Are the Engineer Reports Purchased By Insurance Companies to Deny Claims Accurate and Truthful?

engineer report to deny claim

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     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.

The Insurance Appraisal Clause (Simplified)

     

Insurance appraisal clause simplified

     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.

 

 

 

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.

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.

A Broken Water Pipe and the Insurance Claim

The recent cold blasts and “polar vortexes” that have made their way south into Missouri this winter have not been kind to some homeowners … particularly a recent client who had the misfortune of having a bathroom water pipe burst on the second floor of his home.

Broken water pipe on the level above.

Broken water pipe on the level above.

For an undetermined number of hours, water cascaded from the second-floor bathroom, then through the ceiling of the first-floor master bedroom, and then soon created a path into the finished basement and game room.  The damage was significant … not only to the structure of the home but also to the furnishings, clothing, pool table and electronic equipment that found itself underwater for hours before being discovered.

He called his insurance company who, in turn, hired a local “independent adjuster” who came to the home to assess the damage and determined that the insurance company would agree to pay approximately $11,000.00 to cover the loss of personal property and restore the home to its original condition.   Having recently spent much more than this to install the destroyed wooden floors and finish his basement the previous summer — my client was offended by his insurance company’s apparent disregard for his condition and was understandably upset.

In the search for a public adjuster to represent him, he found this blog on the internet and called me for assistance.

In a little more than four weeks, we were able to negotiate a settlement with his insurance company for over $38,000.00 with which he will be able to fully restore his home back to its original condition and replace his personal property exactly as promised by his insurance policy.

Most states now license public adjusters to assist homeowners and business owners with their property claims.  Help is available.  All you need to do is ask.

What is a Missouri Public Adjuster?

Mississippi River Scenic Byway in Missouri

Mississippi River Scenic Byway in Missouri (Photo credit: Doug Wallick)

By James H. Bushartwww.publicadjustermissouri.comAside from attorneys, public adjusters licensed by the Missouri Department of Insurance are the only type of claims adjuster that can legally represent the rights of an insured during a first party insurance claim process in the State of Missouri.

Upon notification of a claim for property loss or damage, the insurance company will send an adjuster employed by them or an “independent adjuster” contracted by them to investigate the claim.  These adjusters work for the insurance company and only represent the financial interests of the insurance company.  The Missouri Public Adjuster, on the other hand, levels the playing field by representing only the interests of the insured policy holder who has suffered the loss or damage to a business or home located in Missouri.

The Missouri Public Adjuster’s main responsibilities are to:

  • Evaluate existing insurance policies in order to determine what coverage may be applicable to a claim
  • Research, detail, and substantiate damage to buildings and contents and any additional expenses
  • Evaluate business interruption losses and extra expense claims for businesses
  • Determine values for settling covered damages
  • Prepare, document and support the claim on behalf of the insured
  • Negotiate a settlement with the insurance company on behalf of an insured
  • Re-open a claim and negotiate for more money if a discrepancy is found after the claim has been settled

For more information about the Missouri Public Adjuster or to request a free, no obligation consultation regarding a particular claim, contact me by writing jbushart@publicadjustermissouri.com or call me at 314-803-2167.

Copyright 2013 James H. Bushart

Property Depreciation – Age Should NOT Be The Only Factor

By James H. Bushart

 

Most insurance policies will define the terms by which the insurer will calculate ACV (“actual cash value”) in determining how much to pay and, usually, the factor of “age” is not one of those conditions. Still, the age of the property is often used as the primary determining factor when depreciating or subtracting from the replacement costs of an item of property that is being adjusted for settlement.

While it is true that an object’s age can correspond closely to its extent of physical wear and tear – it is not true in every circumstance. Age alone should not cause an object to lose a large percentage of its value and if the object is functionally sound, it should retain most of its value.

I have helped clients recover higher settlements from insurers who had initially calculated depreciation as high as 75% for perfectly working and maintained fireplaces that happened to be original to older homes. Plaster on the wall that was lost to fire was depreciated by more than 65% even though it was fully intact and functional prior to the fire and the insured home owner was entitled to a higher adjusted settlement. Countless other items and systems in the home have been grossly over-depreciated – at a great expense to the insured – for no other reason than their age.

In some cases, the age of the item may be incorrectly calculated and higher rates of depreciation can be mistakenly applied.  One recent case highlighted certain items as being subject to excessive depreciation due to what the adjuster determined to be advanced age when, in fact, the same insurance company had actually paid for their replacement less than a year prior when vandals had damaged the home.

Property owners should know and understand that an object’s amount of depreciation is identical to the amount of how much better, or more valuable, a new object is compared to the older object. This is what is actually being determined. Age is not always an appropriate measure of this and arbitrary deductions from replacement values that are simply based on age should be challenged by the insured. The adjuster must carefully listen to the insured’s arguments and negotiate in good faith.

If you feel that your property was unfairly depreciated and that your insurance company’s offer of settlement is unreasonable and unfair, contact me (if you live in Missouri) or a public adjuster licensed to represent you in your state.

[Update – 3/12/13 –  My client had a home damaged by a fire that needed extensive repair, as mentioned above.  The insurance company underpaid him … claiming a depreciation of 67% on the interior walls based totally upon their age.  After reopening the claim and further discussion with me,  they issued him an additional check for $11,438.00.]

 

Copyright 2013 James H.Bushart

Emergency Supply Kit for Severe Weather

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Assemble the following items to create emergency supply kits for use at home, the office, at school, and in your vehicle:

  •  Water—1 gallon per person, per day (3-day supply for evacuation and 2 week supply for home)
  •  Food—a 3-day supply of non-perishable food for evacuation, 2-week supply for home
  •  Battery-powered or hand crank radio, and a “Public Alert Certified” NOAA Weather Radio and extra batteries for both
  •  Items for infants—including formula, diapers, bottles, pacifiers, powdered milk and medications not requiring refrigeration
  •  Items for seniors, people with disabilities and anyone with medical needs—including special foods, denture items, extra eyeglasses, hearing aid batteries, prescription and non-prescription medications that are regularly used, inhalers and other essential equipment
  •  Kitchen accessories—a manual can opener, mess kits or disposable cups, plates and utensils, utility knife, sugar and salt, aluminum foil and plastic wrap, resealable plastic bags
  •  One complete change of clothing and footwear for each person— including sturdy work shoes or boots, raingear and other items adjusted for the season, such as hats and gloves, thermal underwear, sunglasses, dust masks
  •  Sanitation and hygiene items—shampoo, deodorant, toothpaste, toothbrushes, comb and brush, lip balm, sunscreen, contact lenses and supplies and any medications regularly used, toilet paper, towelettes, soap, hand sanitizer, liquid detergent, feminine supplies, plastic garbage bags (heavy-duty) and ties (for personal sanitation), medium-sized plastic bucket with tight lid, disinfectant, household chlorine bleach
  •  Other essential items—paper, pencil, needles, thread, medicine dropper, whistle, emergency preparedness manual
  •  Several flashlights and extra, fresh batteries
  • A first-aid kit
  • A copy of your home owner’s insurance policy
  • Contact information for a pre-selected, local and licensed Public Adjuster

This list was extracted and modified from the information provided at: http://www.nws.noaa.gov/os/severeweather/resources/ttl6-10.pdf

Prepare for a Home Fire Emergency … Today!

  • Install smoke alarms on every level of your home, including the basement. For extra safety, install smoke alarms both inside and outside sleeping areas.
  • Test your smoke alarms once a month and change the batteries at least once a year.
  • Replace smoke alarms every 8-10 years or as the manufacturer guidelines recommend.
  • Plan your escape from fire. The best plans have two ways to get out of each room.
  • Practice fire escape plans several times a year. Practice feeling your way out of the house in the dark or with your eyes closed.
  • Purchase only collapsible escape ladders evaluated by a nationally recognized laboratory such as Underwriters Laboratory (UL).
  • Check that windows are not stuck, screens can be taken out quickly, and that security bars can be properly opened.
  • Make sure everyone in your family understands and practices how to properly operate and open locked or barred doors and windows.
  • Consider installing residential fire sprinklers in your home.
  • Take the time to prepare (and, if possible, photograph or videotape) a complete inventory of all of your belongings.  Store this information with a friend or family member so that it is not lost in the fire.
  • Find and meet a local licensed Public Adjuster to have your home insurance policy reviewed in advance of an emergency and keep his phone number in an accessible place.

Contact your local fire department on a non-emergency phone number if you need help or have questions about fire safety in your home.

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