If you have filed an insurance claim that your insurance company does not want to pay, they will probably hire an engineer to inspect the damage for them.  

As Chip Merlin of Merlin Law Group recently explained, “A multibillion-dollar industry has developed around insurance company claims vendors. Engineering and consulting firms working for the insurance industry are now their own big-dollar industry. There is plenty of competition among these “consultants” willing to please and keep insurance company accounts. While the insurance adjusters and insurance companies are subject to regulation, most of these vendors answer to nobody other than the insurance claims departments. Those claims departments now depend upon them for reports and opinions about every aspect of a property insurance loss.“

While most insurance company consultants are indeed autonomous, I do not agree that engineers “answer to nobody,” however. 

Like the insurance company’s own adjusters, states do not license many consultants hired by insurance companies but rely totally upon their academic or technical training credentials and answer strictly to the insurance company’s claims department, as stated earlier by Mr. Merlin. However, the state requires engineers working for insurance companies to be licensed. When they go beyond what is correct and fair to accommodate an insurance company’s desire to deny an insurance claim unfairly by acting incompetently or with bias, the engineer must answer to the policyholder and his licensing board for his prejudice and error. I will say more on this later and show how to hold errant and biased engineers accountable.

This article distinguishes between professional engineers who provide services to the public in various engineering capacities and those engineers hired by insurance companies to act as insurance adjusters to defend against insurance claims. These adjusters, who have engineering degrees, seek reasons to deny insurance claims.

Reading and contextually interpreting these reports to assist my clients and to provide consultation and assistance to attorneys litigating such matters has become a specialty for me within my practice. Not all the errors and omissions I have uncovered in engineer reports were intentional acts of fraud, incompetency, or bias; however, many were. I have chosen a few of these errors and omissions to be included in this essay.

Plausible Deniability

“Plausible deniability” is a strategy to escape contractual duties that leave little or no evidence of wrongdoing or abuse.  An insurance carrier can use plausible deniability to blame someone else for denying a claim they should pay. How might this be done, and how might an engineer’s report play a part in it?

The Set-Up

Let’s say that wind or hail has damaged your roof, and you have consulted with a trusted and experienced roofing contractor or other professional before filing your insurance claim, and he has confirmed storm damage to your roof. Your roofing professional might have decades of practical experience and training working for a century-old roofing company, spending thousands of hours per year inspecting and repairing damaged roofs precisely like yours. He may have worked with identical materials like those on your roof hundreds of times with countless numbers of expert repairs or replacements provided to hundreds of satisfied homeowners who had hail or wind damage identical or similar to yours … but your insurance company ignores your expert and bring in their “expert” to look at your roof, instead.

Your insurance company’s “roofing” expert will probably be a licensed engineer who, like most engineers, has no experience installing or supervising the installation or repair of roofs. Before becoming employed by the engineering company he now works for, his engineering specialty may have been geotechnical, water resources, electronics, or any other engineering specialties that have nothing to do with general building or roofing materials. Roofing materials are not structural and are not an engineering specialty.

When high winds or lightning have damaged the home’s structure, a licensed engineer is essential to the insurance carrier and the policyholder to determine and report on the structural integrity of the building and recommend the correct remedy to restore it. But why did your insurance company hire a licensed engineer to inspect something as nontechnical as your roof covering materials? 

Your policy covers damage from all perils except those that it specifically excludes from coverage. Without such an exclusion, your insurance provider must pay for your covered loss.

Your insurance company must prove that a policy exclusion applies (such as “wear and tear” or “poor workmanship,” for example). When an insurance adjuster can find an exclusion to the policy, he will usually tell you. When the adjuster cannot find an exclusion, rather than paying you, he may recommend to his company that they hire an engineer to help “find” one.  

The State of Missouri allows anyone to inspect and report on damage found on a roof, because the roof covering is not considered part of the building’s structure. It is simply there to shed water and enhance the home’s beauty.  But why an engineer? Scroll up a few paragraphs and read again the description of “plausible deniability.” It becomes more apparent why an engineer report, particularly those that are typically void of science (i.e., terminal velocity calculations, measurement of material impact resistance, and relevant ambient factors, etc.), dovetails into a conclusion that supports an exclusion to your coverage and allows for a denial of your claim, could help the insurance company at your expense.

Shooting Yourself in the Foot

After an adjuster tells them he disagrees with their expert, some policyholders will unwisely demand that the insurance company hire an engineer to provide what the policyholder mistakenly believes to be an unbiased and qualified opinion about his roof. The insurance company selects, hires, and pays the requested engineer to provide them (not the policyholder) with a report that the policyholder incorrectly trusts to be independent and unbiased.  In some claims I have worked on, the insurance adjusters hand-picked their favorite engineer from previous claims. Whether requested on their own or at the urging of the policyholder, the engineer is being directed and paid by the insurance company.

Often, the insurance adjuster will ask the engineer inspecting an insured’s roof to call and provide a “verbal” report before submitting his conclusions in writing. During litigation, discovering a written report from the engineer supporting the insured’s claim could cause problems for the insurance adjuster.  The engineer typically gives verbal reports to the insurance adjuster within a couple of weeks. When the adjuster is confident enough to request a written report, it arrives with him about thirty days after the engineer’s inspection.

The insurance company’s engineer provides a report contradicting the finding of the experienced roofing contractor. The insurance company, relying on the report from their engineer, rejects your claim, claiming the hail damage was caused by something other than hail, something not covered by the policy. They disregard the opinion of the policyholder’s expert.

This happens more often than you think and more often than it should. The last thing a policyholder should want to do is encourage his insurance company to hire their own expert, assuming incorrectly that their engineer is unbiased and objective. Of course, there are rare exceptions to this, but they are exceptions—and they are rare. Don’t bet on it.

Who pays for the services of the “hired gun”?

Follow the Money

Some companies that employ licensed engineers to provide these reports to insurance companies do not offer any other engineering services. Writing these reports for insurance companies is their primary (or, in many cases, only) source of business income.  Sometimes, as reported by the television news program “60 Minutes” (click here), the company’s managers may change the language in the engineer’s original report to benefit an insurance company at the homeowner’s expense.  The financial incentive (usually $1,500 to $2,500 for each report, in Missouri) for future repeated business is what will often drive some of them to find creative ways to “help” the insurance company to determine that the policy does not cover your hail (or other property damage). 

Here is an excerpt from a case that reached the Texas Supreme Court that resulted in a ruling against the insurance carrier and was critical of their bias.  I have blocked the names of the insurance company and engineer in this essay, but you can read the case HERE and get the whole story. “Some evidence also indicates that (insurance carrier) knew, when it denied the Nicolaus’ claim for the second time, that the (engineer) report did not justify denying the claim. The (rebuttal) report, which Nicolaus provided to (insurance carrier) after (insurance carrier) initially denied the claim, discussed the moisture content of soil samples taken from four locations within Nicolaus’ house. (Insurance carrier) referred to the (rebuttal) report, which found that water from the leak had spread throughout the soils underlying the Nicolaus’ foundation, to the same (insurance carrier’s) engineers who had prepared the initial report. There is no indication that the (insurance carrier’s) engineers did any further testing in response to the (rebuttal) report or that (insurance carrier) conducted any further investigation before denying the claim a second time.”

As most public adjusters know from the many engineering reports we read and discuss with insurance companies, many of them are simple boilerplate templates with only the beginning and ending pages unique to the applicable home, and many of them lack merit or fact that would support a denial of an insurance claim. Unfortunately, policyholders do not have the expertise and experience to read enough of these reports to recognize the numerous errors, omissions, and contradictions in many of them. They will mistakenly believe that anyone other than another engineer can not successfully dispute an engineering report.

One Plus One Equals Zero

Many policyholders, unaware of better options, who have been negatively affected by a biased, incomplete, or inaccurate engineer’s report (or simply one they disagree with) will ask their insurance company to send another engineer.  A second engineer’s report that differs from the first puts the disputed question in a “tie” – one for you and one against you.  The second report is not definitive simply because it disagrees with the first. Requests from policyholders for the insurer to send out a second engineer for a second opinion go nowhere, and even if the carrier should decide to pay for a second report, it isn’t very likely to result in the policyholder’s favor, even if the second engineer disagrees with the insurance company.

Where’s the Science?

When you read them, you will find that most reports written by engineers for damaged roofing materials are devoid of science and engineering, except for boilerplate language pre-written to describe commonalities that may or may not be relevant to the damage being claimed.  The part of the report unique to your roof will represent as much as a third of the report. It will typically include a record of the engineer’s reported observations (as did the adjuster before him).

You may see an opinion about how the hailstones that fell on your roof lacked speed, velocity, or density to cause damage — but you will find no calculations or references to how that speed, velocity, or density of the long-ago melted hailstone was calculated.  These terms may sound impressive since they are intended to sound impressive, but is it true? Don’t ask the engineer who wrote it. He doesn’t know, for he never computed those calculations or made that analysis. He just copied and pasted the same phrases he often uses in his damaged roof reports, phrases that only those who read many of his reports would be familiar with – like the insurance companies that hire him (and the public adjuster who has represented multiple clients who opposed him). 

Because of a complaint I filed with the engineer’s licensing board regarding one engineer’s report used by the insurance company to deny a claim, the state engineering board placed his entire company on probation for one full year for concluding that no hail of significant size struck the insured property by relying upon nothing more than a commercially available weather data report rather than applying engineering skill and science.  

Examples of Bias, Fraud, and Incompetence

(For a narrative of a recent case in which an engineer fabricated and included false information in his report used by an insurance company to deny an insurance claim, CLICK HERE.)

An engineer’s report that I received from another one of these companies specified how the engineer inspected the “clay tiles” that were chipped and found the damage to be attributed to something other than hail. He then provided a lengthy and generic boilerplate description of how “clay tiles” are made and the scientific studies of how hail affects them.  He failed to notice that the roof was covered in eighty-year-old concrete tiles, not clay tiles. Not only did he miss the hail damage, but he also incorrectly identified the material.

Another engineer’s report for a client that was used to deny an insurance claim for a church with a wind-damaged roof incorrectly described a tongue-in-groove roof covering as plywood sheathing, identified the wrong date (and the wrong windstorm) when he incorrectly reported low wind speeds and failed to identify and record the fact that the steeple had been lifted and moved by a 100-mph wind. An engineer from a company commonly used by insurance carriers in several states to support their claim denials wrote this report. Whether his negligence or bias caused his errors and omissions are not essential since his licensing board prohibits both. When I pointed out the errors in the report, the adjuster’s manager at the insurance carrier promptly and apologetically paid the claim to replace the steeple.

In another recent case, a different engineer from the same company attempted to interpret the insurance policy’s coverage for the insurance carrier in his engineer report. He presented that, while a recent hailstorm had dented copper roofing material, the damage “could not be seen from the ground” and was not, in his professional opinion, “damage.” I immediately challenged their action and reopened the claim.  My investigation revealed that the engineering company had contracted a full-time real estate salesman with an engineer’s license to perform their inspection, which explained his unusual conclusion that damage not viewed from the ground was not worthy of coverage. After that disclosure from my investigation, the insurance company agreed to pay the policyholder over $232,000.00 to restore the roof to its pre-damaged condition. The engineer has returned to his full-time job of selling real estate.

On a commercial roof, the insurance carrier’s engineer attempted to save the insurance carrier from the cost of replacing an entire roof by recommending an inexpensive repair that the local code officials rejected. He argued that his repair was proper, and the insurance company foolishly stood behind a repair recommendation they knew to be unlawful. It was simply because it was provided to them by a licensed engineer and in direct defiance of the code officials. We had to get some attorneys involved, but ultimately, we settled for $1,000,000.00 – without suing.

As you can see from these few recent examples, not all engineer reports reflect accuracy, competency, or non-bias, and insurance companies that use these reports to deny claims are not always acting in good faith, according to the courts who have ruled against them.  There are times when withholding money from you based upon reports that they know to be inaccurate has been considered vexatious and, through litigation in a federal or state court, has entitled policyholders to punitive damages in addition to the money owed to them.  Your attorney can provide more details in this area.

Also worthy of note are the instances in which the engineer’s report is, by design or negligence, written in an ambiguous manner that allows facts about the damage that could benefit the policyholder’s claim to be manipulated in favor of the insurance company. Detailed engineering reports are beyond the understanding and scrutiny of most policyholders.  In one recent claim in 2019, for example, an engineer accurately described and reported damage to a commercial building in their report, but the insurance company wrongfully interpreted it to deny the claim. I reopened the claim and challenged their interpretation, which resulted in a check for over $692,000.00 for my client.  Prudent policyholders will arrange to have their insurance denial letters and accompanying engineer reports reviewed by a public adjuster or attorney before walking away from their claim.

Sometimes, the insurance adjuster cannot communicate the engineer’s report correctly to the policyholder. In one case, the insurance company denied coverage to a church for interior damage caused by water entering from a hail-damaged roof. The adjuster told the church that the engineer concluded the interior damage was from “wear and tear” and not after the hail damage. The people at the church hired me to assist them.

Several weeks after demanding a copy of the report so that I could review it myself, the insurance carrier reluctantly complied with my request. The report did NOT say what they told the policyholder. Though the engineer did his best to present the facts in such a way as to support the insurance company’s denial, his ambiguity and double-talk did not entirely discount the hail damage as a source of water to the interior. The insurance company finally agreed to pay the church $59,000.00 to cover the water damage to the interior of their building.

In another instance, the insurance company denied a claim and stated that their engineer did not find any of the reported hail damage on the roof of a commercial building.  I requested and received a copy of that report, which contained photographs and narrative descriptions of the damage the insurance adjuster said the report did not have. After pointing this out to the insurance adjuster, I received an apology and payment of $500,000.00.  Did the adjuster accidentally miss that in the report? I’ll let you decide.  However, for the sake of this discussion, it’s crucial to remember that we shouldn’t blindly trust the alliance between insurance companies and their engineers. We need to carefully examine their denial letters and their corresponding reports. 

There are many more stories that I can share, but I think, by now, you get the point. Sometimes, neither the insurance carrier nor the engineer writing a report should have the final word.

What can you do if you are working on the claim by yourself?

While some state Departments of Insurance may not find biased, ambiguous, or erroneous engineer reports to be something they wish to handle or spend political capital, there are often other departments within state government that can act to preserve the integrity of the engineering profession and protect the public from licensed engineers who are operating in an incompetent or biased manner.

Licensed professional engineers in Missouri are accountable to the state board that issues their licenses for their acts of bias and negligence.  Accordingly, home insurance policyholders who believe they are victims of an improper relationship between their insurance company and an engineering company may have recourse through the Missouri Board for Architects, Professional Engineers, Professional Land Surveyors, and Professional Landscape Architects.

The board will investigate formal complaints from homeowners with merit, and they may discipline the engineer when appropriate. Engineers who draft reports for insurance companies to use to deny claims that contain incorrect, partial, or biased information will have to justify their actions (if they can) to their respective licensing boards that monitor and enforce competency and impartiality. Their actions, if found to be because of incompetence or partiality, could result in sanctions up to and including fines and forfeiture of their licenses, and these findings can be used by homeowners to address their denial or underpayment through the proper channels available to them … through their policies or judicial means.

Enough enforcement actions against licensed engineers who routinely provide insurance companies with undue “plausible deniability” used in their refusal to pay legitimate claims could effectively reduce this threat to policyholders seeking to be indemnified for their losses.

Last but not least, if you are an engineer who wrote an accurate report that favored the policyholder but had your report changed or modified by someone you work for who provides different conclusions than yours that are incorrect, do the right thing and report that action to your state licensing board.

James H. Bushart, Senior Claim Law Associate

Learn more about the Senior Claim Law Associate (SCLA) designation.

[Note:  Policyholders should also ensure that a state-licensed engineer wrote the engineer report.  In some cases, these damage inspections are conducted by contractors, consultants, home inspectors, and others who are not licensed engineers, and the reports that they compose are subsequently sent to engineers to sign and affix their seal before forwarding them to an insurance company for their use. When you find the inevitable errors or omissions in these reports resulting from the unprofessional inspection or observation and report them to the insurance company, be sure that the insurance company is not responding to you with advice from the same unlicensed consultant rather than a licensed engineer. I have communicated with some insurance adjusters who, themselves, were not aware of the difference.]

(c) James H. Bushart, 2017

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