Here is a story about how an engineer might record the functional damage versus cosmetic damage in a fictional situation, first.
Once there was a maintenance man who worked in a famous art museum and was directed by his supervisor to touch up the white paint on the wall of a certain gallery within the museum. As he was ascending his ladder he accidentally tipped over his gallon of white paint and it splashed across the surface of a 550-year-old painting from a world famous artist that hung in the gallery.
Of course, the painting was insured and the curator immediately filed a claim. The insurance adjuster took a few photos and shared them with his boss who said “We need to send out an engineer.“
The engineer arrived to examine the painting and noted that the framed canvas was designed and intended to hold paint of various colors. Since the canvas and frame were still intact and obviously able to retain paint, he recorded that the painting was still “functional”. The painted surface had white paint splashed across the smiling face of a woman named “Lisa” or something, but he reported the damage was only “cosmetic” in that it did not interfere with the “function” of the canvas to hold paint. It was, after all, paint on a painting … and the gallery was filled with various paintings with random splashes and colors. He concluded that there was no “functional” damage and the insurance company denied the claim.
This story is fictional, of course … but the actions described are quite common.
Let’s look at the shingles on your roof, for example. The manufacturer of your shingles produces them in a wide variety of colors, shapes, and styles. When you selected them (or selected a house that already had them), you noted their color and design in context with the features of the rest of the structure, didn’t you? Of course, their designed purpose is to protect the roof from wear and water intrusion but they also were carefully and creatively designed to enhance the beauty of the home.
When a sudden Missouri storm erupts and pounds them with hail, along with the metal appurtenances, gutters, downspouts, and other surrounding materials, they will often be damaged. When they are damaged, you might contact your insurance carrier to file a claim for direct physical damage or loss to your roofing materials. The insurance adjuster will arrive, take a few photographs, and return to speak to his boss. When the boss does not want to pay you for your damage, he might send an engineer.
The engineer will often look at your shingles and the surrounding metals for holes. Finding none, he declares that the shingles and metals are still shedding water as they were designed to do, and the damage to them is not “functional” but merely “cosmetic”. Based on this report, the manager may deny the claim, depending upon the language in your policy.
Denying the claim because of an engineer’s definitions of “functional” or “Cosmetic” damage rather than the insurance policy’s definitions of damage can be improper. Try as some might, engineers neither write nor interpret Missouri insurance policies and, when they attempt to do so, they are often incorrect. Some insurance companies have been successfully sued for such actions when it happens, as in the case of North-Shore Co-Owner’s Association versus Nationwide Mutual Insurance Company.
When you believe that your insurance carrier is trying harder to deny your claim than pay your claim, you may be the victim of improper claim handling, bad faith, or vexatious actions on the part of your carrier. When this happens, seek the advice of your Missouri attorney or a Missouri licensed public adjuster.
This Blog/Web Site is made available by James H. Bushart, Public Adjuster LLC for educational purposes only as well as to give you general information and a general understanding of the work of a public adjuster, not to provide specific legal advice. The authors and/or site manager make no representations as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. By using this blog site you understand that there is no public adjuster/client relationship between you and James H. Bushart, Public Adjuster LLC. The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state, nor should it be used as a substitute for competent maintenance or repair advice from a qualified contractor licensed to perform work in your state.
The chances are that if you have filed an insurance claim that your insurance company does not want to pay, they will hire an engineer to inspect the damage for them.
As Chip Merlin of Merlin Law Group recently explained, “A multibillion-dollar industry has developed around insurance company claims vendors. Engineering and consulting firms doing work for the insurance industry are now their own big-dollar industry. There is plenty of competition among these “consultants” willing to please and keep insurance company accounts. While the insurance adjusters and insurance companies are subject to regulation, most of these vendors answer to nobody other than the insurance claims departments. Those claims departments are now dependent upon them for reports and opinions about every aspect of a property insurance loss.“
I do not agree that engineers “answer to nobody“, however. While many consultants are not licensed but rely totally upon their credentials, engineers are licensed (presumably) by the state they are working in. When they go too far to accommodate an insurance company’s desire to unfairly deny an insurance claim, the engineer answers to the policyholder and to their licensing board for their bias and their errors. I will elaborate on this later and will show what steps can be taken to hold them accountable.
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 to provide consultation and assistance to attorneys litigating such matters, has become my own specialty within my practice. Not all 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.
“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?
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 varieties 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 from doing it, just as it prohibits non-engineers from performing work that requires an engineering license. The cost of paying an engineer (usually between $1,500.00 and $2,500.00) for a report is a large percentage of what a roof on an average size private dwelling would cost to replace. It seems 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 clearer why an engineer report, particularly those that are typically void of science (i.e. terminal velocity calculations, measurement of material impact resistance and relevant ambient factors, etc.) dovetails into a conclusion that supports an exclusion to your coverage and allows for a denial of your claim, could help the insurance company at your expense.
Shooting Yourself in the Foot
Some policyholders will unwisely demand, 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.
Often, the engineer who inspects an insured’s roof will be asked to call the insurance adjuster and provide a “verbal” report before he commits his conclusions in writing. This is because the existence of a written report from the engineer that favors the insured’s claim might prove to be problematic for the insurance adjuster should it be discovered later if the claim is litigated. Verbal reports usually are provided to the insurance adjuster within a couple of weeks and, when the adjuster is confident enough to request a written report, it arrives to him about thirty days after the engineer’s inspection.
Accordingly, the insurance company’s engineer provides a report to the insurance company 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. The last thing a policyholder should want to do is encourage his insurance company to hire their own expert with the incorrect assumption that their engineer is unbiased and objective. There are rare exceptions to this like anything else, of course, but they are exceptions … and they are rare. Don’t bet on it.
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 roof will represent 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 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 know, for he never computed those calculations or made that analysis. He just wrote the words which he has often cut and pasted into his damaged roof reports on a routine basis – which would be known only to those who read several of them – like the insurance companies that hire him (and the public adjuster who has represented multiple clients who opposed him).
As a result of a complaint I filed with the engineer’s licensing board for one engineer’s report used by the insurance company to deny a claim, his entire engineering company was placed on a one-year probation by the state engineering board for concluding that no hail of significant size struck the insured property by relying upon nothing more than a commercially available weather data report rather than applying engineering skill and science.
Examples of Bias, Fraud, and Incompetence
An engineer’s report that I received from one of these companies specified how the engineer closely examined the “clay tiles” that were chipped and found the damage to be attributed to something other than hail. He then provided a lengthy and generic boilerplate description of how “clay tiles” are made and the scientific studies of the effects of hail that strikes them. 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 hailstorm, 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, after 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 returned to his full-time job of selling real estate.
On a commercial roof, the insurance carrier’s engineer attempted to save the insurance carrier from the cost of replacing an entire roof by recommending an inexpensive repair that the local code officials rejected. He argued that his repair was proper, and the insurance company foolishly stood behind a repair recommendation they knew to be unlawful., simply because it was provided to them by a licensed engineer and in direct defiance with the code officials. We had to get some attorneys involved with this one but, in the end, we reached a settlement for $1,000,000.00 – without filing a lawsuit.
As you can see from just these few recent examples, not all engineer reports reflect accuracy, competency, or non-bias, and insurance companies that use these reports to deny claims are not always acting in good faith, according to the courts who have ruled against them. There are times when withholding money from you based upon reports that they know to be inaccurate 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 on the claim by yourself?
While some state Departments of Insurance may not find biased, ambiguous, or erroneous engineer reports to be something they wish to handle or spend political capital, there are often other departments within state government that 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 draft reports for insurance companies to use to deny claims that contain incorrect, partial, or biased information will have to justify their actions (if they can) to their respective licensing boards that monitor and enforce competency and impartiality. Their actions, if found to be due to incompetence or partiality, could result in sanctions up to and including fines and forfeiture of their licenses and these findings can be used by homeowners to address their denial or underpayment through the proper channels available to them … through their policies or judicial means.
Enough enforcement actions 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, were not aware of the difference.]
(c) James H. Bushart, 2017
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.
An expensive slate roof with copper flashing was severely damaged by hail. The insurance company’s adjuster and his contracted engineering company agreed that it was damaged by hail … but still refused to pay for the repair.
The insurance company’s adjuster referred to a paragraph written on the third page of a letter that had been sent to the policyholder six months before which totally excluded hail damage to soft metals that did not result in leaks. He told the policyholder that the vast majority of the $69,000 (plus) damage to his roof would have to be paid at his own expense.
The policy holder’s roofing contractor referred him to me for assistance with his claim.
My close examination of the policy, the letter, and the engineer’s report (in addition to localized weather reports) revealed that the exclusion the adjuster used to deny coverage did not take effect until four weeks after the hail storm. Accordingly, his denial of the claim was improper and he owed the insured for the damages.
When I brought this to their attention, the insurance company reluctantly acknowledged their duty to pay. The policyholder was made whole and the contractor is now able to serve another homeowner in need of his services.
“No” is not always the final answer. Have a licensed public adjuster review your claim before walking away from your money.
As a very busy summer draws to a close, here are some of the highlights from the season’s most interesting claims.
1. The insurance company had delayed a response to a fire claim for six months. The home owner called me and soon after received an initial payment of $111,000.00 which, upon further review, was underpaid. We recovered an additional $14,000.00 a few weeks later.
2. The insurance company denied the church’s claim for storm damage to its steeple and interior. Their roofing contractor referred them to me and we soon recovered the full amount to repair the steeple, repair the damage to the interior of the church and to replace a section of the roof.
Damaged by 100 mph wind, this steeple was allowing water to flow into the church.
3. The insurance company denied a claim for damages to a home caused by a dishonest contractor. His financial advisor referred his client to me and we turned that “no” into a check for $10,000.00 and a waived $5,000 deductible (total value, $15,000.00).
4. The insurance company denied a claim for hail damage to his roof and my client’s roofing contractor referred him to me. We turned that “no” into a new roof.
5. The insurance company had refused to address the storm damage to her home and my client was referred to me by a friend. In a matter of weeks, we turned that “no” into a several thousands of dollars and a new roof.
6. The insurance company had said “no” and denied coverage to a storm damaged deck. My client was referred to me by a real estate agent. We turned that “no” into $16,400 for a rebuilt second story deck.
7. The insurance company had denied his roof claim stating that the storm with golf ball sized hail did not damage his roof. My client called me after finding me on the internet. We turned that “no” into over $21,000.00 for a new roof and gutter.
We did well on many other storm, theft and fire claims, as well. I’m looking forward to Autumn.