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.

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? 

Your policy covers damage from all perils – except for those that the policy excludes from coverage.  In the absence of an exclusion, your insurance provider must pay for your covered loss.

The burden of proving that a policy exclusion applies (such as “wear and tear” or “poor workmanship”, for example) is on your insurance company.  When an insurance adjuster can find an exclusion to the policy, he will usually tell you.  When the adjuster cannot find an exclusion, rather than pay you he may recommend to his company that they hire an engineer to “find” one.  

The inspection of damaged roofing materials is not an engineering practice.  If it were, Missouri law would prohibit anyone other than a licensed engineer 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.

Public Adjusters Negotiate on Behalf of Policy Holders … Not Their Contractor

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All of my business comes to me by way of my internet advertising and referrals.  I do not “chase fires and storms” or otherwise solicit policyholders who have suffered a loss to hire me.  A potential client (or the person referring them) must contact me, first.

Referrals come to me regularly from former clients, attorneys, insurance agents, and building contractors who recommend me to policyholders that they know, and that might benefit from my involvement with their insurance claim.

Some Missouri building contractors will attempt to negotiate with an insurance company on behalf of the owner of the property that they are repairing or rebuilding (when not prohibited by law) and will often find that the insurance company refuses to cooperate with them.  Instead of contracting to do work for less than what they need to make, or before using inferior products and labor and cut corners to afford to work for the insurance company’s lowball estimate, they advise the homeowner to hire a public adjuster for assistance.

I have received many referrals from building contractors and have assisted the policyholders that they referred to me with successfully reopening their claim and getting a fair settlement that covers the full cost of the project (as well as my fee) so that the contractor can receive his full pay to do quality work.  This is a win for the policyholder, a win for the contractor, and a win for an insurance company who operates in good faith.

Likewise, policyholders that I help will often ask me for advice or referrals when they have been paid and are ready to begin the work of restoring their home or business.  I will recommend many of the fine and reputable building contractors that I have come to know and admire, knowing that they will be satisfied with the results.

Sometimes I will get calls from contractors who are simply wanting me to aid them to increase their own level of profit, at the expense of the insurance company and the policyholder, by adding unnecessary work to the scope to increase the cost to the job and expect me to negotiate on THEIR behalf and convince the insurance company to pay it.  I don’t do that.

A recent case in point was a Missouri policyholder who was reluctant to hire a public adjuster but was pressured to contact me by his building contractor.  The contractor initially attempted to “represent” the policyholder in negotiating his contract with me and discussing the claim with me, but I refused and communicated directly with the policyholder.  This is the only way I do business.

As I investigated the claim, I found that the insurance company had inspected the hail-damaged roof and siding with the contractor’s estimator and had actually agreed to pay what the estimator had originally estimated the costs to be.  Then, for reasons not clearly explained, the owner of the construction company revised his estimator’s original estimate and added a large amount of money for something outside the normal scope of work, and the insurance company refused to pay for this additional cost.

My job, according to the building contractor who pressured the policyholder to hire me, was to get the homeowner this extra sum for this unnecessary work so that he could pay it to the contractor.  I refused to do this and advised the policyholder that the insurance company had offered a fair settlement that matched the original estimate provided by his contractor, and that I was withdrawing from his claim.

An insurance claim is a matter that is between the policyholder and his insurance company, and the only acceptable resolution to an insurance claim is a complete restoration of the insured property to the condition that it was immediately before the event that caused the loss.  The contractor is hired by the policyholder to perform the work to meet that level of restoration and the insurance company has a duty to pay the costs associated with that level of restoration.  Nothing more … nothing less.

I appreciate the many referrals that I receive from building contractors who are looking to help policyholders achieve fair settlements so that they can be paid in full for their valuable services; however, when the policyholder and I agree to work together on his claim, I represent the policyholder and his interests, only.

Home destroyed by fire.

Home destroyed by fire.

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