A strong hotel program may be akey ingredient in managing your temporary housing costs andservice. First, however, you need to know when a hotel is the rightsolution or a waste of additional living expenses (ALE) spending.Your ALE temporary housing vendor should be able to assist you withall aspects of housing, whether it is a few days in a hotel,emergency needs in the middle of the night, or presenting optionsto decide if a one-month rental is a better idea than a hotel.

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Emergency Use

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There are many instances in which you may need to use a hotelfor your policyholder. Claim professionals handling calls afterhours first need to get the policyholder off the front lawn andsettled into a hotel until the assigned field adjuster can assessthe situation. This is your first opportunity to service yourpolicyholder—and when they are most vulnerable, in a panic, andneed assistance the most.

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Make a great first impression. Don't let the Red Cross help themfor the first two days; put them in the hands of a housing companythat will handle all of their housing needs, from the short-termhotel stay into a long-term home. Some of the frustration frominsurance carriers in using housing providers for this type ofemergency claim is the ability to reach a person immediately andspeak with someone who is able to set up a hotel in the middle ofthe night. All vendors may claim to be available regardless of thetime or day; but does that mean you are dealing with an answeringservice? How long are you waiting for a call back? Or even worse, avoice mail?

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A housing provider must have a seamless process, one where ahousing coordinator answers the phone even at 3 a.m. on Saturdayand then places your policyholder in a cost-effective hotel neartheir home all in a matter of hours. One call to your ALE housingprovider should mean you can go back to sleep or get on with yourjob and not have to think about it again. Next time you have anafter-hours call and need an emergency hotel, try your favorite ALEhousing vendor and see how they do.

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Additionally, a growing issue in this economy is how to pay forthe hotel. Many policyholders have maxed out their credit cards orhave no credit ability at all. Therefore, your ALE vendor needs tobe able to make the reservation, and put it on the company card andbill the carrier later.

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Hotels or Furnished Housing?

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Every adjuster knows that a stay of 30 days or longer in afurnished unit will typically be the most cost-effective solutionfor the carrier. Also, a housing provider should start searchingfor the right unit as soon as a time frame is known, as this isessential in controlling costs and servicing the policyholder. Forlosses requiring less than 30 days, on the other hand, a housingprovider should be able to counsel you to help you decide what isbest for that policyholder from both a cost and a serviceperspective.

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A housing provider should be able to supply an adjuster withquotes for both a 14-day hotel stay and a 30-day furnished unitwhere the unit is less expensive than the hotel. The adjuster willthen have a cushion of 16 additional days if the repairs are notcompleted on time. If the claim extends beyond the date, then theadjuster would not incur additional charges until the 31st day,unlike the hotel.

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Room Service

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So when is a hotel the correct move in terms of customerservice? Sometimes, as an adjuster, you need to listen to theindividual's specific situation and then make the best decision fortheir sake. Every policyholder suffers from traumatic stress afteran event or a loss. One of the ways to help policyholders through adifficult situation is to give them some control and listen totheir story and needs.

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A case in point: A housing coordinator spent 45 minuteslistening to a policyholder tell her story about how vandals hadspent hours tearing her home apart, force feeding and beating herdog, and pulling the feathers out of her bird.

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The family dog was so traumatized that the owner couldn't gonear it, and the canine wouldn't leave the house. What was shegoing to tell the children? Would the dog have to be put down? Theadjuster estimated a 30-day stay. After the conversation with thepolicyholder, our housing coordinator determined that the bestchoice was to give some control back to the policyholder and reduceher stress. The best way to do that was to leave her in the hotel.The adjuster agreed, and the customer satisfaction score for theclaim registered 10 out of 10.

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Minimizing Hotel Costs

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The key to a successful hotel program is not only knowing whento use hotels but also getting the best rate for them. WithInternet pricing and travel sites rampant with last-minute deals,who knows for how much you can get that hotel room! There are manytypes of rates among them:

  • The rack rate is the published rate on the back of the room'sdoor. You should never pay this rate.
  • Most corporate rates, AAA, and AARP are all commissionablerates. This means the hotel will pay a travel agent 10 percent ofthat rate, which is lower than the rack rate.
  • The “best available” rate is the lowest published rate on theday of the stay. In most cases, this is the hotel Internet site'sbest rate. It does not change with the length of stay.

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So how do you determine if youare paying too much for that room? Frankly, anyone who fails tonegotiate with the actual hotel property is leaving money on thetable. The hotel industry is currently in the worst position it hasbeen in years. According to analysts Smith Travel Research (STC),the hotel industry had grown every year from 2003 to 2008. In 2009,however, the indicators were all showing negative trends. In fact,STC does not expect them to recover anytime soon. (More informationabout STC's estimates year-to-date through August 2009 can be foundin the sidebar to the right, “Beyond Lip Service.”)

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Housing providers use several models to fund the expense oftheir hotel programs. If an organization tells you there is “nofee” associated with its rates, then the company is most likely atravel agent or is using a travel agent. That means the company isbooking commissionable rates and receiving 10 percent from thehotel.

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Other housing providers negotiate with the individual propertiesfor the “best” rate. Many hotels are franchisees and make pricingdecisions based on the occupancy at that particular property. Theyhave empty rooms to fill and are willing to deal—even companyproperties do the same. Informing them that an insurance company ispaying the bill and that it could be a lengthy stay, you cannegotiate great rates if you try.

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The key to cost-effective use of hotels for short- or long-termALE needs is in the individual hotel negotiation. Is your housingvendor using commissionable rates, or is it negotiating? When ahotel stay drags on, is the company negotiating at each extension?What kind of hotel volume does your vendor handle? Does it haveleverage with the hotel in question? The more room nights and hotelrelationships the vendor has, the better the attainable rate willbe.

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Assistance to the Adjuster

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As you can see, your housing provider can be a great partner inkeeping your hotel costs down. The provider should also be able tohelp you limit stays prior to long-term placement. In addition, itshould be able to offer other services to the adjuster. There is alot of work attached to hotel stays beyond simply booking thehotel. The housing providers you deal with should be able tonegotiate the rate; ensure incidentals are the responsibility ofthe policyholder; handle all extensions; follow up to get a cleanfolio; check that the charges match the folio; at 30 days, get thetaxes paid returned; and provide you with a clean invoice for thestay.

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Engaging a vendor who understands the insurance industry fromthe carrier and adjuster standpoints—and has the policyholder'sinterests at the forefront of customer service—can be invaluable.The vendor's understanding of how and when to use hotels is key tothe most advantageous and cost-effective housing solutions.

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