I met with a new Texas client this morning and we noted the type of problems many will face in Texas. First, a spokesperson of Texas Windstorm Insurance Association indicated in a news article that it was going to take its time, and ensure that the Texas wind pool would not pay for anything caused by storm surge. This reminds me of State Farm’s old claims culture: "we pay not a penny more nor a penny less" than what is owed. The problem with that is delay and continuous underpayment since the culture pushed to make claims overpayment a sin through a false but good sounding motto.
Many claims departments now try to make up a "reasonable" basis for denying claims by using engineering experts that provide outcome oriented opinions. The worst I saw was last week when an engineering opinion said a loss was caused by a "concurrent cause" of loss that just happened to be excluded under the policy. Honest engineers do not use the unique "concurrent cause" terminology used in insurance policies unless the insurance company adjusters have convinced them to do so.
The bottom line is that policyholders should not trust insurance companies to do an honest evaluation of a claim with honest evaluations by engineering firms that pander to the insurance industry. Often, a reasonable investigation is not done because the investigation is not honest and leans towards findings in favor of denial or minimizing claims. The insurance industry simply blackballs engineers that give honest opinions or words reports that result in higher payments to policyholders. All of us in the insurance claims industry know of this current state of being.
My new client was born and raised in Houston. He started his own company ten years ago after working in construction for 25 years. His roof was damaged and water entered the attic causing damage to the insulation and then more damage as the water dripped down into the rest of the structure. However, the insurance adjuster found that the windows leaked and allowed for the water damage. That cause of loss would be excluded under my clients commercial policy.
After a fist fight almost ensued between my client and the adjuster, the adjuster agreed to hire an engineering firm. Texas Wind hired a well known insurance engineering vendor and sure enough, that engineer somehow opined that lower floor windows had water leaked and water defied gravity, finding its way into the attic. Is such a finding a "reasonable" basis? Doubtful. As my Led Zeppelin readers would say, "The Story Remains the Same." Many insurers take a hard line. With a wink and a nod, they accept unethical and fraudulent opinions. I guess I should not complain because this failure to provide the "peace of mind" of full and prompt payment leads to very lucrative and enjoyable work for my law firm. But it should never come to this manner of resolution.
Following Hurricane Ike, I would strongly encourage all policyholders to never accept an insurance company’s version of loss. Sadly, many insurers do not respect their customers or empathize with the loss that has affected their lives and are looking for ways to lower payments in a legitimate or illusory legitimate manner.