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Last Post 02/25/2010 10:53 AM by  Ray Hall
Roof too old to repair
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Leland
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02/13/2010 3:47 PM
Just imagine if two of your friends had a dispute about how something should be repaired. You step in the middle and try to come up with something that makes everybody happy.

That's not how insurance works. It's not about friends "working it out" and being reasonable. It's about what the contract says, and sometimes what the court says it says, and what your employer says it says. And that changes from State to State.

I can guarantee if you adjust an ACV policy roof claim for the largest underwriter of DP1 policies in the state of California and you include areas that aren't damaged ("Because it's resonable"; "because no roofer can repair it without removing the other part"; "because I've always done it that way" etc...) you will told you revise your estimate.

The policy states that it only covers areas that have direct physical damage. So I understand all the arguments about how you need to fix the other parts to get access, but that's just not how the policy is interpreted.

It wasn't my decision, it doesn't matter whether I agree with it or not, it doesn't matter whether you agree with it or not, that's just how the policy is written and interpreted.

So to go over it again, if you have a damaged area and a surrounding area that is not damaged that needs to be removed to get access, an

ACV Policy (might) pay only for the area that had "direct physical damage"

an RCV policy might pay the cost of the whole slope because "we will pay the cost to reconstruct or replace the part of the building damaged..." AND VERY IMPORTANTLY notice that the RCV policy does not have the wording that says "direct physical damage".

Now if you work for a carrier in a state where the decision is different that doesn't make me wrong and you right, it also doesn't make me right and you wrong. In fact, if I did a DP1 adjustment on a Lloyds of London ACV DP3 policy (Very similar to a DP1) on a California loss it is very possible that the TPA out of Florida would tell me to pay for the whole slope.

Let's consider another scenario involving a named peril policy:

Burglars use a car to ram a gate open and steal stuff from the home.

Now the policy says that the peril of vehicle doesn't include damage to fences (and gates). But that exclusion is listed under the peril of Vehicle. Burglary is normally considered the Peril of VM & M, which has no such exclusion. So wouldn't using a car to damage a gate during a burglary be covered under VM&M, just like any other damage caused by any other burglary tool would be covered?

I have my own opinion on that question but what is important to me is what the carrier told me to do. The carrier isn't (usually) stupid. If they analyze it and decide it's covered, then it is covered. If they analyze it and decide it is not covered, then it is not covered.

But here's the important point I'm trying to make- If another adjuster had a different training on that kind of loss in another state, I wouldn't say that he was "wrong".

There ARE things that adjusters can be "wrong" about- for example, a 10' x 10' room doesn't not have 50' of baseboards.

If I am telling you that some carriers on ACV policies pay only for the directly damaged area that isn't "wrong" because some other carrier did it different in a different state on a different house in a different storm on a different kind of policy.

So my suggestion for any adjuster is to:

1) realize that what you think is "True" may not be "true" in a different set of circumstances.

2) Understand how different policies are interpreted differently

3) Understand that different states have different rules

4)MOST IMPORTANT: Figure out how your carrier interprets the policy for the specific facts in your loss. (Ask!)
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Ray Hall
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02/13/2010 4:24 PM

Well here I go again, I disagree with my bud Leland (Ithink for the first time). I don,t think the gate is covered under V &MM. It would have to be a casualty form of a theft policy (any act of stealing) (including damage by burglars) It would have a better shot at coverage if the dwelling policy has APP coverage on the Gate, but this peril of vehicle is though off as an automobile running of the road by a stranger or non insured, resident of the risk.

We beat the flying roof horse to death lets try this one.(Magnolia Oil Bld , roof sign iin Dallas, cica 1920-1980)

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Leland
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02/13/2010 4:47 PM
Next Houston CAT I am going to buy you a beer, Mr. Ray Hall.
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BobH
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02/13/2010 5:57 PM
Posted By Leland on 13 Feb 2010 03:47 PM

...ACV Policy (might) pay only for the area that had "direct physical damage"

...an RCV policy might pay the cost of the whole slope because "we will pay the cost to reconstruct or replace the part of the building damaged..." AND VERY IMPORTANTLY notice that the RCV policy does not have the wording that says "direct physical damage".
...4)MOST IMPORTANT: Figure out how your carrier interprets the policy for the specific facts in your loss. (Ask!)

I have worked ACV only policies for the off-shore folks, and it doesn't sway me on how to repair something in the least.  They simply don't have recoverable depreciation.  The first check is the final check.

RCV policies do typically have "direct physical damage" language (unless otherwise excluded, as opposed to named perils).

I have not seen a policy that gets into granular detail about "you estimate a roof this way, or a fence that way, and if it's interior carpet you owe the whole room".  So it gets left up to us, and as you mention in point 4), the people we may report to. 

What if the claim involved damage to the carpet over a 4 sq foot area?  An ACV policy does not mean you cut out only the damaged area.  Reasonable and normal repair practices will prevail, and if the house gets updated carpet, a full run of fencing, a complete slope of roofing, that will be depreciated because it is not simply a "patch" repair and betterment has occured by doing the scope you write.

A). Most roofs are repairable.

B). If a roof is not repairable (and has direct physical damage related to your claim) and you feel the correct scope = replacement of that slope, it matters not if it is a DP-1 or what carrier.  You do run into individual claims mgr's who may act like a dictator, but in general it really doesn't matter if the depreciation is recoverable or not in terms of the way you write your sheet (partial slope or complete slope that needs replacement).  It is what it is, and if the slope is toast - it is toast.

Bob H
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Ryan in Houston
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02/13/2010 9:52 PM

I came up with a new answer.

 

At least this is how it's been going down lately....

 

1.Adjuster says roof can be repaired and damage is not that bad.  Insured gets their ACV check for repair.

2.Insured never calls adjuster or carrier to say scope was not enough or request appraisal.

3. 8 months go by and adjuster thinks the file is closed.

4. Adjuster is out mowing his yard one day and process server gives him lawsuit papers for the claim.

5. Lawsuit accuses adjuster of being the worst person in the world, conspiring with carrier to keep money from insured.

6. As all suits in Harris County go to doc exchange and mediation.

7. Insured gets their new roof paid in full, attorney gets thousands in fees.

8. Adjuster is left scratching his head.

 

Carriers figure out it's cheaper to pay for a roof and atty fees than pay for defense costs, engineers, etc.

Texas will not be that different from Florida after a few years.

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Ray Hall
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02/13/2010 11:00 PM

When you get real jaded about insurance adjusting and think about all the things that don,t seem right to you your mind will wander all the way to the backside of your thinking about the needed changes; you may then realize with out good public adjusters and attorneys we would not be needed.

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Ray Hall
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02/15/2010 1:11 AM

How many of us adjusters think what we could have done to keep a storm claim from being re opened. I do ever time I hear that one of mine reopens. In my background of many years I did not have very many bodily injury claims go to attorneys after I got the file, thats what we called "controlling the claimant". Many had attorneys when I got the file and 99% were settled, some with a large defense lawyer bill, most without a defense lawyer expense. That was our job, investigate and settle claims.

In hurricane Ike about 3-4 % of all losses in 4 counties have suits filed. I worked about 150 losses and have been sued one time (so far) What could I have done better to keep this case from going to an attorney? apologize more for the agent loosing the report for several weeks. Leave as soon as I got the loss instead of the next day. Ask the insured to make a list of all the damaged property and give it to me when I arrived. Listen to their story longer. Showed more compassion. Do not request the TV be turned down. Explain the coverage better. Explain why we were both bound by the contract. Explain why I could not consider some of the items on the list as storm damage, as it was not consistant with any storm damage I had seen before. Not asking the insured to have an advocate with them like a contractor, PA or relative with construction knowledge.

Thinking back now I did not do any of the above and I did not get an agreement on the scope and the cost of repairs with them or a contractor. I just mailed them a copy after I sent it to my vendor who approved the file and they sent it to the carrier who was 3 weeks hehind on approving files, and it took me one day after my vendor got word and then it took me another day or so to get the mailed copy to the homeowner.

From all the lawsuits filed today on hurricane Ike (in the thousands) it will take 50,000 court room days to try all the cases (about50 years) in the affected counties of Texas. But I do know what it cost the insurance carriers to settle the cases and the incurred defense legal expense without a trial(and none of the cases will go to trial)

If I had controlled this claimant(insured) like I have 3rd party bodily injury claims for years, by me not being so ridgid along with the 2 level,s above and getting an agreed settlement with a contractor or insured and submitting a signed proof of loss form this loss MAY not be in the hands of an attorney who will not settle for less than $100,000. (the going settlement rate) and an additional $30 to $50 K defense legal cost. This is about 20 times more than my mailed out first offer. The law firm kept thier promise.Texas and Florida will have wind/hail settlement problems for a genaration.

Catastrophe losses have to be controlled better,its not the software, its not a shortage of adjusters, the 4% will have to be controlled better. We need to have a check in hand and slow down. The other 96% will not stand for the increase in cost for windstorm insurance.

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Ol' Ghost
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02/15/2010 8:46 AM
Gosh, Ray! Are you really and truly advocating more 'people' skills and less emphasis on 'automation' skills? That could put a crimp in the best laid plans of the corporate suits and their maximum profit plans.

Nope! It'll never fly.

Ol' Ghost
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Medulus
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02/17/2010 5:05 PM

So, if I understand your story correctly, Ray, you are single-handedly responsible for making claim settlements difficult for the entire next generation. That's the counselor in me pointing out the absurdity of second guessing oneself.

On the other hand, here are some observations gleaned from my half a generation of adjusting:

1. Some insureds make up their mind that you are a hired gun sent out by the insurance company who wants nothing but to deny you all that to which you are entitled. They determine this before an event happens, before a claim is filed, and before they ever meet you. There will always be some of these insureds and whatever you offer will never be enough.
2. Some claims will go to suit, whatever you do and however competently you handle the claim. (See number 1.)

Those two things having been said,

3. First impressions are paramount.
4. Treating people as people, listening to them, and treating them fairly will cost less in the long run. Those who do not operate in this way are straining at gnats and swallowing camels.
5. The insured will not neccessarily get more money after everyone take their cut with an attorney than without one, but a claim where the insured believes they need an advocate in order to be treated fairly will cost more than one that is handled between the adjuster and the insured.
6. Time spent listening to the insured and explaining just what you are doing and why (I think politicians call that transparency, a term they use much and practice little) will be rewarded. (See number 4.)

This is the beginning of the list.

Steve Ebner CPCU AIC AMIM

"With great power comes great responsibility." (Stanley Martin Lieber, Amazing Fantasy # 15 August 1962)
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Medulus
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02/17/2010 6:07 PM
As an example of what I was referring to in the earlier post, a letter from an insured to an independent adjuster that I use in Florida came to my attention immediately afterwards. Here is a copy of a portion of the letter:


“Lee, I highly respect the expert and helpful advice you so generously offered in order to help us achieve an expeditious and totally satisfactory resolution of a very complicated set of damages.

As an attorney, I can say that I have seen many situations where the claimant and the insurer got off on the wrong foot almost entirely because of a negative or uncooperative attitude on the part of the adjuster.

That did not happen in this case! You have my personal appreciation for your instrumental part in satisfying both the emotional and financial needs of our many unit owners who sustained emergency damage - and for doing so in a way that allowed the ******* board of directors to perform its statutory responsibilities quickly, informatively and professionally.”

I do not expect that this level of claim handling will lead to a lawsuit.
Steve Ebner CPCU AIC AMIM

"With great power comes great responsibility." (Stanley Martin Lieber, Amazing Fantasy # 15 August 1962)
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Ray Hall
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02/17/2010 7:03 PM

medulus, you made all my rants worth while, but created a larger problem, we will have to re-train thousands of roof thumpers into bodily injury adjusters for 2-3 years to see the real world value of settled claims.

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Ryan in Houston
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02/18/2010 9:29 AM
Steve is right, some claims will go to suit no matter how nice you are, how much time you spend with the insured, etc.

Some of the suits I have are from people that I never thought would have sued. Claim was handled quickly, scope was complete, agreement was reached with their contractor....but I guess they saw the commercials running here in Houston about how much more money they "deserve."

I know that some people were not treated right and given the shaft by some adjusters and carriers. But I have yet to hear of **** law firm declining a case. Insured goes in, signs the contingency agreement, they just change the policy number and claim number in the petition. Every one I have, the petition reads the same, just the names are changed. No wonder my own HO premium almost doubled.
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Ray Hall
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02/18/2010 10:45 AM

I agree with you Ryan. I saw Homeowners go up 150 to 200% after the mold gold area 1999-2003. If Ike lawsuits cause another 100% increase, we will return to fire insrance only coverage at my house.

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Ray Hall
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02/18/2010 10:56 AM
This is not on topic, but when I started only two or 3 very large carriers wrote liability insurance on escalators. Lots of claims for bare foot children injury.Insurance Company of North America would not pay or settle with the lawyers, ever case went to trial. Guess what happened. The suits stopped and the(reported) claims fell off 5 6 hundred %. Fon,t ever see the warning signs 50 years later.
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Leland
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02/18/2010 1:05 PM
I just got some clarification from a major carrier on this question. As I mentioned above, on a partial slope damage in California with a DP1 ACV policy, the carrier will (may?) only pay for the damaged area. The reasoning is that the policy covers only the damaged area, and moreover the Calif insurance regulations talk about line of sight for RCV but don't use this wording for ACV. The thinking is that if the state wanted the carrier to pay for matching the colors/textures on the whole slope (or addl slopes) they would have said so. Partial roof damage claims on these DP1 ACV policies have been paid this way for years. The original post was relating to a Texas DP1 policy, so it might be a similar thinking.

And I get all the arguments about how ridiculous it would be to patch carpet or paint just part of a ceiling. Trust me, I was surprised when I was told to just write the estimate for the damaged portion only, without regard to the fact the entire slope would need to be removed for other reasons.

Here's the wording from the California regs:

When a residential or commercial property insurance policy provides for the adjustment and settlement of first party losses based on replacement cost, the following standards apply:

1) When the loss requires repair or replacement of an item or part, any consequential physical damage incurred in making the repair or replacement not otherwise excluded by the policy shall be included in the loss. The insured shall not have to pay for depreciation nor any other cost except for the applicable deductible.

2) When a loss requires replacement of items and the replaced items do not match in quality, color or size, the insurer shall replace all items in the damaged area so as to conform to a reasonably uniform appearance.

The way the carrier interprets this wording is that they must match colors etc. AND cover consequential damages on RCV policies just like it says. But not on ACV policies.

As far as the carpet examples and paint examples there is a difference compared to roofing/floor tile.

I have never been told to pay for only the damaged part when it comes to painting a ceiling or replacing carpet. I have however been instructed to do that on floor tile and roofing. Notice the word "items" in the regulations- roofing is often made up of individual items (shingles) and so is tile flooring.

When I worked for a restoration contractor I had many claims where we would replace thousands of square feet of flooring because the tile, although available, was from a different lot and had very very slight color difference and the carrier determined that it was not a match (HO3 RCV).

Later as an adjuster you can imagine my surprise when I was told to pay only for the damaged tiles and not the whole room, when there was no way the tile (20 years old) could be even remotely matched (DP1 ACV).

So don't be mad at me for saying this, I don't make the decision, that's the carrier's job. I would just reiterate that each State/Carrier/policy has differences.

Maybe the Texas DP1 ACV policy is interpreted similar to the Calif DP1 ACV.....

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FloridaBoy
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02/24/2010 2:38 PM
Posted By BobH on 12 Feb 2010 11:42 PM
Posted By Ryan in Houston on 12 Feb 2010 12:59 PM

(1)...  Other adjuster says, repair because insured failed to maintain the roof.  He says carrier only owes for what was damaged and age and condition of roof have no bearing on if entire roof should be replaced.

 (2)... Can a roof be too old to repair?  

(3)... If a roof is too old and worn to repair, does the carrier owe to replace? 

1). Roofs become aged, brittle, and manifest thermal cracking, heat blisters, etc.  Maintenance is not typically needed to a roof, aside from proper ventilation (which begins with responsibility for the builder).  Think about the tires on your vehicle.  You can rotate them every 3,000 miles, but they are only going to last so long.

2). Yes.  It's a pliability issue, lack of.

3). You don't owe anything for non-damaged slopes.  Some carriers have criteria that can vary, and it is their sand box.  Assuming there is direct accidental damage to a specific slope, and the surrounding shingles are TRULY non-pliable, it can be non-repairable.  Run it by mgmt if you want to CYA and ensure that you are doing what your principle is asking

I would know how that 'adjuster' determined failure to 'maintain' a roof. Especially asphalt shingles. The roof does its job until it fails. Most people cannot tell a roof is beyond its useful life from looking at it. Just handle the claim on its merits and you will be doing your job.



 

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Ray Hall
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02/24/2010 7:22 PM

Assume ever thing that is built into a house has a span of life. If all of a major area needs repairs; roof,exterior paint, siding, windows and so forth. The interior walls, floors, ceilings, appliances, paint etc. Take reasonable BETTERMENT and settle the loss. The age has nothing to do with the ACV loss amount. It is what it is. The type of coverage has not one thing to do with the amount of loss. Forget about the coverage work the loss up, insured or uninsured, flood/wind/fire/terrorism/locus etc.

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moco
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02/24/2010 7:33 PM

I allow for replacement of these type roofs alot, due to non-pliability. However, my carrier ask's for the depreciation to be 75-85%.

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Ray Hall
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02/25/2010 10:53 AM

75 to 85% BETTERMENT sounds fair, because it is fair. My point is the coverage(recoverable depreciation) does not make the loss any greater than ACV. (some adjusters and contractors think it does)

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