protect the insurance claimant. Courts and legislatures have established many such laws. For example, an insurer must provide you with a written explanation when they deny a claim, they cannot void your claim because you failed to file insurance forms on time or failed to properly complete them. Also if language in your policy is ambiguous to the point that it has two different meanings your interpretation will prevail.
Further, there are laws to protect against an insurers acts of bad faith. Bad faith occurs when an insurance company or its representatives fraudulently withhold contractual obligations by intentionally and maliciously deceiving their insured. As insurance companies know all to well, court awards for such wrongful acts can be very high indeed. In some cases court awards have reached well into the millions for compensatory relief and punitive damages.
Attorneys charge $85.00 to $250.00 per hour. However, with insurance claims most will accept payment on a contingency-fee basis. The contingency fee is usually 20% to 25% for out-of-court settlement and 30% to 35% if it goes to trial.
This final stage of settlement is the last procedural action (albeit the most important). Most insurance claims less than $1,000 can be handled by your insurance agent. All other payments will be handled through the claims department of your insurance company. If an independent adjuster is used the payments will usually pass through his office first and then on to you.
The deductible will be subtracted from the settlement amount. Be sure that it is the same amount as stated in your policy.
The insurance draft may have up to four signatories named; the insured, the insured' spouse, a mortgage holder, and possibly a general contractor.
If your mortgage company is named on the draft they may decide to protect their interests if the damages involved are substantial. If so, they may want to set up a joint bank account with you. The payments for restoration work would then be dispersed according to the completion of certain stages of work. You will want to determine as soon as possible if this procedure will be used. It may appear to be inconvenient but it can be another protection if incorporated into your restoration agreement with the Contractor.
If payment is not available at the time of settlement make an appointment to pick up the draft. This eliminates any chance of having it misplaced, forgotten or lost in the mail. Remember, an insurance draft that is lost or misplaced must be canceled before a new one is released.
If your loss is greater than the amount of the settlement you may be able to use the difference as a federal tax deduction. There are a number of requirements however.
1. You must file the 1040 form and itemize your deductions on Schedule A. You cannot claim the deduction if you file forms 1040A or 1040EZ.
2. Generally, you may deduct losses only in the tax year in which the loss occurred. If you have not received an insurance settlement before you file for taxes you can subtract the expected settlement amount from the deduction.
3. You can deduct only the actual cash value of the loss. Replacement costs are not tax deductible.
4. As with the insurance claim, it is important to have records that will prove your deduction.
Calculating your tax deduction:
1) You must reduce your loss by any reimbursement (insurance settlement) you receive or expect to receive. In other words, you may not deduct that part of the loss which is covered by insurance.
2) You must reduce your loss by $100. If you had more than one loss during the tax year, you must reduce each loss by $100.
3) You must further reduce your loss by 10% of your adjusted gross income (line 32 of Form 1040). If you had more than one loss, this 10% limit applies to the total of all your losses.
You can obtain the necessary tax forms by contacting the IRS at (800) 424-FORM (3676), or visiting your local public library. Ask for the following IRS forms:
#547(Nonbusiness Disasters, Casualties, and Thefts)
#584(Nonbusiness Disaster Casualty, and Theft Loss Workbook)
#4684(Casualties and Thefts)
Publication 551(Basis of Assets)
Form 525 (Taxable and Nontaxable Income)
Publication 549(Condemnations and Business Casualties and Thefts)
Disclaimer The information, forms, and techniques herein represent the author's opinions only and is not legal advice. Any and all advise given herein is not legal advise. The information and forms provide general educational information only. If legal or other expert advice is required by the reader, the services of a competent attorney, accountant, insurance agent, or other professional should be sought. The information, forms, etc. come without warranty of any kind, either express or implied, including but not limited to implied warrantes for quality, performance, merchantability, or fitness for any purpose. The author shall not be liable to the user or any other person or entity with respect to any liability, loss, or damage caused or alleged to be caused directly or indirectly by this information, forms, etc.
Copyright © 1992 Michael L. Smith, Revised 1998, 2000 All rights reserved. No part of this publication (except forms) may be reproduced or transmitted in any form or by any means, electronic or mechanical, without permission in writing from the author. The forms may be printed out for private, one time, use only. Any and all commercial use of this site, without prior agreement, is strictly prohibited. All copyright infringements may result in severe penalties.
