After considering the adversarial posture of an insurance company toward its policyholder in the event of a claim and assuming the best – that you would be successful in recovering the most that your policy provides to restore your property after a catastrophic loss – did you buy enough insurance to actually restore your property?
Some people will negotiate a terrific deal when purchasing a commercial building or residential dwelling and then will insure that building for the amount of money they paid for it. The mortgage lender is certainly happy with that amount of insurance for it fully protects their financial investment, but is the market value of a structure sufficient to rebuild it if it were destroyed? Most likely, it would be significantly less, and it is probably not your plan after a major loss to simply pay off your loan, remove the rubble at your own expense, and live or conduct business on an empty lot.
Even before the current exponential increase in costs for building materials, the market value of a structure did not reflect the cost of replacing all or most of it which, in the event of a major fire or storm, would be the purpose of an insurance policy.
A general contractor or builder in your immediate area will be able to tell you what an average cost per square foot would be to replace all or most of your building today if it were significantly damaged. Take that cost and multiply it by the square footage of the building you are insuring and then add a few dollars for next year’s inflation. This will tell you whether or not your home or business structure is insured for a sufficient amount of money.
Believe it or not, many policyholders will help their insurance company withhold money from them that they might have otherwise been paid. Of course, they don’t mean to sabotage their own insurance claim – but the denial will often rest more upon their actions than those of their insurance carrier.
To better understand how insurance companies allow their policyholders to defeat themselves, it is important to understand three basic points:
1. The policyholder has the burden to prove that they have a covered loss.
2. The insurance company has no duty or obligation to assist the policyholder in their efforts to prove that they have a covered loss.
3. The insurance company has the duty to pay the claim for a covered loss unless they can prove that an exclusion named in the open peril policy applies to the claim. The burden of proof that the exclusion exists rests upon the insurance company.
If you have incurred damage to your home or business, you must present proof of the loss and proof that it is covered under your policy and you must do it without counting on your insurance company to assist you. It is your duty to prove your claim. If you do, they pay you – unless there is an exclusion in your policy that disallows payment for your particular loss. If there is such an exclusion, the burden of proof is theirs to prove that the condition excluding coverage exists. If they cannot prove this, they must pay you.
Refer to these basic points as you read the following few ways that policyholders I have recently spoken to have assisted their insurance companies with the denial of their claim:
A. “A hailstorm struck my neighborhood recently and everyone within a quarter of a mile of my house had their roofs replaced by their insurance companies, so I filed a claim, too,” said the policyholder to the claims adjuster.
This is a common insurance claim which is just as commonly denied by insurance companies. The policyholder, when reporting a “claim” such as this has no idea whether or not there is any hail damage to their property and, accordingly, has no proof to provide to the insurance carrier.
Their argument that their claim is based upon the condition of neighboring properties is not only inconsistent with their insurance policy but is just as irrelevant and illogical as if their carrier were to tell them “We are not going to accept your insurance claim for hail damage since no one within a quarter of a mile from you reported damage.” The fact that neighboring structures are damaged does not prove that yours is.
It is possible, by chance, that the adjuster might find hail damage to your property in spite of the fact that you did not, but don’t bet on it. The damage he might find could possibly exceed your deductible and you might receive some money for that loss. The future adjustment to your insurance premium, however, might be greater than your settlement if your carrier decides that you are a risk to file a claim against your policy with no actual knowledge of damage. Re-read Basic Point #1, above. Know that you have incurred damage from a storm before you file your claim.
B. “I have water leaking through my ceiling. I filed a claim for damage to my roof,” said the policyholder to the claims adjuster.
In Missouri, it has been an extremely rare event for a hailstone to be large enough to strike roofing material with enough force to create a hole in the roof. A roof leak is rarely associated with damage from hail. More commonly, a roof leak is the result of a maintenance issue related to the deterioration of flashing, aged repairs, or other roofing materials. Before filing a claim for roof damage, you (or a trusted roofing professional at your request) should determine the source of the leak and its cause.
If the cause was sudden and accidental (i.e. wind damage or fallen tree limb, for example), photographs of the damage and cause should be included with the insurance claim you file. If the cause was due to wear and tear of aging materials or other maintenance-related issues, however, your claim will be denied because you failed to prove that you incurred damage from a covered loss. It is better for you (and your future premiums) to know this before you decide to file a claim.
Know where the leak is coming from and what sudden and accidental event caused it. If the leak was caused by a covered peril, prove it to yourself first. When you file your claim, describe the damage and the cause and, when the adjuster comes out to inspect the damage, be prepared with your evidence to prove your covered loss to your insurance company.
C. “We had heavy rain for three days. There are six inches of water flooding my basement. I filed an insurance claim.”
Missouri home insurance policies do not cover “flood” damage. Unless you have an endorsement added to your policy for sump pump failure or backup damage, it is probable that water that enters a home from outside of the home (as opposed to a broken water service line inside the house) is not covered under a home insurance policy.
Before filing a claim, know (and gather physical or photographic evidence) where the water came from. When reporting the claim to the insurance company, don’t describe your damage as “flood” damage when it is water damage caused by a broken line or backed up drain from within the home. If you are counting on the insurance adjuster to investigate and prove your loss for you, it is highly probable that you will be disappointed in his results.
After you have presented proof of your covered loss to your insurance carrier, they should pay you – unless they can prove that your loss is specifically excluded by your policy. To assist them with their proof, the insurance company will sometimes hire people who they have worked with and who they know to be skilled in assisting them with finding such proof (i.e. engineers and consultants). Often, the professionals they hire to assist them will go beyond the scope of PROVING an exclusion and go out in search of one. When this happens, the likelihood exists that the forthcoming denial is based on something less than objective facts.
Since the insurance company hires and pays engineers and consultants to assist them with proving that there is an exclusion to the coverage that removes their obligation to pay you, it is clear to see how a policyholder sabotages his own claim by insisting that the adjuster he disagrees with hire an engineer to inspect the damage – as if the engineer will somehow decide to support the policyholder rather than the insurance company paying him.
If you are not comfortable preparing your own claim and presenting your proof to your insurance company, a licensed public adjuster can help you. When you present your own claim and are not convinced that the insurance company’s denial or underpayment is fair, have your claim reviewed by your attorney or a licensed public adjuster to determine the next best step.
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, 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 “cosmetic” in that it did not interfere with the “function” of the canvas to hold paint. It was, after all, covered with paint … 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 represent those that are quite common with home and business property insurance claims.
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 the 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 storm 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 will send an engineer.
The engineer will often look at your shingles and surrounding metals for gaping 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 will deny the claim – for this is the very reason the engineer was hired.
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 attorney or a licensed public adjuster.
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 big 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 hail storm 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 or not 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 or not 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. This is why the carrier will hire an engineer or other expert to look at the damage. Policyholders who are in disagreement 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. Generally speaking, 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 interests in profiting from the work provides the adjuster with ease in exploiting and manipulating him.)
3. Learn if that damage is covered under your policy. Read your policy, speak to your agent, or consult with your attorney or public adjuster for assistance if you are confused about your policy’s language. Sometimes, it’s tricky.
4. Provide copies of your evidence to the insurance company when you file the claim or, if more convenient when the adjuster visits to inspect the property. (If you are not confident or comfortable in doing this, hire a public adjuster to represent you with this process.)
5. If your insurance carrier does not cooperate with you after providing proof of your loss and coverage, seek the assistance of an attorney or a public adjuster.
“I have paid my premiums on time for twenty years and have never filed a claim. Now, it is difficult for me to tell who has caused me more damage — the storm or my insurance carrier.”
The above exclamation, or words similar to it, is something that I hear almost on a daily basis from Missourians who have had the misfortune of needing to file an insurance claim for damage to their homes and businesses. Do you really become “the enemy” of your insurance carrier when you file a claim? Do they really consider you more as an adversary than a customer?
I received an email today from an attorney representing an insurance carrier from out of state and who sells insurance policies in Missouri who provided a clear and convincing answer to those questions.
My client, a commercial business, had incurred extensive and obvious hail damage to multiple buildings and filed an insurance claim. Their insurance company hired an independent adjustment firm to inspect the damage who reported their observations to the carrier. The carrier, after receiving their report and photographs, decided to hire an engineer who regularly assists insurance carriers in denying coverage for hail damage to properties in Missouri.
With the hail damage being as obvious as it was, there was no legitimate reason to have an engineer look at the same dents, gouges, and tears that their independent adjuster had just seen and photographed. I suspected that the independent adjuster had actually recommended that the claim be paid against the carrier’s wishes, and I requested a copy of his report. Insurance companies almost always share their reports when their report supports a claim denial. For some reason, the carrier did not want to share this one and I was suspicious of their intention.
When I submitted a formal written request for a copy of the report from their independent adjuster that I believed supported my client’s claim for damages, I received a letter from the carrier’s attorney in response that confirmed my suspicions. In part, it read as follows:
“Under Missouri law, the relationship between an insured and the insurer with regard to first-party claims becomes adversarial when a claim is made on the policy. Therefore, the insurer is entitled to assert work product privileges to prevent access to materials found in the claim or investigative file.”
Because my client had filed a claim, he became an “adversary” to his insurance carrier and was not entitled to see documents in his file that might support his claim. In return for his annual premiums exceeding $80,000.00 per year, this is what his money bought for him. An adversarial relationship.
Of course, we’re suing. Soon, that report and all of the other documents in the file will be in the hands of his attorney. He will recover all of the money owed to him by his insurance carrier along with (most likely) punitive damages and his attorney fees. He is, indeed, an “adversary” to his insurance company – but not because he filed a claim. Rather, it was the insurance carrier that decided to vexatiously withhold money that was due to him under his contract rather than to pay him what he was entitled to. That action taken by them, and not his claim, is what made him an adversary … and a worthy one, at that.
Not everything that is unethical is illegal. There are ways of stepping right up to the line without crossing it and no one can do it better than some insurance companies with their vast financial resources and lobby power at the state government level.
375.1007. Any of the following acts by an insurer, if committed in violation of section 375.1005, constitutes an improper claims practice:
(1) Misrepresenting to claimants and insureds relevant facts or policy provisions relating to coverages at issue;
(2) Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies;
(3) Failing to adopt and implement reasonable standards for the prompt investigation and settlement of claims arising under its policies;
(4) Not attempting in good faith to effectuate prompt, fair and equitable settlement of claims submitted in which liability has become reasonably clear;
(5) Compelling insureds or beneficiaries to institute suits to recover amounts due under its policies by offering substantially less than the amounts ultimately recovered in suits brought by them;
(6) Refusing to pay claims without conducting a reasonable investigation;
(7) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed and communicated to the insurer;
(8) Attempting to settle a claim for less than the amount to which a reasonable person would believe the insured or beneficiary was entitled by reference to written or printed advertising material accompanying or made part of an application;
(9) Attempting to settle claims on the basis of an application which was materially altered without notice to, or knowledge or consent of, the insured;
(10) Making a claims payment to an insured or beneficiary without indicating the coverage under which each payment is being made;
(11) Unreasonably delaying the investigation or payment of claims by requiring both a formal proof of loss form and subsequent verification that would result in duplication of information and verification appearing in the formal proof of loss form;
(12) Failing in the case of claims denial or offers of a compromise settlement to promptly provide a reasonable and accurate explanation of the basis for such actions;
(13) Failing to provide forms necessary to present claims within fifteen calendar days of a request with reasonable explanations regarding their use;
(14) Failing to adopt and implement reasonable standards to assure that the repairs of a repairer owned by or required to be used by the insurer are performed in a workmanlike manner;
(15) Failing to promptly settle claims where liability has become reasonably clear under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.
I recently read a touching and inspiring tribute written by an attorney who advocates for policyholders and who had recently lost a valuable partner and fellow advocate to cancer. Together, they would fight the good fight. There are not enough fighters like them in this arena, and in his tribute to his partner, he described her drive and enthusiasm for battling with insurance companies on behalf of their clients.
Being one who shares in the same fight (though not at such grand of a scale), I felt a great sense of personal loss. Even though I did not know her, personally, I know her heart and I have shared similar pain with the clients who had purchased insurance for peace of mind but found, when disaster came to their door, that this peace was only a temporary illusion.
Though Missouri law tasks an insurance company to provide prompt and fair assistance to its policyholders in exchange for payment of premiums, minimizing risk, and filing a claim only upon sustaining damage – some insurance companies, to protect their own financial interest, inflict more stress and financial harm upon their policyholders than the destructive event that prompted their claim, and at a time when the policyholder is most vulnerable with the least financial reserve. Instead of providing the warm professional care and assistance projected by their televised mascots, the policyholder is frequently met with fierce opposition and obstruction intended to exasperate, wear down, and break the resolve of the most committed policyholder defending his own rights under the very insurance policy he bought for “peace of mind”.
Fighting through a barrage of tactics used by insurance companies to delay, deny, and defend against the policyholder is certainly not an enjoyable experience for either the policyholder or his advocate. It is, however, something that must be done in order to receive a dollar-for-dollar payment for the incurred loss. That is the reality that is not shown on friendly and warm television commercials.
In search of an expert to provide them with a reason to deny a claim, many insurance companies will turn to the engineering profession.
There are highly respected and valued professional licensed engineers who design and build bridges and skyscrapers, who safely and efficiently channel waterways through and around large cities, who design and test the durability of aircraft and automobiles, who meet and overcome construction and building challenges around the globe – and then there are those who market themselves to insurance carriers for the purpose of providing written reports for them to use to deny insurance claims for wind and hail damage to homes and businesses. There is money in it. Insurance companies will pay them upwards of $2,500.00 per report. Most of these reports provide little more than boilerplate narratives regarding simple roofing materials and most of them contain little or no scientific or engineering data – but aside from their apparent lack of relevance, how accurate is the information that is provided?
As a public adjuster representing business and homeowner policyholders with their insurance claims, I read many of these reports and too often find errors, misrepresentations, and ambiguities salted among information intended to present a “scientific” spin on what are usually simple, routine observations that virtually anyone can make.
Much of what you will find in these reports, sometimes as much as two-thirds or more of the entire report, is a boilerplate filler of generic information that could be (but not always) relevant to their observations. It looks impressive at first glance, just as it is intended to, but is it even correct? Not always.
An engineer in several of his recent reports used by various insurance companies to deny claims includes the following language: “According to the National Roofing Contractors Association (NRCA), the lifespan of a roof is 20 years.” His report was peer-reviewed and stamped by another engineer with his firm – an engineering firm widely used by insurance carriers throughout the country. This claim by the engineer caught my attention because he was writing about a certain type of roofing material that carried a 30-year warranty and, as most people familiar with roofing materials know, various roofing materials have various lifespans – some as high as over 50 years.
I did not believe that the National Roofing Contractor’s Association would be so uninformed as to publish what he claimed they did, so I wrote to them and inquired as to where I could find the information from them that this engineer was quoting in his report used to support a denial of a cliam. The Vice President of Technical Services for the NRCA responded to me, as follows: “The 20-year figure is not from the NRCA. Lifespans vary greatly.” Thus, the engineer was not only wrong in his peer-reviewed statement of fact regarding the lifespan of a roof, but he also misrepresented the source for his errant facts.
Some engineers will provide comments and conclusions about the density or speed of hailstones as being less than required to damage roofing material and provide absolutely no information as to how they were able to measure the density or speed of the hailstone that melted away months or years before their observation. We are to simply take their word for it, like the quotations from the NRCA, perhaps.
The engineer paid by the insurance company might use ambiguous language that appears to say something but doesn’t. For instance, did the engineer say that large hailstones did not strike your roof, or did he simply say that he did not observe evidence of large hail strikes? There is a difference. Could there be evidence that he did not “see”, such as bruised indentations on weathered asphalt composite material that is soft to the touch? Did he say this, or did he leave it to the insurance company to use in the manner of their own choosing?
Insurance carriers, being corporations who have a fiduciary duty to protect the financial interests of their shareholders as well as a contractual duty to fulfill their promises to their policyholders, will often find this conflict of interest resulting in their wrongful actions of grossly underpaying or wrongfully denying their policyholders’ claims. The misuse of engineer reports is one of the ways they do this.
Often, insurance companies will knowingly allow the engineer’s errant attempts to interject policy interpretations into his report to be used to deny a policyholder’s claim. I have personally reversed an attempt by an insurer to deny an insurance claim because the engineer reported that the damage to the roof “could not be seen from the ground” when there was nothing in the policy to exclude damage for that reason, as one of many examples.
An expert witness in court must present his credentials, provide his testimony under oath, and be subjected to cross-examination, but insurance companies present biased hired guns as experts in the claims process and deprive vulnerable policyholders of necessary funds to restore their homes and businesses, with impunity.
The advice to not believe everything you read should be extended to engineer reports paid for by your insurance company to deny your insurance claim. Have them closely reviewed by your own expert for accuracy, relevancy, and truth before accepting that your claim should be denied as a result of an engineer’s report. Whatever you do, do NOT let the insurance company’s engineer be the final word on the validity of your claim.
Missouri contractors cannot negotiate your insurance claim on your behalf with your insurance company. On August 28, 2011, the Governor of Missouri signed into law Senate Bill 101 which prohibits home exterior contractors from representing a policyholder or negotiating on their behalf with their insurance company for exterior work on their home as a part of an insurance claim.
So why do insurance companies continue to negotiate with residential contractors in spite of this law? Perhaps it is because, when they do, they can get away with underpaying your claim.
An insurance adjuster can say things to your contractor that he cannot say to you, your Missouri attorney or your Missouri licensed public adjuster because, unlike you (and those who lawfully represent you), the contractor is not a party to the agreement (the policy) between you and the insurance company.
Insurance adjusters will often withhold certain information from the contractor, misrepresent or not fully disclose your coverage to the contractor, and say things to your contractor such as “We are not paying that much for that building material … Your estimate is too high for labor and you need to revise that … We are not going to pay more than such and such dollars for this claim … We won’t pay your overhead and profit” … and so forth because they are not communicating with you or anyone lawfully representing you.
It would be an act of bad faith, and perhaps a vexatious act carrying severe penalties, for the adjuster to say such things to you or to your lawful representative. Why? Because certain communications and actions between insurance companies, their policyholders, and their lawful representatives are regulated by the Missouri Department of Insurance. Such regulations, however, do not necessarily extend to their relationships with contractors and other vendors. In their opinion, your contractor is representing his own interests and not yours.
For example, when an insurance adjuster makes a statement of fact regarding your coverage to you or your lawful representative, he must respond with supporting language from your policy upon demand. Not so, however, when the same demand is made by your contractor. Since the contractor is not a party to the agreement or lawfully representing anyone who is, he is not entitled to know all of the important information the policy contains. Withholding this information about your specific coverage from your contractor puts him in the dark and the insurance company’s adjuster in complete control.
Some contractors mistakenly believe that since they have worked with certain insurance companies or adjusters in the past, all policyholders with that company have the same or similar coverage – which is not true. Three or four neighbors living side by side on the same street can be insured by the same insurance carrier and have different policies with different coverage. Some contractors quote what they believe to be “state law” as to what an insurance company must pay for which is also not true. In Missouri, state laws do not govern or control all of the information contained in an insurance policy, and policy interpretation disputes are settled in civil court and are generally not legislated.
I hold skilled and experienced exterior contractors in very high regard. They are important advisors for you and/or your lawful representatives in settling a claim. Their skillful and experienced input in determining the full scope of the damage and what they charge for restoration of that damage is helpful, often vital, in settling your claim. It is when they extend beyond their valuable construction skills and expertise and go beyond the “low hanging fruit” that the adjuster would pay anyway and (as some contractors advertise) “push” the adjuster toward a larger settlement, complete documentation, communicate with the carrier on your behalf and settle your claim, those and similar actions may not be in accord with the law and their results may not produce all of the money that you are entitled to.
Most damaging is the harm some do to your claim before you finally bring in qualified and lawful representatives, such as your attorney or licensed public adjuster, to assist you. While their lack of ability to correctly interpret your coverage or communicate your rights under the policy may have limited their ability to help you fully resolve your claim, what they communicated to the insurance company (correctly or incorrectly) can interfere with a fair resolution and must be identified and resolved before progress can be made.
I work with many exterior contractors and help them operate within the boundaries that are set forth in Senate Bill 101, allowing them to focus upon their areas of skill and expertise to fully serve their customers’ construction needs. Their customers are able to recover from their insurers what they require to restore their home to its pre-damaged condition and the contractor makes what he bids for the work that is required. When it is done correctly, all parties are served in a win-win position. When it is done improperly, however, some or all come out on the losing end.
Not all claims require an attorney or a public adjuster to handle them. In fact, most can be handled directly by the policyholder with no representation at all, if they understand their rights under their contract with the insurance company and have a skilled contractor they trust to correctly inform them of their damage and what must be done to restore their property to its pre-loss condition.
No one but you, your Missouri attorney, or your Missouri licensed public adjuster should be communicating with your insurance company on your behalf, and remember that a “no” from the insurance adjuster to your exterior contractor is not 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.