Last week, I read another article bashing plaintiff lawyers. This particular article (written by someone with ties to the insurance industry) complained that 25% of all storm claims in the Rio Grande Valley resulted in litigation.
The article’s disingenuous premise was that lawyers are filing unmeritorious lawsuits on claims that were properly paid by insurance companies. As a first-party property insurance attorney, I’ve reviewed thousands of claims over the past 5 years. I assure you: Considerably more than 25% of storm claims are either wrongfully delayed, denied, or underpaid.
Insurance companies are in the business of managing risks. They accept premiums in return for a contractual promise to promptly and fully pay all covered claims for property damage. To comply with this contractual obligation, all insurers should use an unbiased insurance adjuster to conduct a prompt, thorough investigation.
The inherent conflict in this arrangement is this: Insurance companies are in business to make profit. Many larger insurers are publicly traded companies facing immense pressure to increase net profits year after year. Of course, adjusters hired to investigate claims are aware of the pressure regarding insurance company profits.
Even so-called “independent adjusting firms” hired by insurance companies are vulnerable to these financial pressures. Furthermore, all independent adjusters are hired exclusively by insurance companies; thus, 100% of their income is derived from large insurance companies. So-called “independent adjusters” do NOT work for policyholders.
Due to this incestuous relationship between “for profit” insurance companies and insurance adjusters, adjusters rarely attempt to find coverage for policyholders on legitimate claims. On the contrary, adjusters are indoctrinated to conduct outcome-oriented investigations designed to identify applicable exclusions that allow insurers to deny claims in their entirety. If adjusters cannot find applicable exclusions, they look for any possible way to minimize the claim payment.
Often, the objective of policyholders on these claims is simply to obtain sufficient funds to replace a storm-damaged roof and property. Unfortunately, there’s no end to the excuses insurance companies and adjusters make for denying or underpaying claims. Here’s an off-the-cuff list of excuses I’ve encountered:
- Wear and tear of the property
- Deterioration of the property
- Vacancy of the dwelling
- Blistering rather than storm damage
- Marring
- Cosmetic damage only
- Nail pops
- Storm damage exclusion
- Co-insurance penalty
- Delays in reporting the claim
- Failure to protect property from additional damage
- Failure to maintain property
- Refusal to include overhead and profit
- Improper depreciation for labor and materials
- Improper installation rather than storm damage
- Preexisting damage prior to policy inception
- Mechanical damage
- Covered damages below deductible
- Foot traffic caused the damage rather than a covered loss
- Manufacturing defects of the building materials
- No insurable interest in the property
- Claimant not an insured on the policy
- No storm created opening to allow interior water damage
Although insurance companies have a right to deny claims that are clearly excluded by the insurance policy, they shouldn’t conduct outcome-oriented investigations designed to identify exclusions. If it’s unclear whether an exclusion is applicable to a particular claim, the adjuster and insurance company should always give the benefit of the doubt to the policyholder and pay the claim. Unfortunately, due to the drive for corporate profits and the indoctrination of insurance adjusters, this rarely happens
If your insurance company isn’t giving you the benefit of the doubt on your insurance claim, we would appreciate the opportunity to evaluate your case. There’s no fee for initial consultation, and almost all cases are handled on a contingency fee basis. Contact us at Pennebaker Law today for a free consultation.