Missouri Homeowners/Business Insurance and the Roof

 

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     There are basically 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 or 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 generally understand your roofing coverage for each insurance carrier.  While I recommend that you visit their site, I urge you to take the time to actually 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 very best behavior, its job is the same as any corporation that is run by a board of directors.  That job is to put the financial 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?

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

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

a.  the financial interests of the policyholders.

b. the financial interest of the stockholders.

c.  both of the above.

d.  none of the above.

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

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

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

     What this list should teach those of us who buy insurance is the need for us to carefully select an insurance provider based on something other than cute or funny television commercials.  Sweet talking lizards that collect your insurance premium can quickly become vicious and vexatious crocodiles defending the company against your valid claim.  If you can learn this before you become vulnerable as a result 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 actually go through the red tape to file a complaint with the State government , when an insurance company exceeds the normal rate of complaints under such circumstances – it really says something.

Caveat emptor.

Why Missouri Contractors Cannot Negotiate Your Insurance Claim.

missouri contractors cannot represent your claim

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

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

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

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

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

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

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

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

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

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

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

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

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

 

 

 

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

The Need for a Personal Contents Inventory

Need for a personal content inventory

Home destroyed by fire.

 

The most cumbersome task required of a homeowner by their insurance company when filing a claim after a catastrophic 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 time and time again.

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 video.  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.

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

 

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

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

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

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

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

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

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

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

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

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

 

 

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

The Insurance Appraisal Clause (Simplified)

     

Insurance appraisal clause simplified

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

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

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

     After suffering a direct physical loss to your home or commercial building, the last thing in the world you need is three people you don’t really know (none of whom will be doing the work) “guess“timating what someone else will charge you to restore it.  

     Remember this important fact:  In exchange for your premium, your insurance policy directs your insurance company to pay you what it costs (not what anyone “estimates” it to cost) to restore your property to the way it was before the loss.

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

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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.

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

War Exclusion

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

Dear Jim,

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

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

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

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

 

 

 

 

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.

Computer Generated Estimates from Insurance Adjusters

computer generated estimates

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

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

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

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

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

The Improper Use of Engineers’ Reports to Deny Insurance Claims

 

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

 

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Plausible Deniability

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

The Set-Up

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

Your insurance company’s “roofing” expert will probably be a licensed engineer who, if he is like most engineers, has never installed or supervised the installation or repair of a roof.  His engineering specialty before becoming employed by the engineering company he now works for may have been geotechnical, water resources, electronics, or any other of the numerous variety of engineering specialties that have nothing at all to do with building materials in general or roofing materials, in particular.  Roofing materials are not structural and are not an engineering specialty.

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

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

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

 

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Shooting Yourself in the Foot

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

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

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

Follow the Money

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

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

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

One Plus One Equals Zero

Because they don’t know better, many policyholders who have been stung by a biased, incomplete, or errant engineer’s report (or simply one they do not agree with) will insist that their insurance company “send out another engineer“.  Understanding that the engineer was hired to write the controversial report in the first place, and at a considerable sum, the insurance carrier has no incentive at all to argue with itself.  A second engineer’s report that differs at all from the first simply puts the disputed question in a “tie” – one for you and one against you.  The second report is not definitive simply because it disagrees with the first.  Requests from policyholders for the insurer to send out a second engineer for a second opinion go nowhere and even if the carrier should decide to pay for a second report, it is highly unlikely to result in the policyholder’s favor, even if the second engineer disagrees with the insurance company.

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 particular roof will represent maybe 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 possibly 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 really know, himself.  Often, this narrative is cut and pasted into the same engineer’s 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). 

 

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Examples of Bias, Fraud, and Incompetence

An engineer’s report that I received from one of these companies specified how the engineer closely examined the “clay tiles” that were chipped and found the damage to be attributed to something other than hail. He then provided a lengthy and generic boilerplate description of how “clay tiles” are made and the scientific studies of the effects of hail that strikes them.  What he failed to observe was the fact that the roof was covered with eighty-year-old concrete tiles and not clay tiles.  He not only missed the hail damage but incorrectly identified the material.

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

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

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

Also worthy of note are the instances in which the engineer’s report is, by design or negligence, written in an ambiguous manner that allows facts about the damage that could benefit the policyholder’s claim to be manipulated in favor of the insurance company. Most policyholders are not trained or able to fully screen and comprehend detailed engineering reports.  In one recent claim in 2019, for example, an engineer report that accurately described and reported damage to a commercial building was wrongfully interpreted by the insurance company to deny a claim that, after I reopened it and challenged their interpretation, resulted in a check to my client for over $692,000.00.  Prudent policyholders will arrange to have their insurance denial letters and accompanying engineer reports reviewed by a public adjuster or attorney before walking away from their claim.

Sometimes, what the engineer actually reported was not correctly communicated to the policyholder by his insurance adjuster. In one case, the insurance company denied coverage to a church for interior damage caused by water entering from a roof damaged by hail. The adjuster told the church that the engineer concluded that the interior damage was from “wear and tear” and not subsequent to the hail damage. The people at the church hired me to assist them.

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

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

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

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

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

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

Enough enforcement actions taken against licensed engineers that participate in the practice of routinely providing insurance companies with undue “plausible deniability” used in their refusal to pay legitimate claims could effectively reduce this threat to policyholders seeking to be indemnified for their losses.

 

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

 

 

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.

Insurance Adjuster and Engineer Make a $69,000 Mistake at Policy Holder’s Expense

Photo by Gabby K on Pexels.com

An expensive slate roof with copper flashing was severely damaged by hail.  The insurance company’s adjuster and his contracted engineering company agreed that it was damaged by hail … but still refused to pay for the repair.

The insurance company’s adjuster referred to a paragraph written on the third page of a letter that had been sent to the policyholder six months before which totally excluded hail damage to soft metals that did not result in leaks.  He told the policyholder that the vast majority of the $69,000 (plus) damage to his roof would have to be paid at his own expense.

The policy holder’s roofing contractor referred him to me for assistance with his claim.

My close examination of the policy, the letter, and the engineer’s report (in addition to localized weather reports) revealed that the exclusion the adjuster used to deny coverage did not take effect until four weeks after the hail storm. Accordingly, his denial of the claim was improper and he owed the insured for the damages.

When I brought this to their attention,  the insurance company reluctantly acknowledged their duty to pay.  The policyholder was made whole and the contractor is now able to serve another homeowner in need of his services.

“No” is not always the final answer.  Have a licensed public adjuster review your claim before walking away from your money.

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