Insurance claims for property damage can be a complicated process and avoiding mistakes can be a challenge. It requires proper documentation and timely submission of relevant paperwork. Any mistake in filing the claim could result in delayed or denied coverage, leaving the policyholder to bear the entire cost of the damage. Therefore, it is essential to understand the do’s and don’ts of filing an insurance claim for property damage and to know when to get help. In this essay, we will discuss the mistakes that policyholders should avoid when filing an insurance claim for property damage.
Failing to Document the Damage:
The first and most common mistake that policyholders make is failing to document the damage properly. It is essential to take pictures and videos of the damaged property as soon as possible after the incident occurs. This documentation will serve as evidence for the insurance company to determine the extent of the damage and the amount of coverage required. Without proper documentation, it can be challenging to prove the damage, and the insurance company may deny the claim.
Photographs or video of the hailstones that struck the property, for example, are valuable evidence since some weather reports might report the nearest hailstorm to have been miles away on the date of loss. Photographs of interior water damage taken before clean-up measures began help preserve evidence of fresh damage. Proving your claim is YOUR responsibility. Leave it up to the insurance company to prove it for you and you are likely to be disappointed in the result of their half-hearted efforts.
Waiting Too Long to File the Claim:
Another common mistake that policyholders make is waiting too long to file the claim. It is crucial to report the damage to the insurance company as soon as possible after the incident occurs. Most insurance policies have a specific timeframe within which the policyholder must report the damage. Failing to report the damage within this timeframe could result in a denied claim. Additionally, waiting too long to file the claim could result in delays in the claims process, which could cause further damage to the property.
Failing to Provide Accurate Information:
When filing an insurance claim for property damage, it is essential to provide accurate and detailed information about the incident. This includes the date and time of the incident, the cause of the damage, and the extent of the damage. Providing inaccurate or incomplete information could result in delays or denials of the claim. Additionally, it could result in the policyholder being accused of insurance fraud, which could result in legal consequences.
Not Reviewing the Insurance Policy:
Before filing an insurance claim for property damage, it is essential to review the insurance policy to understand the coverage and exclusions. Many policyholders make the mistake of assuming that their insurance policy covers all types of damage, only to realize later that the damage is excluded from the policy. Therefore, it is essential to review the policy and understand the coverage and exclusions before filing the claim. Your insurance policy is a contract worth hundreds of thousands (sometimes millions) of dollars. READ IT.
Attempting to Repair the Damage Before Filing the Claim:
Some policyholders make the mistake of attempting to repair the damage before filing the claim. It is essential to notify the insurance company before making any repairs to the property. The insurance company will likely send a claims adjuster to assess the damage and determine the amount of coverage required. Failing to notify the insurance company before making repairs could result in a denied claim, as the insurance company will not have the opportunity to assess the damage.
Failing to Mitigate Further Damage:
When property damage occurs, it is essential to take steps to mitigate further damage. This includes taking steps to prevent water damage or securing the property from further damage. Failing to take steps to mitigate further damage could result in a denied claim, as the insurance company may view the policyholder as negligent in protecting the property.
Not Understanding the Claims Process:
Filing an insurance claim for property damage can be a complicated process. It is essential to understand the claims process and follow the guidelines provided by the insurance company. Failure to understand the claims process could result in delays or denials of the claim. If you need help with this, contact a licensed public adjuster or attorney for advice or assistance.
Not Following Up on the Claim:
After filing an insurance claim for property damage, it is essential to follow up with the insurance company regularly. This includes following up on the status of the claim and providing any additional documentation required.
Not Seeking Assistance from Unbiased Sources:
When you find your insurance provider putting more effort into denying your claim than paying it or you feel that you are getting unfair resistance or treatment, consult a licensed public adjuster or an attorney to assist you.
Successfully navigating through the insurance claims process can be challenging for a home or business owner who has suffered loss or damage to their property. Knowing the process and its boundaries and setting reasonable expectations will play a key role in achieving success with the minimum amount of frustration. Knowing what to expect (and what not to expect) from your insurance company’s adjuster is important.
Once an insurance carrier has been notified that a loss has occurred to the property that it insures, the insurer will assign one of its employees or an independent adjuster to investigate and gather information about the claim.
Many policyholders begin this process under the mistaken impression that the adjuster’s job is to assist the policyholder with their claim, but quickly learn that this is not true. It is the burden of the policyholder (not the insurance company’s adjuster) to prove that his loss was caused by a covered peril. The adjuster assigned to the claim is tasked to protect the rights and interests of the insurance carrier and assist the carrier in obtaining and presenting evidence of a policy’s exclusion when it exists.
While it is the burden of the policyholder to prove his loss was caused by a covered peril, it is the burden of the insurance carrier to prove that coverage is excluded under the policy. Presumably, both sides are prepared or preparing to meet their burdens of proof. How does the insurance company’s adjuster go about doing this for his employer?
First, he confirms that the damaged property is the property described in the policy and was at the location described in the policy. If you are claiming an item that you did not insure, or if the insured item was not on the insured property when it was damaged, you might not have a valid claim.
Next, he confirms that the loss occurred during the time period when the policy was in effect. If your roof was damaged by hail and the last hailstorm in your area occurred two months prior to the beginning of your coverage, his job is to discover and record that fact.
He will then determine whether the loss was caused by a peril covered by your policy. There are many causes for damage that are specifically excluded from an insurance policy.
The adjuster will then determine the extent of the ownership interest of the policyholder in the insured property and the extent of the ownership interest of others in the insured property. If the policyholder shares ownership of the property with others, how much of the damage is his loss and how much might be shared with others?
He will investigate to confirm that the policyholder did not commit fraud or material misrepresentation to procure the insurance policy. If the policyholder withheld material information in his application used to determine risk, for example, coverage under the policy may be rescinded.
The adjuster will confirm whether the premises were occupied as permitted or required by the policy. Certain policies negate coverage for loss when the property had been vacant for more than 60 days during the term of the policy.
He will also confirm that, at the time of the loss, there were no conditions that would cause suspension of the coverage.
This is the investigation that the adjuster conducts at the same time he is taking his measurements and photographs of the damage to determine the value of the loss, should it be paid. These are the purposes behind his questions as he conducts his investigation to first determine IF the insurance company will pay before determining how much money the carrier might offer.
It is imperative and required by the insurance contract that the policyholder fully cooperate with this investigation and be precise, accurate, and truthful when responding to these inquiries. Fraud and/or misrepresentation of the smallest degree can result in complete denial of the entire claim.
When the adjuster believes that there is a possibility of the existence of an exclusion to the peril that you have reported a loss from, he is likely to seek the assistance of someone the carrier can use as an expert (should you sue) to support their use of that exclusion. Therefore, the carrier will hire an engineer or other expert to look at the damage. Policyholders who disagree with the carrier’s decision regarding coverage of their claim and do not understand how and why insurance companies use experts will sometimes demand on their own that the insurer pays for an engineer to evaluate the damage that they believe should be paid. In doing so, they are unwittingly providing the carrier with ammunition to use against them instead of meeting their own burden to prove their loss – since the insurance company’s engineer is not going to be paid by the carrier to assist the policyholder to defend against them.
Understand the process, be fully prepared to prove that your loss or damage was caused by a covered peril when you file your claim and seek the advice of an attorney or public adjuster if you are not fully confident in handling the claim on your own or at the first sign of trouble with your insurance carrier.
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 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.
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 with their insurance company for exterior work on their home as a part of an insurance claim.
So why do insurance companies continue negotiating with residential contractors despite 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 tell 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 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 represents his 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 your contractor makes the same demand. 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 critical 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. The same insurance carrier can insure three or four neighbors living side by side on the same street and have different policies with different coverage. Some contractors quote what they believe to be “state law” regarding what an insurance company must pay for, which is also untrue. 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 essential advisors for you and 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 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.
On your own, reflect as to how an independent roofing contractor negotiating a claim for hail damage to shingles is likely to overlook and omit hail damage to windows, siding, screens, wood trim, decks, and HVAC equipment from his estimate as he argues with an insurance company’s adjuster for a complete roof replacement. Then consider why an insurance adjuster would be willing to negotiate with him even though the law forbids it. It could be a bargain for the insurance company at your expense.
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 spoke 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 outlined in Senate Bill 101, allowing them to focus on their areas of skill and expertise to serve their customers’ construction needs fully. Their customers can 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 needed work. When done correctly, all parties are served in a win-win position. However, when done improperly, some or all come out on the losing end.
Not all claims require an attorney or a public adjuster to handle them. Most can be taken directly by the policyholder with no representation if they understand their rights under their contract with the insurance company and have a skilled contractor they trust to inform them of their damage correctly 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/Website is made available by James H. Bushart, Public Adjuster LLC, for educational purposes only and 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 site manager make no representations as to the 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. Using this blog site lets you understand there is no public adjuster/client relationship between you and James H. Bushart, Public Adjuster. The Blog/Website should not be used as a substitute for competent legal advice from a licensed professional attorney or for capable maintenance or repair advice from a qualified contractor licensed to perform work in your state.
Here is a story about how an engineer might record the functional damage versus cosmetic damage in a fictional situation, first.
Once there was a maintenance man who worked in a famous art museum and was directed by his supervisor to touch up the white paint on the wall of a certain gallery within the museum. As he was ascending his ladder he accidentally tipped over his gallon of white paint and it splashed across the surface of a 550-year-old painting from a world famous artist that hung in the gallery.
Of course, the painting was insured and the curator immediately filed a claim. The insurance adjuster took a few photos and shared them with his boss who said “We need to send out an engineer.“
The engineer arrived to examine the painting and noted that the framed canvas was designed and intended to hold paint of various colors. Since the canvas and frame were still intact and obviously able to retain paint, he recorded that the painting was still “functional”. The painted surface had white paint splashed across the smiling face of a woman named “Lisa” or something, but he reported the damage was only “cosmetic” in that it did not interfere with the “function” of the canvas to hold paint. It was, after all, paint on a painting … and the gallery was filled with various paintings with random splashes and colors. He concluded that there was no “functional” damage and the insurance company denied the claim.
This story is fictional, of course … but the actions described are quite common.
Let’s look at the shingles on your roof, for example. The manufacturer of your shingles produces them in a wide variety of colors, shapes, and styles. When you selected them (or selected a house that already had them), you noted their color and design in context with the features of the rest of the structure, didn’t you? Of course, their designed purpose is to protect the roof from wear and water intrusion but they also were carefully and creatively designed to enhance the beauty of the home.
When a sudden Missouri storm erupts and pounds them with hail, along with the metal appurtenances, gutters, downspouts, and other surrounding materials, they will often be damaged. When they are damaged, you might contact your insurance carrier to file a claim for direct physical damage or loss to your roofing materials. The insurance adjuster will arrive, take a few photographs, and return to speak to his boss. When the boss does not want to pay you for your damage, he might send an engineer.
The engineer will often look at your shingles and the surrounding metals for holes. Finding none, he declares that the shingles and metals are still shedding water as they were designed to do, and the damage to them is not “functional” but merely “cosmetic”. Based on this report, the manager may deny the claim, depending upon the language in your policy.
Denying the claim because of an engineer’s definitions of “functional” or “Cosmetic” damage rather than the insurance policy’s definitions of damage can be improper. Try as some might, engineers neither write nor interpret Missouri insurance policies and, when they attempt to do so, they are often incorrect. Some insurance companies have been successfully sued for such actions when it happens, as in the case of North-Shore Co-Owner’s Association versus Nationwide Mutual Insurance Company.
When you believe that your insurance carrier is trying harder to deny your claim than pay your claim, you may be the victim of improper claim handling, bad faith, or vexatious actions on the part of your carrier. When this happens, seek the advice of your Missouri attorney or a Missouri licensed public adjuster.
This Blog/Web Site is made available by James H. Bushart, Public Adjuster LLC for educational purposes only as well as to give you general information and a general understanding of the work of a public adjuster, not to provide specific legal advice. The authors and/or site manager make no representations as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. By using this blog site you understand that there is no public adjuster/client relationship between you and James H. Bushart, Public Adjuster LLC. The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state, nor should it be used as a substitute for competent maintenance or repair advice from a qualified contractor licensed to perform work in your state.
Your contractor will be valuable 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 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. However, if you choose to have your roofing contractor do the talking for you, 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 it serves the insurance company’s best interest 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 strike a deal with you based upon his agreement to work for the lesser amount. However, a roofing contractor’s opinions or arguments calling for more money or materials that differ from what the adjuster has already decided to pay will likely be dismissed. As the governing regulations state, the contractor cannot 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 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 acted improperly and unfairly. 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 presented to his adjuster were three other 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 roof’s overall condition may require the roof to be replaced. The roofing contractor is doing his job by correctly informing the homeowner of that need and can undoubtedly observe and communicate that to the insurance adjuster. The adjuster might even agree with him regarding the roof’s overall condition. However, one item usually required to recover money from the insurance carrier to pay for the roof replacement is physical proof that the reported damage is the only cause of that condition. Another is to prove that the damage occurred under conditions covered by the insurance policy in effect on the date of the loss. I have observed that this is where many roof claims presented by roofing contractors, prohibited by law from negotiating the claim on behalf of a homeowner, fall short of those limitations.
Consultation with a reputable roofing contractor or expert is crucial as you prepare to present your claim to your insurance company. Suppose 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 evidence 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 the insurance company initially denied 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 can 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 he is not required 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.
It may surprise you 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 settle 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 who 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 related to performing the restoration work or providing the materials 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” … restoration cost. They will know that they are not limited to receiving 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 destroyed or damaged property.
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.
If you have filed an insurance claim that your insurance company does not want to pay, there is a good chance 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 working for the insurance industry are now their own big-dollar industry. There is plenty of competition among these “consultants” willing to please and keep insurance company accounts. While the insurance adjusters and insurance companies are subject to regulation, most of these vendors answer to nobody other than the insurance claims departments. Those claims departments now depend upon them for reports and opinions about every aspect of a property insurance loss.“
While most insurance company consultants are indeed autonomous, I respectfully disagree that engineers “answer to nobody,” however.
Like the insurance company’s own adjusters, many consultants hired by insurance companies are not licensed but rely totally upon their academic or technical training credentials and answer strictly to the insurance company’s claims department, as stated earlier by Mr. Merlin. However, engineers that contract with insurance companies are licensed (presumably) by the state where they work. When they go too far to accommodate an insurance company’s desire to deny an insurance claim unfairly by acting incompetently or with bias, the engineer must answer to the policyholder and his licensing board for his prejudice and error. I will say more on this later and show what steps can be taken to hold errant and biased engineers accountable.
As a licensed public adjuster who has negotiated millions of dollars worth of insurance claims for policyholders who have suffered damage to their homes and commercial buildings, I have overturned many claim denials based on reports from persons with engineering degrees and licenses that insurance companies hired.
Making a distinction between professional engineers who provide services to the public in various engineering capacities and those who act as field adjusters with engineering degrees hired by insurance companies to assist them with the adjustment of insurance claims, this article focuses on the latter.
Reading and contextually interpreting these reports to assist my clients and to provide consultation and assistance to attorneys litigating such matters has become my specialty within my practice. Not all the errors and omissions I have uncovered in these reports were acts of fraud, incompetency, or bias; however, many were. A few of those have been selected for this essay.
Plausible Deniability
“Plausible deniability” is a strategy 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 who 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 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 precisely like yours. He may have worked with identical materials like those on your roof hundreds of times with countless numbers of expert repairs or replacements provided to hundreds of satisfied homeowners who had hail or wind damage identical or similar to yours … but your insurance company 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. Before becoming employed by the engineering company he now works for, his engineering specialty may have been geotechnical, water resources, electronics, or any other engineering specialties that have nothing to do with general building or roofing materials. Roofing materials are not structural and are not an engineering specialty.
When high winds or lightning have damaged the home’s structure, a licensed engineer is essential to the insurance carrier and the policyholder to determine and report on the structural integrity of the building and recommend the correct remedy to restore it. But why did your insurance company hire a licensed engineer to inspect your shingles?
Your policy covers damage from all perils – except for those that the policy excludes from coverage. Without 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 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 adjuster. Paying an engineer to inspect your shingles is not based on skill requirements or cost-effectiveness.
The State of Missouri qualifies anyone to inspect and write a report on the damage found on a roof since the roof covering is not considered a part of the structure of the building. It is simply there to shed water and enhance the home’s beauty. But why an engineer? Scroll up a few paragraphs and re-read about “plausible deniability.” It becomes more apparent why an engineer report, particularly those that are typically void of science (i.e., terminal velocity calculations, measurement of material impact resistance, and relevant ambient factors, etc.), dovetails into a conclusion that supports an exclusion to your coverage and allows for a denial of your claim, could help the insurance company at your expense.
Shooting Yourself in the Foot
After an adjuster tells him he disagrees with their expert, some policyholders will unwisely demand that the insurance company hire an engineer to provide what the policyholder mistakenly believes to be an unbiased and qualified opinion about his roof. The requested engineer is then selected, employed, and paid by the insurance company to provide them (not the policyholder) with a report that the policyholder trusts 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.
The engineer who inspects an insured’s roof will often be asked to call the insurance adjuster and provide a “verbal” report before submitting his conclusions in writing. This is because a written report from the engineer that favors the insured’s claim might prove 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 that contradicts the finding of the experienced roofing contractor. 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.
Who pays for the services of the “hired gun”?
Follow the Money
Some companies that employ licensed engineers to provide these reports to insurance companies do not offer any other engineering service. Writing these reports for insurance companies is their primary (or, in many cases, only) source of business income. Sometimes, as reported by the television news program “60 Minutes” (click here), the company’s managers may change the language in the engineer’s original report to benefit an insurance company at the homeowner’s expense. The financial incentive (usually $1,500 to $2,500 for each report, in Missouri) for future repeated business is what will often drive some of them to find creative ways to “help” the insurance company to determine that the policy does not cover your hail (or other property damage). 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 case HERE and get the whole story. “Some evidence also indicates that (insurance carrier) knew, when it denied the Nicolaus’ claim for the second time, that the (engineer) report did not justify denying the claim. The (rebuttal) report, which Nicolaus provided to (insurance carrier) after (insurance carrier) initially denied the claim, discussed the moisture content of soil samples taken from four locations within Nicolaus’ house. (Insurance carrier) referred 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 support a denial of an insurance claim. Unfortunately, policyholders do not have the expertise and experience to read enough of these reports to recognize the numerous errors, omissions, and contradictions in many of them. They will mistakenly believe that 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 stung by a biased, incomplete, or errant engineer’s report (or simply one they disagree 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 from the first puts the disputed question in a “tie” – one for you and one against you. The second report is not definitive simply because it disagrees with the first. Requests from policyholders for the insurer to send out a second engineer for a second opinion go nowhere, and even if the carrier should decide to pay for a second report, it isn’t very likely to result in the policyholder’s favor, even if the second engineer disagrees with the insurance company.
Where’s the Science?
When you read them, you will find that most reports written by engineers for damaged roofing materials are devoid of science and engineering, except for boilerplate language prewritten to describe commonalities that may or may not be relevant to the damage being claimed. The part of the report unique to your roof will represent as much as a third of the report. It will typically include a record of the engineer’s reported observations (as did the adjuster before him).
You may see an opinion about how the hailstones that fell on your roof lacked speed, velocity, or density to cause damage — but you will find no calculations or references to how that speed, velocity, or density of the long-ago melted hailstone was calculated. These terms may sound impressive since they are intended to sound impressive, but is it true? Don’t ask the engineer who wrote it. He doesn’t know, for he never computed those calculations or made that analysis. He just wrote the words that 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. He failed to observe that the roof was covered with eighty-year-old concrete tiles, 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 negligence or bias caused his errors and omissions are not essential since his licensing board prohibits both. When the errors 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 a recent hailstorm had dented copper roofing material, the damage “could not be seen from the ground” and was not, in his professional opinion, “damage.” 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 over 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. After that disclosure from my investigation, the insurance company agreed to pay the policyholder over $232,000.00 to restore the roof to its pre-damaged condition. The engineer has returned to his full-time job of selling real estate.
On a commercial roof, the insurance carrier’s engineer attempted to save the insurance carrier from the cost of replacing an entire roof by recommending an inexpensive repair that the local code officials rejected. He argued that his repair was proper, and the insurance company foolishly stood behind a repair recommendation they knew to be unlawful., simply because it was provided to them by a licensed engineer and in direct defiance of the code officials. We had to get some attorneys involved, but ultimately, we settled for $1,000,000.00 – without filing a lawsuit.
As you can see from these few recent examples, not all engineer reports reflect accuracy, competency, or non-bias, and insurance companies that use these reports to deny claims are not always acting in good faith, according to the courts who have ruled against them. There are times when withholding money from you based upon reports that they know to be inaccurate has been considered vexatious and, through litigation in a federal or state court, has entitled policyholders to punitive damages in addition to the money owed to them. Your attorney can provide more details in this area.
Also worthy of note are the instances in which the engineer’s report is, by design or negligence, written in an ambiguous manner that allows facts about the damage that could benefit the policyholder’s claim to be manipulated in favor of the insurance company. Most policyholders are not trained or can thoroughly 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 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 after the hail damage. The people at the church hired me to assist them.
Several weeks after demanding a copy of the report so that I could review it myself, the insurance carrier reluctantly complied with my request. The report did NOT say what they told the policyholder it said. Though the engineer did his best to present the facts in such a way as to support the insurance company’s denial, his ambiguity and double-talk did not entirely discount the hail damage as a source of water to the interior. The insurance company finally agreed to pay the church $59,000.00 to cover the water damage to the interior of their building.
There are many more stories that I can share, but I think, by now, you get the point. Sometimes, neither the insurance carrier nor the engineer writing a report should have the final word.
What can you do if you are working on the claim by yourself?
While some state Departments of Insurance may not find biased, ambiguous, or erroneous engineer reports to be something they wish to handle or spend political capital, there are often other departments within state government that can act to preserve the integrity of the engineering profession and, in turn, protect the public from licensed engineers who are operating in an incompetent or biased manner.
Licensed professional engineers in Missouri are accountable to the state board that issues their licenses for their acts of bias and negligence. Accordingly, home insurance policyholders who believe they are victims of an improper relationship between their insurance company and an engineering company may have recourse through the Missouri Board for Architects, Professional Engineers, Professional Land Surveyors, and Professional Landscape Architects.
The board will investigate formal complaints from homeowners with merit, and action can be taken against the engineer when appropriate. Engineers who draft reports for insurance companies to use to deny claims that contain incorrect, partial, or biased information will have to justify their actions (if they can) to their respective licensing boards that monitor and enforce competency and impartiality. Their actions, if found to be 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 against licensed engineers who routinely provide insurance companies with undue “plausible deniability” used in their refusal to pay legitimate claims could effectively reduce this threat to policyholders seeking to be indemnified for their losses.
Last but not least, if you are an engineer who wrote an accurate report that favored the policyholder but had your report changed or modified by someone you work for who provides different conclusions than yours that are incorrect, do the right thing and report that action to your state licensing board.
[Note: Policyholders should also ensure that a state-licensed engineer wrote the engineer report. In some cases, these damage inspections are conducted by contractors, consultants, home inspectors, and others who are not licensed engineers, and the reports that they compose are subsequently sent to engineers to sign and affix their seal before forwarding them to an insurance company for their use. When you find the inevitable errors or omissions in these reports resulting from the unprofessional inspection or observation and report them to the insurance company, be sure that the insurance company is not responding to you with advice from the same unlicensed consultant rather than a licensed engineer. I have communicated with some insurance adjusters who, themselves, were not aware of the difference.]
(c) James H. Bushart, 2017
This Blog/Website is made available by James H. Bushart, Public Adjuster LLC, for educational purposes only and 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 site manager make no representations as to the 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 there is no public adjuster/client relationship between you and James H. Bushart, Public Adjuster. The Blog/Website 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 capable maintenance or repair advice from a qualified contractor licensed to perform work in your state.
I have handled many different kinds of insurance claims for policyholders. These are some examples of the situations I encountered and the outcomes I achieved. I did not violate any privacy or confidentiality agreements when writing these descriptions. My goal is to inform policyholders of what they can expect from insurance claims and that an alternative exists other than walking away from a denied or underpaid claim. These examples are not meant to imply that similar results are guaranteed.
Hail Damage to a Commercial Building — An insurance agent sold himself a policy for a commercial structure that he personally owned and that was subsequently damaged in a violent storm of high wind and softball sized hail. He filed a claim and the insurance company’s adjuster inspected his loss, applied his deductible, and wrote him a check for only $127.
The understandably shocked insurance agent attempted to negotiate a fair settlement for his loss on his own but could not get cooperation from the adjuster or his claims department. Eventually, the carrier’s claims department stopped responding to the calls from the agent and from his contractor. After several weeks of frustration and lack of progress, he contacted me and hired me to assist him with his claim.
After three weeks of negotiating with the insurance company and revisiting the property with a different adjuster, the insurance company agreed to settle for a little over $111,000.00.
You read that right. After originally valuing the loss at only $127 over the deductible, the insurance company agreed to the existence of extensive hail damage and paid more than $111,000.00 to restore the damaged property.
If being lowballed on an insurance claim can happen to an insurance agent, it can certainly happen to you.
[The agent now sells insurance for a different insurance company.]
Water Damage — After finishing their morning routine and leaving their home for work, the policyholder and his family were unaware that a water supply line in their bathroom had broken. When they returned home at the end of the day, there were more than two inches of water covering several thousand square feet of floor space and wicking up the walls. The insurance company’s adjuster did not convince the policyholder that he was making a fair assessment of the damage and I was invited to assist with the claim. The initial calculation to address the damage to the structure that was provided by the insurance company’s first adjuster was $24,763.83. After a few weeks of negotiations, we agreed to settle for the full cost of repairing the damage to the structure … which came to $69,764.94.
Hail Damage to a Personal Dwelling — The concrete and asbestos roof tiles were destroyed by a hailstorm and water entered the interior walls of the home. The insurance company offered $28,000.00 to replace the roof and repair the interior … but the homeowner could not find a contractor willing to do the work for that price. One of her contractors referred the homeowner to me to communicate with the insurance company on their behalf. In a shorter period of time than it took the policyholder to negotiate a $28,000.00 offer, I negotiated a settlement for $98,000.00 and she immediately hired a contractor to restore her home to its original condition prior to the storm.
Hail Damage to a Commercial Building — When the claim was first filed by my client, the insurance company said that there was no hail damage to the slate roof. After an inspection by someone the carrier identified as an “engineer” (who wasn’t), the insurance company agreed to pay only $61,000.00 for a partial repair to the damaged roof. Refusing to back down after our negotiations were stalled by the insurance company, we took the claim to appraisal and prevailed with an award of over $130,000.00 to replace the slate roof.
