Monthly Archives: April 2021

Are the Engineer Reports Purchased By Insurance Companies to Deny Claims Accurate and Truthful?

April 29, 2021 By in Home Owner Insurance Issues, Home Repairs Tags: , , , , , , 4 Comments

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     In search of an expert to provide them with a reason to deny a claim, many insurance companies will turn to the engineering profession. 

     There are highly respected and valued professional licensed engineers who design and build bridges and skyscrapers, who safely and efficiently channel waterways through and around large cities, who design and test the durability of aircraft and automobiles, who meet and overcome construction and building challenges around the globe – and then there are those who market themselves to insurance carriers for the purpose of providing written reports for them to use to deny insurance claims for wind and hail damage to homes and businesses.  There is money in it.  Insurance companies will pay them upwards of $2,500.00 per report.  Most of these reports provide little more than boilerplate narratives regarding simple roofing materials and most of them contain little or no scientific or engineering data – but aside from their apparent lack of relevance, how accurate is the information that is provided?

     As a public adjuster representing business and homeowner policyholders with their insurance claims, I read many of these reports and too often find errors, misrepresentations, and ambiguities salted among information intended to present a “scientific” spin on what are usually simple, routine observations that virtually anyone can make.

     Much of what you will find in these reports, sometimes as much as two-thirds or more of the entire report, is a boilerplate filler of generic information that could be (but not always) relevant to their observations.  It looks impressive at first glance, just as it is intended to, but is it even correct?  Not always.

     An engineer in several of his recent reports used by various insurance companies to deny claims includes the following language:  “According to the National Roofing Contractors Association (NRCA), the lifespan of a roof is 20 years.”  His report was peer-reviewed and stamped by another engineer with his firm – an engineering firm widely used by insurance carriers throughout the country. This claim by the engineer caught my attention because he was writing about a certain type of roofing material that carried a 30-year warranty and, as most people familiar with roofing materials know, various roofing materials have various lifespans – some as high as over 50 years.  

     I did not believe that the National Roofing Contractor’s Association would be so uninformed as to publish what he claimed they did, so I wrote to them and inquired as to where I could find the information from them that this engineer was quoting in his report used to support a denial of a cliam.  The Vice President of Technical Services for the NRCA responded to me, as follows:  “The 20-year figure is not from the NRCA.  Lifespans vary greatly.”  Thus, the engineer was not only wrong in his peer-reviewed statement of fact regarding the lifespan of a roof, but he also misrepresented the source for his errant facts.  

     Some engineers will provide comments and conclusions about the density or speed of hailstones as being less than required to damage roofing material and provide absolutely no information as to how they were able to measure the density or speed of the hailstone that melted away months or years before their observation.  We are to simply take their word for it, like the quotations from the NRCA, perhaps.

     The engineer paid by the insurance company might use ambiguous language that appears to say something but doesn’t.  For instance, did the engineer say that large hailstones did not strike your roof, or did he simply say that he did not observe evidence of large hail strikes?  There is a difference.  Could there be evidence that he did not “see”, such as bruised indentations on weathered asphalt composite material that is soft to the touch?  Did he say this, or did he leave it to the insurance company to use in the manner of their own choosing?

     Insurance carriers, being corporations who have a fiduciary duty to protect the financial interests of their shareholders as well as a contractual duty to fulfill their promises to their policyholders, will often find this conflict of interest resulting in their wrongful actions of grossly underpaying or wrongfully denying their policyholders’ claims.   The misuse of engineer reports is one of the ways they do this.

     Often, insurance companies will knowingly allow the engineer’s errant attempts to interject policy interpretations into his report to be used to deny a policyholder’s claim.  I have personally reversed an attempt by an insurer to deny an insurance claim because the engineer reported that the damage to the roof “could not be seen from the ground” when there was nothing in the policy to exclude damage for that reason, as one of many examples.  

     An expert witness in court must present his credentials, provide his testimony under oath, and be subjected to cross-examination, but insurance companies present biased hired guns as experts in the claims process and deprive vulnerable policyholders of necessary funds to restore their homes and businesses, with impunity.

     The advice to not believe everything you read should be extended to engineer reports paid for by your insurance company to deny your insurance claim.  Have them closely reviewed by your own expert for accuracy, relevancy, and truth before accepting that your claim should be denied as a result of an engineer’s report.  Whatever you do, do NOT let the insurance company’s engineer be the final word on the validity of your claim.

Missouri Homeowners/Business Insurance and the Roof

April 29, 2021 By in General Home Issues, Home Owner Insurance Issues, Home Repairs Tags: , , , , , , Leave a comment

 

     There are two kinds of roofs on Missouri homes and business structures.  There are those that have storm damage and those that will have storm damage.  Understandably, the various insurance companies from all over the country that sell policies in our state will offer a wide variety of coverage options that are not always fully understood by the property owners before disaster strikes.  

     Learning after the roof has been damaged that you have been saving pennies per year by NOT including coverage to match replacement shingles or siding, or learning that hail dents that destroy the appearance of your metal roof is not considered “damage” by your insurance company, can result in costly out of pocket expenses that you thought were covered by insurance.  

     The Missouri Department of Insurance has created an informational and interactive website that helps you to understand your roofing coverage for each insurance carrier.  While I recommend that you visit their site, I urge you to take the time to read and understand your insurance policy, as well.  Have your agent clearly explain to you, when necessary, what it does and does not provide and ask lots of questions.

     Considering that when an insurance company’s claims department is on its absolute best behavior, its job is the same as any corporation that is run by a board of directors.  That job is to put the monetary interests of their shareholders (not their policyholders) at the top of their priority list.  Their duty to you, as a policyholder, is not fiduciary (as it is with their shareholders) but contractual.  Thus, even when you are dealing with a fair and reasonable adjuster, you need to know what your contract with them says.  That contract is your insurance policy.

     Your insurance company is prepared and well-practiced to fight and defend their rights under that contract.  How prepared are you?  Don’t let the first large claim be the first time you read it.  Caveat emptor.

If My Neighbor Has Hail Damage, Should I Also File an Insurance Claim?

April 28, 2021 By in Property Insurance 1 Comment

 

     This argument on its face seems logical.  A severe storm has recently passed through your neighborhood and your surrounding neighbors have filed claims for roof damage and received settlements from their carriers.  You must have roof damage too, right?  Perhaps, and perhaps not.  Many policyholders make this mistake of assuming damage and relying upon their insurance company to find it.

     Let’s look at hail damage, for example.  Most roofing materials are specifically designed to withstand hail strikes to certain degrees, but much depends upon the type of roofing material that is on the roof, its age and condition before the storm, the angle of the hail strike, the number of layers of roofing materials (particularly shingles), the proximity of trees and other structures taller than the building, and other variables.  Since not all these factors are typically identical with every home in a neighborhood, not all homes will be damaged, equally damaged, or damaged in the same manner.

     While it is not certain that you have incurred an insurable loss, when storm damage is present in the buildings around you it is prudent to have your roof inspected by a professional contractor in your area.  Storms invite “traveling contractors” from “various parts unknown” who drive through neighborhoods alerting homeowners of damage but avoid them and find a contractor who is known and trusted and ask him to evaluate your home for damage – and don’t limit the inspection to the roof.  Hail will damage siding, gutters, downspouts, decks, porches, and windows as well.  When you have established that YOU … and not your neighbors … have damage to your home that will exceed your deductible, then it is time to call your insurance company and file a claim.

     It is important to know that you, as a policyholder, have the burden of proving to your insurance company that you have incurred an insurable loss.  Reporting to them that you have a loss simply because your neighbors do will fall significantly short of that burden. 

     Ask your contractor to provide you with photographs of the damage and ask him to be present with you when you (not the contractor) present your loss to the adjuster. Do not let the contractor speak on your behalf or represent your claim to the insurance company.  In Missouri, he is not allowed to by law, and insurance companies have no duty to inform him of your coverage fully or accurately since he is not a party to the contract that you have with them.  He’s easy for them to push around which is why, despite the law, adjusters will sometimes pretend to negotiate with them. But he is your expert in presenting the damage he found and answering questions about it.  Having him there can be a plus.

     Prove your loss to yourself, first.  Then file your claim and prove it to your insurance company … in that order.

     

 

Shareholders or Policyholders? Who matters most?

April 28, 2021 By in General Home Issues, Health and Safety, Home Owner Insurance Issues, Property Insurance Tags: , , , , , , 4 Comments

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Shareholders or policyholders.  Who matters most?  Take this quiz:

The Board of Directors of my insurance company has a lawful duty to protect:

a. the financial interests of the policyholders.

b. the financial interest of the stockholders.

c. both of the above.

d. none of the above.

The answer is (b).  The Board of Directors of an insurance company’s first (or fiduciary) duty is to the shareholders that elected them. 

This means that the financial interests of the shareholders come before those of the insured policyholder when that corporation is an insurance provider.  Profits come to a business from paying out less than what they take in.  Shareholders demand this in return for their investment.  Insurance companies comply.   Know this as you shop. 

The National Law Review has published a list of the “eleven worst insurance companies” and I encourage you to read it.  Before you take too much comfort in finding that your home insurance provider did not make the list, you should consider that many that made the list are providers of health insurance.  The factors that were used for the home and business insurers that made the list, however, are not unique to them but are commonly shared among smaller companies that would have at least made “dishonorable mention” if the list did not include other types of insurers.

What this list should teach those of us who buy insurance is the need for us to carefully select an insurance provider based on something other than cute or funny television commercials.  Sweet talking lizards that collect your insurance premium can quickly become vicious and vexatious crocodiles defending the company against your valid claim.  If you can learn this before you become vulnerable because of catastrophic loss, the better off you will be.     

The Missouri Department of Insurance publishes a complaint index to help Missouri consumers determine how likely they may find displeasure with an insurance company’s claim handling process.  Considering how few unsatisfied policyholders will go through the red tape to file a complaint with the State government, when an insurance company exceeds the normal rate of complaints under such circumstances – it really says something.

Caveat emptor.

“No hail damage” Concluded Before the Roof Inspection?

April 21, 2021 By in Home Owner Insurance Issues, Property Insurance Tags: , , 2 Comments

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The engineer’s report I read today concluded, as follows:  “There was no functional damage due to hail observed on any of the roofs on the buildings at the subject property.  If hail occurred at the subject property, it did not have sufficient size, density, or speed to cause functional damage to the roof covering.”

My first reading of this conclusion sent up a red flag as I read “If hail occurred at the subject property …” since the report contained weather data showing that hail greater than 1.25″ had fallen at the site of the fifteen-year-old shingled roof on the date of loss and observations of hail dents were reported on all metals on and surrounding the roof.  How could “if hail occurred” even be a factor in a conclusion about the damage clearly reported to be caused by it, I wondered.  Then I began to look deeper.

My second reading of the report was an intense search for any mention of the engineer’s measurement or calculation of the density of the hailstones that he knew to have struck the roof or a determination of the distance or angle of their descent.  There was none.  Without that, how could the engineer, who had now come to question “if” hail had struck the roofing materials, conclude that the hail was known to have lacked the density or speed to cause damage?

I checked my files and found three other reports written by the same engineer from other claims I had represented.  Like this one, all of them were written at the request of an insurance company and all of them concluded the same absence of “observed” damage to the roof.  Oddly, however, each of the four reports stated the exact same conclusion in the exact same words – verbatim.

2017 – “There was no functional damage due to hail observed on any of the roofs on the buildings at the subject property.  If hail occurred at the subject property, it did not have sufficient size, density, or speed to cause functional damage to the roof covering.”

2020 – “There was no functional damage due to hail observed on any of the roofs on the buildings at the subject property.  If hail occurred at the subject property, it did not have sufficient size, density, or speed to cause functional damage to the roof covering.”

2021 – “There was no functional damage due to hail observed on any of the roofs on the buildings at the subject property.  If hail occurred at the subject property, it did not have sufficient size, density, or speed to cause functional damage to the roof covering.”

2021 – “There was no functional damage due to hail observed on any of the roofs on the buildings at the subject property.  If hail occurred at the subject property, it did not have sufficient size, density, or speed to cause functional damage to the roof covering.”

Not one of these narratives was supported with information as to how or if the density and speed of the hailstones were measured by the engineer to conclude their insufficiency to cause damage.  Nor did they report the direction of the storm, the angle at which the hailstones struck the roofing materials, the speed or direction of the wind at the time of the storm, or other relevant data required for scientific analysis of hail damage.  In other words, if one were to remove the boilerplate language apparently common to all of his reports, nothing appeared in the narrative that required an engineer to cite.  The same ambiguous and noncommital descriptions could have been just as easily written by a shingle salesman with poor marketing skills.

Last, but certainly not least, please pay special attention as to how this carefully worded boilerplate conclusion did not say there was no damage to the roof caused by hail.  Instead, the engineer simply stated that based only on his powers of observation, he didn’t see it.   

Could it be that these conclusions, like the language used to communicate them, had been predetermined prior to the inspection?

Copyright 2021, James H. Bushart, Licensed Adjuster LLC

 

 

This Blog/Web Site is made available by James H. Bushart, Public Adjuster LLC for educational purposes only as well as to give you general information and a general understanding of the work of a public adjuster, not to provide specific legal advice. The authors and/or site manager make no representations as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. By using this blog site you understand that there is no public adjuster/client relationship between you and James H. Bushart, Public Adjuster LLC.  The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

Why Missouri Contractors Cannot Negotiate Your Insurance Claim.

April 18, 2021 By in Home Owner Insurance Issues, Home Repairs, Property Insurance Tags: , , , , , , , , , 1 Comment

Missouri contractors cannot negotiate your insurance claim on your behalf with your insurance company.  On August 28, 2011, the Governor of Missouri signed into law Senate Bill 101 which prohibits home exterior contractors from representing a policyholder or negotiating on their behalf with their insurance company for exterior work on their home as a part of an insurance claim.

Here is a link to the law:   It is very clear.  

So why do insurance companies continue to negotiate with residential contractors in spite of this law?  Perhaps it is because, when they do, they can get away with underpaying your claim.

An insurance adjuster can say things to your contractor that he cannot say to you, your Missouri attorney or your Missouri licensed public adjuster because, unlike you (and those who lawfully represent you), the contractor is not a party to the agreement (the policy) between you and the insurance company. 

Insurance adjusters will often withhold certain information from the contractor, misrepresent or not fully disclose your coverage to the contractor, and say things to your contractor such as “We are not paying that much for that building material … Your estimate is too high for labor and you need to revise that … We are not going to pay more than such and such dollars for this claim … We won’t pay your overhead and profit” … and so forth because they are not communicating with you or anyone lawfully representing you.

It would be an act of bad faith, and perhaps a vexatious act carrying severe penalties, for the adjuster to say such things to you or to your lawful representative.  Why?  Because certain communications and actions between insurance companies, their policyholders, and their lawful representatives are regulated by the Missouri Department of Insurance. Such regulations, however, do not necessarily extend to their relationships with contractors and other vendors.  In their opinion, your contractor is representing his own interests and not yours. 

For example, when an insurance adjuster makes a statement of fact regarding your coverage to you or your lawful representative, he must respond with supporting language from your policy upon demand.  Not so, however, when the same demand is made by your contractor.  Since the contractor is not a party to the agreement or lawfully representing anyone who is, he is not entitled to know all of the important information the policy contains.  Withholding this information about your specific coverage from your contractor puts him in the dark and the insurance company’s adjuster in complete control. 

Some contractors mistakenly believe that since they have worked with certain insurance companies or adjusters in the past, all policyholders with that company have the same or similar coverage – which is not true.  Three or four neighbors living side by side on the same street can be insured by the same insurance carrier and have different policies with different coverage. Some contractors quote what they believe to be “state law” as to what an insurance company must pay for which is also not true.  In Missouri, state laws do not govern or control all of the information contained in an insurance policy, and policy interpretation disputes are settled in civil court and are generally not legislated.

I hold skilled and experienced exterior contractors in very high regard. They are important advisors for you and/or your lawful representatives in settling a claim.  Their skillful and experienced input in determining the full scope of the damage and what they charge for restoration of that damage is helpful, often vital, in settling your claim.  It is when they extend beyond their valuable construction skills and expertise and go beyond the “low hanging fruit” that the adjuster would pay anyway and (as some contractors advertise) “push” the adjuster toward a larger settlement, complete documentation, communicate with the carrier on your behalf and settle your claim, those and similar actions may not be in accord with the law and their results may not produce all of the money that you are entitled to.

Most damaging is the harm some do to your claim before you finally bring in qualified and lawful representatives, such as your attorney or licensed public adjuster, to assist you.  While their lack of ability to correctly interpret your coverage or communicate your rights under the policy may have limited their ability to help you fully resolve your claim, what they communicated to the insurance company (correctly or incorrectly) can interfere with a fair resolution and must be identified and resolved before progress can be made.

I work with many exterior contractors and help them operate within the boundaries that are set forth in Senate Bill 101, allowing them to focus upon their areas of skill and expertise to fully serve their customers’ construction needs.  Their customers are able to recover from their insurers what they require to restore their home to its pre-damaged condition and the contractor makes what he bids for the work that is required.  When it is done correctly, all parties are served in a win-win position.  When it is done improperly, however, some or all come out on the losing end.

Not all claims require an attorney or a public adjuster to handle them.  In fact, most can be handled directly by the policyholder with no representation at all, if they understand their rights under their contract with the insurance company and have a skilled contractor they trust to correctly inform them of their damage and what must be done to restore their property to its pre-loss condition.

No one but you, your Missouri attorney, or your Missouri licensed public adjuster should be communicating with your insurance company on your behalf, and remember that a “no” from the insurance adjuster to your exterior contractor is not the final word on your claim for damage.

 

 

 

This Blog/Web Site is made available by James H. Bushart, Public Adjuster LLC for educational purposes only as well as to give you general information and a general understanding of the work of a public adjuster, not to provide specific legal advice. The authors and/or site manager make no representations as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. By using this blog site you understand that there is no public adjuster/client relationship between you and James H. Bushart, Public Adjuster.  The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state, nor should it be used as a substitute for competent maintenance or repair advice from a qualified contractor licensed to perform work in your state.

The Need for a Personal Contents Inventory

April 18, 2021 By in Property Insurance Tags: , , , , ,

Sifting through the ashes to write an inventory of personal contents to provide to your insurance company can be stressful.

 

The most cumbersome task required of a homeowner by their insurance company when filing a claim after a catastrophic fire or tornado loss is the preparation of a personal contents inventory. 

Test yourself right now.  Close your eyes and make a mental list of everything in the room you are in … then open your eyes and marvel at all you failed to include in your list. Think of doing this for every item in your home after a fire, tornado, or other tragic events then add to this overwhelming task your insurance carrier’s request that you also add to each item on your list the date you purchased it, its manufacturer, price, and more.

It’s hard.  It’s expensive to be wrong.  It seems unfair.  It will make you angry to be required to perform this task and it will upset you to be forced to revisit your loss and relive this tragedy each time you return to the task.  I’ve seen many of my clients experience this anguish repeatedly.

There is something you can do TODAY, however, that will help you to minimize this daunting effort should you ever be faced with such loss.  That something is to create and maintain your inventory right NOW.  Remembering all of your items can make the difference of thousands of dollars in your insurance claim.  Imagine being paid a thousand dollars per minute to file your claim.

The Missouri Department of Insurance provides a handy booklet you can download to get started, but I recommend that any written list of your belongings you create be supplemented with a gallery of photographs and videos.  When photographing your items for your inventory, including photographs of the data plates that record the serial numbers, manufacturer, and manufacturing date.  A digital recording of a slow span of a room, a drawer, a box of mementos, tools, and cupboards will assist you and your insurance company, as well.  There is also a phone app. 

It is important to keep your inventory and video/photographic record of your belongings in a safe place other than in your home where they could be destroyed along with the recorded belongings.  Keep it up to date when items are added or removed from the home … and may you never, ever have to use it.

For more information, contact James H. Bushart, Missouri Licensed Public Adjuster.

 

 

This Blog/Web Site is made available by James H. Bushart, Public Adjuster LLC for educational purposes only as well as to give you general information and a general understanding of the work of a public adjuster, not to provide specific legal advice. The authors and/or site manager make no representations as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. By using this blog site you understand that there is no public adjuster/client relationship between you and James H. Bushart, Public Adjuster.  The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state, nor should it be used as a substitute for competent maintenance or repair advice from a qualified contractor licensed to perform work in your state.

Engineer Speak – “Functional” v. “Cosmetic” Damage

April 18, 2021 By in Home Owner Insurance Issues, Home Repairs, Property Insurance Tags: , , , , , ,

 

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Here is a story about how an engineer might record the functional damage versus cosmetic damage in a fictional situation, first.

Once there was a maintenance man who worked in a famous art museum and was directed by his supervisor to touch up the white paint on the wall of a certain gallery within the museum.  As he was ascending his ladder he accidentally tipped over his gallon of white paint and it splashed across the surface of a 550-year-old painting from a world famous artist that hung in the gallery.

Of course, the painting was insured and the curator immediately filed a claim.  The insurance adjuster took a few photos and shared them with his boss who said “We need to send out an engineer.“

The engineer arrived to examine the painting and noted that the framed canvas was designed and intended to hold paint of various colors.  Since the canvas and frame were still intact and obviously able to retain paint, he recorded that the painting was still “functional”.  The painted surface had white paint splashed across the smiling face of a woman named “Lisa” or something, but he reported the damage was only “cosmetic” in that it did not interfere with the “function” of the canvas to hold paint.  It was, after all, paint on a painting … and the gallery was filled with various paintings with random splashes and colors.  He concluded that there was no “functional” damage and the insurance company denied the claim.

This story is fictional, of course … but the actions described are quite common.

Let’s look at the shingles on your roof, for example.  The manufacturer of your shingles produces them in a wide variety of colors, shapes, and styles.  When you selected them (or selected a house that already had them), you noted their color and design in context with the features of the rest of the structure, didn’t you?  Of course, their designed purpose is to protect the roof from wear and water intrusion but they also were carefully and creatively designed to enhance the beauty of the home.

When a sudden Missouri storm erupts and pounds them with hail, along with the metal appurtenances, gutters, downspouts, and other surrounding materials, they will often be damaged.  When they are damaged, you might contact your insurance carrier to file a claim for direct physical damage or loss to your roofing materials.  The insurance adjuster will arrive, take a few photographs, and return to speak to his boss.  When the boss does not want to pay you for your damage, he might send an engineer.

The engineer will often look at your shingles and the surrounding metals for holes.  Finding none, he declares that the shingles and metals are still shedding water as they were designed to do, and the damage to them is not “functional” but merely “cosmetic”.  Based on this report, the manager may deny the claim, depending upon the language in your policy.

Denying the claim because of an engineer’s definitions of “functional” or “Cosmetic” damage rather than the insurance policy’s definitions of damage can be improper.  Try as some might, engineers neither write nor interpret Missouri insurance policies and, when they attempt to do so, they are often incorrect. Some insurance companies have been successfully sued for such actions when it happens, as in the case of North-Shore Co-Owner’s Association versus Nationwide Mutual Insurance Company.

When you believe that your insurance carrier is trying harder to deny your claim than pay your claim, you may be the victim of improper claim handling, bad faith, or vexatious actions on the part of your carrier.  When this happens, seek the advice of your Missouri attorney or a Missouri licensed public adjuster. 

 

 

This Blog/Web Site is made available by James H. Bushart, Public Adjuster LLC for educational purposes only as well as to give you general information and a general understanding of the work of a public adjuster, not to provide specific legal advice. The authors and/or site manager make no representations as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. By using this blog site you understand that there is no public adjuster/client relationship between you and James H. Bushart, Public Adjuster LLC.  The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state, nor should it be used as a substitute for competent maintenance or repair advice from a qualified contractor licensed to perform work in your state.

Were You Sold a Homeowner Policy with “Functional Replacement Cost” Coverage?

April 18, 2021 By in Property Insurance

 

To save dollars and reduce insurance premiums in a competitive insurance market, some Missouri homeowners are offered insurance policies that provide them with “functional replacement cost”.  What does this mean?

If your policy pays you for damage based upon “actual cash value” or “ACV”, you will be paid for the cost to replace the damaged item after subtraction for depreciation.  Depreciation is commonly determined by age and/or condition.  In the end, you will be paid some, and not all, of the total cost to replace the damaged item.

If your policy pays you for damage based upon “replacement cost value” or “RCV”, you will be paid for the cost to replace the damaged item.  The money is typically paid in two payments: the first payment is the actual cash value (see above) and the balance paid after the item has been replaced or restoration work has been completed.  In the end, you should be paid all of what it cost to restore you to where you were before the covered damage occurred.

If your policy pays you for damage based upon “functional replacement cost”, you are not entitled to be restored to where you were before the covered loss.  Instead, the insurance company will decide what to replace the damaged item(s) with.  For example, if you have an expensive slate or tile roof that is severely damaged by a storm and requires replacement, instead of replacing the slate roof with a material of like kind and quality, the insurance company has the option of paying to replace the expensive slate or tile with less expensive but “functional” shingles.  If it is necessary for you to have slate or tile to maintain the style and quality of the home’s appearance, it will be out of your own pocket that the difference in cost will be paid.  This type of settlement is rarely satisfactory to the homeowner but failure to carefully read the policy when shopping for the lowest possible premium could result in long-term regret.

Talk to your agent and know what you are buying.  If you are learning about this type of coverage for the first time as you read this post, talk to your agent and know what you bought … BEFORE you incur damage that can permanently change the value of your home.  You may find that a policy with more complete coverage is still available for a comparatively negligible difference in cost.  That option will not be available to you the day after the storm or fire.

Caveat emptor.

 

 

This Blog/Web Site is made available by James H. Bushart, Public Adjuster LLC for educational purposes only as well as to give you general information and a general understanding of the work of a public adjuster, not to provide specific legal advice. The authors and/or site manager make no representations as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. By using this blog site you understand that there is no public adjuster/client relationship between you and James H. Bushart, Public Adjuster LLC.  The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state, nor should it be used as a substitute for competent maintenance or repair advice from a qualified contractor licensed to perform work in your state.

The Insurance Appraisal Clause (Simplified)

April 7, 2021 By in Property Insurance Tags: , , , , , , 1 Comment

     

     If you are a policyholder disputing a claim with your insurance company and you have given up the fight and are ready to lose, go ahead and invoke your right to the appraisal clause that your insurance company has written into their policy. It will be over quickly and if you are paid anything because of it, at best it will be a fictitious figure, and reached through compromise from what someone other than you “estimates” your loss to be – and with no commitment from a contractor willing to accept that amount to perform any of necessary the work.  

     The appraisers are paid their full fee.  The umpire is paid his full fee.  The policyholder, on the other hand, is left with a dollar amount resulting from a compromise that no contractor has agreed to accept to do the necessary work that that the appraisers and umpire guessed he might.

     There is a reason your insurance provider wrote this clause and chose to insert it into his contract with you.  Judging by his unwillingness to pay you up to this point, that reason is NOT because it is likely to result in a significantly higher payment to you.  

     If you are growing weary of fighting with your insurance company over a legitimate claim and you want to be fully indemnified but don’t know how to proceed to make that happen, seek the advice of either your attorney or a public adjuster licensed to practice in your state.  

     After suffering a direct physical loss to your home or commercial building, the last thing you need is three people with no skin in the game (none of whom will be doing the work) “guess“timating what someone else might charge you to restore it.  This should NOT be the process of determining the amount of money you are entitled to restore your home or business to its condition prior to your loss.

     Remember this important fact:  In exchange for your premium, your insurance policy directs your insurance company to pay you what it costs (not what anyone “estimates” it to cost) to restore your property to the way it was before the loss.  The appraisal process falls short toward that end and should be avoided – not sought.

     As I stated, there is a reason your insurance company wrote this into your policy, and it is obvious that the reason was NOT to pay you more money.

 

 

 

This Blog/Web Site is made available by James H. Bushart, Public Adjuster LLC for educational purposes only as well as to give you general information and a general understanding of the work of a public adjuster, not to provide specific legal advice. The authors and/or site manager make no representations as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. By using this blog site you understand that there is no public adjuster/client relationship between you and James H. Bushart, Public Adjuster LLC.  The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state, nor should it be used as a substitute for competent maintenance or repair advice from a qualified contractor licensed to perform work in your state.

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