The Insurance Appraisal Clause (Simplified)

     If you are a policyholder with a claim dispute 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 process that your insurance company has written into their policy. It will be over quickly and if you are paid anything as a result of it, at best it will be a figure reached through compromise from what someone other than you “estimates” your loss to be with no commitment to perform any of necessary the work for the amount the appraisers and umpire “estimate” it to cost.

     There is a reason why 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 probably NOT because it is likely to result in a significantly higher payment to you.  

     If, on the other hand, 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.  



Warning – War Exclusion Being Used to Deny Business Claims for Cyber Attacks

I received the following news in my email this morning from Joel A. Appelbaum, Executive Vice President & Chief Content Officer of International Risk Management Institute, Inc.  I thought it was important enough to share.

Dear Jim,

Insurers have recently invoked the “war exclusion” to deny coverage for a cyber-security incident that caused policyholders significant damage. Specifically, Merck & Co., Inc., one of the largest pharmaceutical companies in the world, said its insurers denied claims related to the NotPetya cyber-security incident under commercial property insurance policies. Some of Merck’s insurers denied coverage principally based on the war exclusion.

Whether insurers will routinely invoke the war exclusion to deny coverage for cyber-security incidents comparable to NotPetya is essential—especially since these cyber attacks will likely become increasingly prevalent. Indeed, NotPetya reportedly affected companies such as conglomerate Maersk, FedEx’s European subsidiary TNT Express, French construction company Saint-Gobain, and British consumer goods company Reckitt Benckiser. Other companies with substantial international operations, such as Roche, Marriott, and Lion Air, also confirmed that they were targeted.

Policyholders should take the steps necessary before being affected by cyber incidents to preempt a denial of coverage based on the war exclusion. To enhance the predictability of how the insurer will attempt to use the exclusion, carefully review the exclusion in proposed policy forms and inquire how the insurer intends to apply the exclusion before buying the policy. This proactive approach will also serve to define the scope the parties understand the exclusion to have.

Joel’s warning is a resounding “caveat emptor” to a business reviewing its coverage or considering a new policy.  Consider discussing this with your agent the next time you meet.  Before then, however, visit to find more about IRMI and the valuable insurance risk information they provide.


Beware of the Bias of “Independent” Insurance Adjusters

When you file an insurance claim for damage to your home or business, most of the time your insurance company will investigate your claim.  They will either send out an employee of their company (their adjuster) or they will contract with an adjustment firm that works for a variety of different insurance companies (independent adjusters).

Both, the insurance company’s own adjuster or the independent adjuster hired from another company, are required and expected to protect and act in the best interests of the insurance company – the party that is paying them to investigate your claim.

Some independent adjusters have been known to misrepresent themselves to policyholders as being “independent” from any duty to the insurance company and non-biased.  To gain trust with the policyholder and attempt to uncover underlying “facts” that they believe might help them deny a claim or save their company money by underpaying a claim, some independent adjusters will say things like “I don’t work for either side” or “I’m an independent adjuster and do not work for the insurance company.  I just write checks”.  There have been cases reported to me by policyholders where the independent adjuster has told them “I’m on your side.  I’m independent.”  Nothing can be more false.

Telling the contracted independent adjuster sent out by your insurance company something that you are not absolutely certain about or sharing with him a passing and unsubstantiated thought,  while mistakenly believing that he is objective and unbiased, could result in having that simple conjecture documented by him as “fact” and used against you.  I’ve seen it happen many times.

It is important for a policyholder to know the different insurance adjusters who investigate claims.  Here they are:

A.  Insurance company adjusters are employees of your insurance company.  They are usually not licensed and their sole duty and fiscal responsibility are to the insurance company that employs them.  They have no duty to you.

B.  Independent insurance adjusters are contracted employees of your insurance company.  They are usually not licensed and their sole duty and fiscal responsibility are to the insurance company that has contracted them or their firm to assist them with your claim.  They have no duty to you.

C.  Public insurance adjusters are contracted by policyholders to protect and act only in the policyholder’s best interest.   They are licensed by the state in which they operate to represent only you to your insurance company in proving your loss and negotiating the cost to restore you to your financial condition prior to your loss.  Their duty is to you under the requirements of their license and not to your insurance company.





Your Hail/Wind Damage Claim, You, and Your Roofing Contractor.

You might have read the Missouri law that states that a roofing contractor cannot represent you with your insurance claim when communicating with your insurance company about the condition of your roof. Your insurance company’s adjuster certainly has.

Specifically, it reads in part “A contractor shall not represent or negotiate, or offer or advertise to represent or negotiate, on behalf of an owner or possessor of real estate on any insurance claim in connection with the repair or replacement of roof systems, or the performance of any other exterior repair, replacement, construction, or reconstruction work. [Missouri Revised Statute Title XXVI, Trade and Commerce, 407.25]

You can represent your hail damage claim by yourself or you may decide to hire an attorney or Missouri licensed public adjuster to represent you with your insurance claim. If you decide to have your roofing contractor do the talking for you, however, he represents only himself and his company’s financial interests in restoring your storm damaged roof. Not you.

Accordingly, your insurance company’s adjuster will often disregard much of your contractor’s input as being self-serving … unless, of course, it serves the best interest of the insurance company to do otherwise. For instance, if your roofing contractor is willing to compromise and agree to the adjuster’s lower computer-generated estimate, the adjuster may then strike a deal with you based upon his agreement to work for the lesser amount. A roofing contractor’s opinions or arguments calling for more money or materials that differ from what the adjuster has already decided to pay, however, will likely be dismissed. As the governing regulations state, the contractor is not allowed to negotiate your claim.

A policyholder called me for assistance recently and told me that he had three different roofing contractors speak to his insurance company’s adjuster on his behalf, and all three told the adjuster that his roof required replacement. According to him – and to his dismay – the adjuster simply disregarded the arguments from all three of them and refused to pay him to replace his roof.

Of course, the policyholder was convinced that the adjuster was acting improperly and being unfair. He believed that his insurance company had a duty to accept these arguments, particularly since the came from three different contractors, as definitive proof of his loss, but he was wrong. What the policyholder’s three contractors actually presented to his adjuster were three different sales presentations for replacing his roof – none of which proved to the adjuster that the roof had been damaged by hail on the reported date of loss to the extent that it needed to be replaced.

Simply stated, the insurance company’s adjuster was not convinced by the three different contractors, each of whom is in business to sell new roofing systems, that the home required a new roofing system as a direct result of the claimed hail event.

Sometimes, the overall condition of the roof may indeed require that the roof be replaced. The roofing contractor is doing his job by correctly informing the homeowner of that need and is certainly able to observe and communicate that to the insurance adjuster. The adjuster might even agree with him regarding the overall condition of the roof – however, what is required in most cases, in order to recover money from the insurance carrier to pay for the replacement of the roof, is physical proof that the reported damage is the only cause for that condition. It has been my observation that this is the point where many roof claims presented by roofing contractors, prohibited by law to negotiate the claim on behalf of a homeowner, fall short under those limitations.

Your consultation with a reputable roofing contractor or roofing expert is an important step as you begin to prepare to present your claim to your insurance company. If you know what to request from your roofing contractor so that you can acquire and present proof of your loss to your insurance company, you can present that proof to your adjuster who, under the state rules that govern insurance claims, must respond to you on the record to the proof that you present. This is what your licensed public adjuster would do on your behalf, as well.

There are a select few high-end roofing companies in Missouri that are staffed with experienced professionals who have proven to be able to acquire and provide convincing evidence that I have used to turn claims that were initially denied by the insurance company into recoveries of $80,000.00 to $690,000.00 – but the collected evidence was presented to the insurance company by me.

In the absence of such proof of loss or if the adjuster is simply not accepting the sales presentation from the roofing contractor as being definitive, the policyholder will likely be unsuccessful in his attempt to obtain more than what the adjuster initially values the loss to be – whether the adjuster is correct or not.

Since the roofing contractor does not officially represent the policyholder with his claim, the adjuster has the freedom to totally disregard anything that the contractor directly presents to him. Where the insurance company’s adjuster must respond to your written requests in writing, he can reject arguments presented by your roofing contractor without justification or explanation. In certain instances, the insurance adjuster will go as far as to ignore or refuse to communicate with the roofing contractor on site since there is no requirement for him to do so.

Keep this in mind when you decide to ask your roofing contractor to present your roofing claim to your insurance company. A “no” to your roofing contractor from your insurance adjuster is not always the final word.

2019 – Our Most Interesting Claims

The owner of a condominium building suffered damage to an expensive copper and slate tile roof and filed an insurance claim. The adjuster from the insurance company inspected the damage and determined that there was no damage associated with the storm. He added extra weight to his denial of the claim by paying an engineer to inspect the roof and agree with him, and the engineer he paid dutifully complied with his request. The owner’s roofing contractor recommended that he contact me to see if I could assist him. After a very close review of the engineer’s written report, I found that the engineer did NOT say what the insurance company interpreted and that the report actually supported the owner’s claim.  In a matter of a few weeks, we negotiated a payment of over $21,000.00 to repair his roof.

The owner of a 125-year-old building in a historical district suffered hail damage to a unique roofing system made from materials that have not been manufactured since 1945. Using an engineering report that they had acquired from a young man who had graduated engineering school eighteen months prior to this inspection, his insurance company offered the owner a small amount of money to make insufficient repairs that were not consistent with the design of the roof or with the ordinances enforced within the historic district. After several months of fruitless debate with his insurance company and with the recommendation of his roofing contractor, he contacted me. I negotiated an agreement for a settlement of over $236,000.00.


The owner of a commercial building that had suffered serious damage from wind and hail filed a claim with his out-of-state insurance company in Florida. Although the roof was damaged to where it was leaking water into the businesses below, his insurance company hired an engineer to agree with their decision to deny the claim, refused to pay him anything for his damage, and did not answer his numerous inquiries for over six months. At the end of his rope, he contacted me for assistance. After three months of negotiations and using nothing more than the language in the engineering report that the insurance company had used to deny the claim, I negotiated an agreement for them to pay my client over $682,000.00 for the replacement of the destroyed roof for which they had previously refused to pay anything.

A church in a major metropolitan area in Missouri sustained substantial damage from hail, wind, and a lightning strike in the spring of 2018. While the insurance company was going through the motions of adjusting the claim and promising payment, by the summer of 2019 the church had yet to receive any of the money that had been promised from the insurance company to begin the repair and, additionally, the most substantial and expensive part of their loss had not been addressed at all. Their contractor suggested that the church leaders contact me for help. Within a matter of weeks, I negotiated the release of over $70,000.00 of past due funds owed to the policyholder and initiated recovery for an additional $180,000.00 for damages that were overlooked and not included in the original settlement.

A family in a large city in western Missouri suffered a devastating fire that destroyed most of their home. Their insurance company paid them slightly over $94,000 to rebuild their home. They could not find a contractor willing to do all the work for that amount of money so they contacted me for help. I negotiated with their insurer on their behalf and we agreed to a total settlement of $171,201.00 so that the home could be restored to its original condition.

Computer Generated Estimates from Insurance Adjusters – Should You Expect Them To Be Fair?

It may come as a surprise to you to learn that the overwhelming majority of insurance adjusters, no matter which insurance company they work for, use the same computer software to generate estimates from which they pay insurance claims.  The corporation that owns and manages the software that creates the computer-generated estimate that your adjuster is using to pay your claim is called Verisk Analytics, Inc.

When you visit this page of the website for Verisk Analytics, Inc. you will see something very interesting about its managers and Board of Directors.  Most of them, including the director that bears the title of “Lead Director” are from the insurance industry and/or have professional backgrounds in the very closely associated financial investment industry.  Very few, if any, have backgrounds or practical experience in the industries or trades associated with performing the restoration work or providing the materials that are represented in these computer-generated estimates.

This could lead a reasonable person to question whether the computer-generated estimate provided by the insurance adjuster represents the financial interests of the insurance industry managing and producing it … or the interests of the policyholder who is presumably expected to have enough money to fully restore his property from the amount estimated by the software program.

Prudent policyholders, however, will carefully read their policies and discover that their payments from their insurance companies are to be based upon the actual … and not the “estimated” … cost of restoration.  They will know that they are not limited to receive only the insurance adjuster’s home-grown estimate generated by his own industry’s managed computer software program but are entitled, instead, to the amounts that it will actually cost to replace or restore the property that is destroyed or damaged.

If they don’t know this and settle for what the computer generated estimate guesses that their payment should be, they are likely to be underpaid for their loss.

Hail Storm vs. Hail Damage

I recently received a telephone call from a roofing contractor who asked me for advice concerning a customer that he has been trying to assist who had digitally recorded a hailstorm at the insured dwelling during the hail event and who had photographed and measured the hailstones immediately afterward.

The insurance carrier was insisting that there was no damage to the roof from hail and, on the policyholder’s behalf, the roofing contractor was insisting to the insurance company’s adjuster that the video alone was proof of hail damage and that the insurance company should pay to replace the entire roof, but to no avail.  He wanted me to arrange to represent the policyholder in an “appraisal” process … a procedure under the insurance policy where differences of opinion regarding the amount of damage can be settled without litigation.

The first thing I explained to the contractor was that the insurance company’s total denial of the claim due to the lack of apparent hail damage is a coverage issue, and the “appraisal” process cannot be used to determine coverage issues.  It is only available to use when both sides agree to the existence of covered damage but do not agree on the amount of that damage and its associated costs.

The second point, one that he did not agree with me on, was that simply the evidence of a hailstorm (in the form of a digital recording and photographs of hailstones) is not evidence of hail damage to the insured property.  He tried to assure me that, based upon his many years in the roofing business he is certain that proof of a hail storm with hailstones measuring one inch or more should be sufficient to convince an insurance company to replace an entire roof; however, I pointed out to him that if this were true he would not be calling me for assistance.

This leads to my third point which is, in the State of Missouri, exterior contractors are specifically forbidden from representing policyholders with their insurance claims.  In this case, it could have very well been his obvious conflict of interest that nullified his arguments regarding the existence of damage, since he would be enriched from the repair that he was recommending to the insurance adjuster from damage that was not readily visible to them.

Should your home be struck by hail, it is advisable for you to take the step to have your roof carefully inspected by a professional, such as a reputable roofing contractor, to determine if it has been damaged by that hail.  Some insurance policies will exclude dents to soft metals (flashing, gutters, downspouts, etc) that are not perforated and leaking, so it is best to compare the damage that is reported to you by the professional inspecting your roof to your insurance policy.   Also, it is advisable to ask the professional inspecting your roof to photograph for you the damage that he has found and to describe all of it to you so that you can accurately report it to your insurance company.

After determining the actual presence and amount of damage, and reading what you can understand about your insurance coverage in your policy, consider whether or not it would be in your financial interest to file a claim.  If you file your claim, you (not your contractor) should be prepared to explain and prove your loss to your insurance company.  While it is acceptable to have your roofing contractor share his observations with your insurance company adjuster and to point out the damage to the roof at the time it is inspected, your contractor is not licensed or qualified to debate with or represent you in discussions with your insurance company regarding your claim.  You must do that yourself or through someone licensed to represent you.

If the insurance company agrees that there is hail damage to your roof but does not agree on the amount of the damage, ask your contractor to provide you with a bid (not an “estimate”) to do the necessary roof repair or replacement.  The insurance company can agree to pay that bid or, if they do not, should be asked to provide a bid of their own from a contractor of their choosing … rather than to “estimate” the damage on their computer software program.  Your payment should be based on the cost to restore your home to its pre-storm condition … not an “estimated” cost to restore your home.

If this process appears complicated, confusing, or something you would not prefer to do on your own, you should seek the advice of a licensed public adjuster or attorney.  If you are in Missouri you can call me during normal business hours and I will discuss this with you.  There is no charge for the call.


2018 – Our Most Interesting Claims

The more interesting claims of this year result from roof damage, it seems.

Hail damaged a very expensive tile and copper roof and my client’s insurance company inspected the damage and hired an engineer to report on the damage.  The engineer reported the hail damage … but added his own opinion that, since the damage could not be seen from the ground, “it wasn’t really damage” — and the insurance company denied payment on the claim.  After several years of fruitlessly challenging this denial, my client’s roofing contractor suggested that he hire me to assist him.  After several months of my communications and negotiations with the insurance company, they finally agreed to pay my client over $232,000.00 to restore her roof to its condition prior to the hail storm.

Another expensive roof (slate and copper) was damaged by hail and the insurance company provided my client with a computer-generated estimate to repair the damage for a little over $4,800, but no roofing contractor could be found who was willing to restore the roof for that amount of money.  She hired me to assist her and, after several months of communication and negotiation, the insurance company agreed to pay her over $66,000.00 to restore her roof to its condition prior to the storm.

A clay tile and copper roof in St. Louis was damaged by hail and the insurance company’s adjuster determined that it was “insignificant” and would cost less to repair than the deductible.  After an additional inspection and several weeks of negotiations regarding the actual scope of the work required to affect the repair, the insurance company agreed that the damage was significant and issued payment for more than $17,000.00.

A St. Louis homeowner accepted her insurance company’s settlement of $9,000 for damage to her roof and spent over two years trying to find a contractor who was willing to make the necessary repair for that amount of money as water continued to enter her home.  In September, a roofing contractor referred her to me for assistance.  I reopened her claim and, by the end of October, her insurance company agreed to pay her an additional $40,000.00 to restore her roof to its condition prior to the storm.







2017 – A Few of Our Most Interesting Claims

(From our many claims of 2017, the following are the more interesting.)

A corporate attorney with storm damage to his home had attempted for five months to resolve his claim with his insurance company that had paid him only $3,500 for storm damage to his expensive copper and slate roofing system.. His roofing contractor referred him to me for assistance. After my negotiations were completed, the policyholder received an additional check for $56,000.00.

A homeowner had a fire start in the dryer of his home which caused extensive damage.  His insurance company accused him of setting the fire and refused his claim while they investigated.  He called me for assistance.  They concluded their investigation and determined that the fire started in the dryer and initially offered only $77,000 to settle the claim. After my negotiations were completed, the policyholder received over $160,000 from the insurance company for the damage to his home and contents.

A homeowner had suffered damage to his expensive copper and tile roofing system from hail and the insurance company, after hiring an inspection from a company that they represented to be “engineers”, denied his claim and refused to pay him anything.  His roofing contractor referred him to me for assistance.  After my negotiations were completed, the policyholder received over $28,000 for the repair of her roofing system.

A homeowner suffered damage to his expensive roofing system from hail and his insurance company refused to pay anything for the damage.  His roofing contractor referred him to me for assistance.  After my negotiations were completed, the policyholder received over $86,000 for the repair of his roofing system.

A homeowner had lost everything that she owned in a fire that had occurred a year and a half prior and for which she had not received what she believed to be the full amount of her loss.  She contacted me for assistance.  After my negotiations were completed, the policyholder received an additional amount of over $37,000 for unpaid contents.

A homeowner had suffered damage to the interior of his home from a hailstorm that had damaged his roofing system.  His insurance company hired an engineering company to evaluate his roof and they reported to the insurance company that there was hail damage to the roof but, in their incorrect opinion, not enough to consider the roof to be damaged, according to their own arbitrary definition of “damage”.  The insurance company improperly used the engineer’s report to deny the claim.  The homeowner continued to fight the insurance company for two years until his roofing contractor suggested that he consult with me to see if I could be of assistance to him.  I negotiated a payment of over $25,000 for the homeowner to receive to repair the roof.


If you have suffered a loss and believe that it would benefit you to have someone who is experienced with insurance claims assist you through the process, it will cost you nothing to consult with me to see if I can be of assistance to you.  Call me at 314-803-2167 for a free consultation.





The Improper Use of Engineers’ Reports to Deny Insurance Claims


As a licensed public adjuster who has negotiated millions of dollars worth of insurance claims on behalf of policyholders who have suffered damage to their homes and commercial buildings, I have overturned many claim denials that were based on reports from engineers hired by insurance companies.  Reading and contextually interpreting these reports to assist my clients, and also to provide consultation and assistance to attorneys litigating such matters, has become my own specialty within my practice.  Not all of the errors and omissions that I have uncovered in these reports were acts of fraud, incompetency, or bias; however, many were.  A few of those that were have been selected for this essay.

Plausible Deniability

“Plausible deniability” is a strategy used to escape contractual duties that leave little or no evidence of wrongdoing or abuse.  As it applies to the claims process, plausible deniability would allow an insurance carrier to hide behind the wrongful act of someone else that would determine on their behalf that a claim should not be paid when, in fact, it should be paid.  How might this be done, and how might an engineer’s report play a part in it?

The Set-Up

For illustration purposes, let’s say that wind or hail has damaged your roof and you have consulted with a trusted and experienced roofing contractor or other roofing professional before filing your insurance claim.  Your contractor has confirmed the presence of 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 exactly 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 decides to ignore 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, if he is like most engineers, has never installed or supervised the installation or repair of a roof.  His engineering specialty before becoming employed by the engineering company he now works for may have been geotechnical, water resources, electronics, or any other of the numerous variety of engineering specialties that have nothing at all to do with building materials in general or roofing materials, in particular.  Roofing materials are not structural and are not an engineering specialty.

When high winds or lightning have damaged the structure of the home, 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 simply inspect your shingles? 

The inspection of damaged roofing materials is not an engineering practice.  If it were, Missouri law would prohibit anyone other than a licensed engineer to do it, just as it prohibits non-engineers from performing work that requires an engineering license.  The cost of paying an engineer (usually between $1,500.00 and $2,500.00) for a report is a large percentage of what a roof on an average size private dwelling would cost to replace.  It seems extremely odd that an insurance company would not trust this routine and otherwise inexpensive process to less expensive and more experienced professionals when they are available, such as your expert or even their own adjuster.  The decision to pay an engineer to inspect your shingles does not seem to be based on skill requirements or cost-effectiveness, does it? 

Anyone is qualified by the State of Missouri to inspect and write a report on the damage found on a roof since the roof covering is not considered to be a part of the structure of the building.  It is simply there to shed water and enhance the beauty of the home.  But why an engineer?   Scroll up a few paragraphs and re-read about “plausible deniability” and it becomes more clear 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

Some policyholders will unwisely request on their own, after being told by an adjuster that he does not agree with their expert, 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 requested engineer is then selected, hired, and paid by the insurance company to provide them (not the policyholder) with a report that the policyholder is trusting to be independent and unbiased.  Whether requested on their own or at the urging of the policyholder, the engineer is being directed and paid by the insurance company.

Accordingly (in this example), the insurance company’s engineer provides a report to the insurance company which contradicts the finding of the experienced roofing contractor, and the insurance company concludes from that report (while ignoring the opinion of the policyholder’s expert and preferring the opinion of their expert) that the hail damage was caused by something other than hail and something that is not covered by the policy – and your claim is denied.

This happens more often than you think and more often than it should.

Follow the Money

Some of these companies that employ licensed engineers to provide these types of reports to insurance companies do not provide any other type of engineering service. Writing these reports for insurance companies is their major (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 expense of the homeowner.  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 your hail (or other property damage) is not covered by the policy.  Click HERE for more examples. 

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 full case HERE and get the full 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 the Nicolaus provided to (insurance carrier) after (insurance carrier) initially denied the claim, discussed the moisture content of soil samples taken from four locations within the Nicolaus’ house. (Insurance carrier) referred the (rebuttal) report, which had 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 numerous engineering reports that 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 actually support a denial of an insurance claim. Unfortunately,  policyholders do not have the expertise and experience of reading enough of these reports to recognize the numerous errors, omissions, and contradictions contained within many of them and will mistakenly believe that an engineering report cannot be successfully disputed by anyone other than another engineer.

One Plus One Equals Zero

Because they don’t know better, many policyholders who have been stung by a biased, incomplete, or errant engineer’s report (or simply one they do not agree with) will insist that their insurance company “send out another engineer“.  Understanding that the engineer was hired to write the controversial report in the first place, and at a considerable sum, the insurance carrier has no incentive at all to argue with itself.  A second engineer’s report that differs at all from the first simply 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 is highly unlikely to result in the policyholder’s favor, even if the second engineer disagrees with the insurance company.

Examples of Bias, Fraud, and Incompetence

An engineer’s report that I received from one of these companies specified how the engineer closely examined 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 the effects of hail that strikes them.  What he failed to observe was the fact that the roof was covered with eighty-year-old concrete tiles and not clay tiles.  He not only missed the hail damage but 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. This report was written by an engineer from a company commonly used by insurance carriers in several states to support their claim denials.  Whether his errors and omissions were caused by his negligence or bias is not important since his licensing board prohibits both.  When the errors that I found in the report were brought to the insurance carrier’s attention, the adjuster’s manager promptly and apologetically paid the claim to replace the steeple.

In another recent case, a different engineer from the same company went as far as to attempt to interpret the insurance policy’s coverage for the insurance carrier in his engineer report and presented that, while copper roofing material had clearly been dented by a recent hail storm, the damage “could not be seen from the ground” and was not, in his professional opinion, “damage“.  The insurance company that wrote the insurance policy and knows it better than any of its policyholders conveniently and improperly allowed this errant interpretation of coverage by the engineer to stand – knowing fully that the policy had no such exclusion for hail damage that “could not be seen from the ground“.  The insurer denied payment to the policyholder, an elderly widow, for more than two years and I was hired to intercede on her behalf.  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.  The insurance company, subsequent to that disclosure from my investigation, agreed to pay the policyholder over $232,000.00 to restore the roof to its pre-damaged condition.  The engineer has reportedly returned to his full-time job of selling real estate.

As you can see from just these three 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 have been considered vexatious and, through litigation in a federal or state court, have 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. Most policyholders are not trained or able to fully screen and comprehend detailed engineering reports.  In one recent claim in 2019, for example, an engineer report that accurately described and reported damage to a commercial building was wrongfully interpreted by the insurance company to deny a claim that, after I reopened it and challenged their interpretation, resulted in a check to my client for over $692,000.00.  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, what the engineer actually reported was not correctly communicated to the policyholder by his insurance adjuster. In one case, the insurance company denied coverage to a church for interior damage caused by water entering from a roof damaged by hail. The adjuster told the church that the engineer concluded that the interior damage was from “wear and tear” and not subsequent to 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 it said. Though the engineer did his best to present the facts in such a way to support the insurance company’s denial,  his ambiguity and double-talk did not fully 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.

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

What can you do if you are working the claim on your own?

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 are able to act to preserve the integrity of the engineering profession and, in turn, protect the public from licensed engineers who are acting in an incompetent or biased manner.

Licensed professional engineers in Missouri are accountable for their acts of bias and/or negligence to the state board that issues their licenses.  Accordingly, home insurance policyholders that 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.

Formal complaints from homeowners that have merit will be investigated by the board, and action can be taken against the engineer when it is appropriate. Engineers who write 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 due to 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 taken against licensed engineers that participate in the practice of routinely providing 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.


[Note:  Policyholders should also take care to ensure that the engineer report was actually written by a state-licensed engineer.  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 certain 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, weree not aware of the difference.]

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