Filing an insurance claim can be much more complicated than it first appears. To some who have never filed a claim before, there is the assumption that all they must do is notify their insurance carrier of their loss and wait to be paid. They are unaware that the burden to prove that covered property has been damaged or lost due to a covered peril rests entirely upon them. Many mistakenly believe that they are entitled to be paid unless the insurance carrier can prove otherwise, which usually results in frustration and misunderstanding.
Before deciding to file an insurance claim, a policyholder should understand two important points:
1. It is always the burden of the policyholder to prove that a covered peril caused damage to their covered property.
2. It is always the burden of the insurance provider to prove that an excluded peril caused the loss.
Often (actually, too often) a policyholder will note a symptom of damage – such as a leak in the ceiling – and file an insurance claim for damage to their roof. Without knowing the cause of the leak or whether that cause was due to a peril covered under their policy, they will ask their insurance carrier to send out an adjuster to pay their claim.
The insurance company’s adjuster, whose duty is to protect the interests of the insurance company he works for, does NOT have the duty to prove that a covered peril caused the loss. Instead, he is there to collect information and evidence to support (if necessary) his burden to prove that an excluded peril caused the loss if, indeed, it did. When he is uncertain about his observations and the possibility of an exclusion under the policy to apply to the loss, he may seek the assistance of a third party (such as an engineer, architect, or consultant) to assist him.
After his investigation, unlike the typical policyholder who has not prepared his case to prove that a covered peril caused damage to their covered property, the insurance carrier is fully prepared to argue against coverage with any proof that an excluded peril caused the loss that the adjuster may have found.
Thus – knowing that they must first prove that their covered property was damaged by a covered peril – the prudent policyholder will investigate their own claim BEFORE inviting the carrier to begin their investigation of it. This is what I usually recommend:
1. Know, as best as you can, exactly what is damaged and what caused it. If you are unable to determine this on your own, seek the advice of a trusted professional skilled in the material(s) that is damaged. If your roof is leaking, for example, have a roofer find the source of the leak and the cause of that source.
2. Collect physical and/or photographic evidence of the damage and proof of its origin. Obtain a bid from a trusted contractor for the cost to restore the damage to its condition prior to the loss. (Avoid allowing your contractor to negotiate directly with the carrier. A contractor’s lack of knowledge of your coverage and his interest in profiting from the work provides the adjuster with ease in exploiting and manipulating him.)
3. Learn if that damage is covered under your policy. Read your policy, speak to your agent, or consult with your attorney or public adjuster for assistance if you are confused about your policy’s language. Sometimes, it’s tricky.
4. Provide copies of your evidence to the insurance company when you file the claim or, if more convenient when the adjuster visits to inspect the property. (If you are not confident or comfortable in doing this, hire a public adjuster to represent you with this process.)
5. If your insurance carrier does not cooperate with you after providing proof of your loss and coverage, seek the assistance of an attorney or a public adjuster.
“I have paid my premiums on time for twenty years and have never filed a claim. Now, it is difficult for me to tell who has caused me more damage — the storm or my insurance carrier.”
The above exclamation, or words like it, is something that I hear daily from Missourians who have had the misfortune of needing to file an insurance claim for damage to their homes and businesses. Do you really become “the enemy” of your insurance carrier when you file a claim? Do they really consider you more as an adversary than a customer?
I received an email today from an attorney representing an insurance carrier from out of state and who sells insurance policies in Missouri who provided a clear and convincing answer to those questions.
My client, a commercial business, had incurred extensive and obvious hail damage to multiple buildings and filed an insurance claim. Their insurance company hired an independent adjustment firm to inspect the damage who reported their observations to the carrier. The carrier, after receiving their report and photographs, decided to hire an engineer who regularly assists insurance carriers in denying coverage for hail damage to properties in Missouri.
With the hail damage being as obvious as it was, there was no legitimate reason to have an engineer look at the same dents, gouges, and tears that their independent adjuster had just seen and photographed. I suspected that the independent adjuster had recommended that the claim be paid against the carrier’s wishes, and I requested a copy of his report. Insurance companies will share their reports when their report supports a claim denial. For some reason, the carrier did not want to share this one and I was suspicious of their intention.
When I submitted a formal written request for a copy of the report from their independent adjuster that I believed supported my client’s claim for damages, I received a letter from the carrier’s attorney in response that confirmed my suspicions. In part, it read as follows:
“Under Missouri law, the relationship between an insured and the insurer with regard to first-party claims becomes adversarial when a claim is made on the policy. Therefore, the insurer is entitled to assert work product privileges to prevent access to materials found in the claim or investigative file.”
Because my client had filed a claim, he became an “adversary” to his insurance carrier and was not entitled to see documents in his file that might support his claim. In return for his annual premiums exceeding $80,000.00 per year, this is what his money bought for him. An adversarial relationship.
Of course, we’re suing. Soon, that report and all the other documents in the file will be in the hands of his attorney. He will recover all the money owed to him by his insurance carrier along with (most likely) punitive damages and his attorney fees. He is, indeed, an “adversary” to his insurance company – but not because he filed a claim. Rather, it was the insurance carrier that decided to vexatiously withhold money that was due to him under his contract rather than to pay him what he was entitled to. That action taken by them, and not their claim, is what made him an adversary … and a worthy one, at that.
Not everything that is unethical is illegal. There are ways of stepping right up to the line without crossing it and no one can do it better than some insurance companies with their vast financial resources and lobby power at the state government level.
375.1007. Any of the following acts by an insurer, if committed in violation of section 375.1005, constitutes an improper claims practice:
(1) Misrepresenting to claimants and insureds relevant facts or policy provisions relating to coverages at issue;
(2) Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies;
(3) Failing to adopt and implement reasonable standards for the prompt investigation and settlement of claims arising under its policies;
(4) Not attempting in good faith to effectuate prompt, fair and equitable settlement of claims submitted in which liability has become reasonably clear;
(5) Compelling insureds or beneficiaries to institute suits to recover amounts due under its policies by offering substantially less than the amounts ultimately recovered in suits brought by them;
(6) Refusing to pay claims without conducting a reasonable investigation;
(7) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed and communicated to the insurer;
(8) Attempting to settle a claim for less than the amount to which a reasonable person would believe the insured or beneficiary was entitled by reference to written or printed advertising material accompanying or made part of an application;
(9) Attempting to settle claims on the basis of an application which was materially altered without notice to, or knowledge or consent of, the insured;
(10) Making a claims payment to an insured or beneficiary without indicating the coverage under which each payment is being made;
(11) Unreasonably delaying the investigation or payment of claims by requiring both a formal proof of loss form and subsequent verification that would result in duplication of information and verification appearing in the formal proof of loss form;
(12) Failing in the case of claims denial or offers of a compromise settlement to promptly provide a reasonable and accurate explanation of the basis for such actions;
(13) Failing to provide forms necessary to present claims within fifteen calendar days of a request with reasonable explanations regarding their use;
(14) Failing to adopt and implement reasonable standards to assure that the repairs of a repairer owned by or required to be used by the insurer are performed in a workmanlike manner;
(15) Failing to promptly settle claims where liability has become reasonably clear under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.
I recently read a touching and inspiring tribute written by an attorney who advocates for policyholders and who had recently lost a valuable partner and fellow advocate to cancer. Together, they would fight the good fight. There are not enough fighters like them in this arena, and in his tribute to his partner, he described her drive and enthusiasm for battling with insurance companies on behalf of their clients.
Being one who shares in the same fight (though not at such grand of a scale), I felt a great sense of personal loss. Even though I did not know her, personally, I know her heart and I have shared similar pain with the clients who had purchased insurance for peace of mind but found, when disaster came to their door, that this peace was only a temporary illusion.
Though Missouri law tasks an insurance company to provide prompt and fair assistance to its policyholders in exchange for payment of premiums, minimizing risk, and filing a claim only upon sustaining damage – some insurance companies, to protect their own financial interest, inflict more stress and financial harm upon their policyholders than the destructive event that prompted their claim, and at a time when the policyholder is most vulnerable with the least financial reserve. Instead of providing the warm professional care and assistance projected by their televised mascots, the policyholder is frequently met with fierce opposition and obstruction intended to exasperate, wear down, and break the resolve of the most committed policyholder defending his own rights under the very insurance policy he bought for “peace of mind”.
Fighting through a barrage of tactics used by insurance companies to delay, deny, and defend against the policyholder is certainly not an enjoyable experience for either the policyholder or his advocate. It is, however, something that must be done in order to receive a dollar-for-dollar payment for the incurred loss. That is the reality that is not shown on friendly and warm television commercials.
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.
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.
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.
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.
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.
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.
Your contractor will prove to be a valuable resource to you as you present your insurance claim to your adjuster. Without his skill and expertise, you will have a tough time communicating all that has been damaged and the work that will be necessary to restore your home to its original condition.
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 they 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 put, 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, 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 a key 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 $925,000.00 – 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.
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 chances are that if you have filed an insurance claim that your insurance company does not want to pay, they will 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 doing work 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 are now dependent upon them for reports and opinions about every aspect of a property insurance loss.“
I do not agree that engineers “answer to nobody“, however. While many consultants are not licensed but rely totally upon their credentials, engineers are licensed (presumably) by the state they are working in. When they go too far to accommodate an insurance company’s desire to unfairly deny an insurance claim, the engineer answers to the policyholder and to their licensing board for their bias and their errors. I will elaborate on this later and will show what steps can be taken to hold them accountable.
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 to provide consultation and assistance to attorneys litigating such matters, has become my own specialty within my practice. Not all 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 varieties 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?
Your policy covers damage from all perils – except for those that the policy excludes from coverage. In the absence of an exclusion, your insurance provider must pay for your covered loss.
The burden of proving that a policy exclusion applies (such as “wear and tear” or “poor workmanship”, for example) is on your insurance company. 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 pay you, he may recommend to his company that they hire an engineer to “find” one.
The inspection of damaged roofing materials is not an engineering practice. If it were, Missouri law would prohibit anyone other than a licensed engineer from doing 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 clearer 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 demand, 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.
Often, the engineer who inspects an insured’s roof will be asked to call the insurance adjuster and provide a “verbal” report before he commits his conclusions in writing. This is because the existence of a written report from the engineer that favors the insured’s claim might prove to be problematic for the insurance adjuster should it be discovered later if the claim is litigated. Verbal reports usually are provided to the insurance adjuster within a couple of weeks and, when the adjuster is confident enough to request a written report, it arrives to him about thirty days after the engineer’s inspection.
Accordingly, 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. The last thing a policyholder should want to do is encourage his insurance company to hire their own expert with the incorrect assumption that their engineer is unbiased and objective. There are rare exceptions to this like anything else, of course, but they are exceptions … and they are rare. Don’t bet on it.
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.
Where’s the Science?
When you read them, you will find most reports written by engineers for damaged roofing materials are devoid of science and engineering, with the possible exception of boilerplate language that has been prewritten to describe commonalities that may or may not be relevant to the damage being claimed. The part of the report that is unique to your roof will represent as much as a third of the actual report and will typically include nothing more than 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. The use of these terms may sound impressive since it is 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 wrote the words which he has often cut and pasted into his damaged roof reports on a routine basis – which would be known only to those who read several of them – like the insurance companies that hire him (and the public adjuster who has represented multiple clients who opposed him).
As a result of a complaint I filed with the engineer’s licensing board for one engineer’s report used by the insurance company to deny a claim, his entire engineering company was placed on a one-year probation by the state engineering board 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
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 hailstorm, 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, after 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 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., simply because it was provided to them by a licensed engineer and in direct defiance with the code officials. We had to get some attorneys involved with this one but, in the end, we reached a settlement for $1,000,000.00 – without filing a lawsuit.
As you can see from just 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 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 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 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 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 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.
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 that provides different conclusions than yours that are incorrect, do the right thing and report that action to your state licensing board.
[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, were not aware of the difference.]
(c) James H. Bushart, 2017
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.
