I am continuously surprised by the muddled thinking many adjusters have regarding the coverage of architectural and structural engineering services. When we have an earthquake in California this will become an issue and I think it deserves some thought. Adjusters who work in other states may be familiar with building departments that have very minimal requirements. That doesn't mean a California insured is not entitled to be compensated for something that would not be required in another state.
First I would like to make a list of all the different things architects and engineers can be hired for, with my analysis of coverage for each:
Architects and engineers can be hired to:
1) Determine "what happened" ie cause of loss. This expense is generally an investigative expense for the carrier. If the insured incurs this expense it is not covered by the policy. It would be an expense the insured incurred to "prove up" their loss, not an expense actually necessary to repair their property.
2) Determine the extent of damage. Again, this expense is generally an investigative expense for the carrier. If the insured incurs this expense it is general not covered by the policy.
3) Prepare drawings and calculations for replacing the existing damaged framing or other structural items. In California these drawings are required by the city before a building permit can be issued. In California, it is generally not possible to simply verbally explain that the same design of framing is being replaced. Drawings and calculations are required even if the structure is being rebuilt exactly as it was. For framing damage it is customary to have an architect prepare drawings although some cities will accept plans from draftsmen. The structural engineer must provide calculations and his stamp with a license number. Since the presumption is generally that most structures were built with permits and drawings, courts in California have held that these are normal and reasonable expenses the carrier must pay. I suppose it might be theoretically possible for a carrier to argue that an extremely old structure or bootleg structure was built without permits and therefore the carrier doesn't owe for architectural drawings and permits. This argument might hold some water. However, it is rare to find buildings so old that no architect was involved and no permits were required. Even if it can be proved that no permits were pulled it still would likely be a covered expense, but that is another discussion beyond the scope of this post. It is common sense that a tract home built in 1960 was built with architectural drawings and building permits. Requiring the insured to prove that such a house was built 50 years ago with these costs is ridiculous, unprofessional, and probably bad faith.
4) Prepare drawings and calculations to install new structural elements to bring the structure up to new codes. This expense would be covered under any code upgrade coverage. If the architect's work is a combination of #3 and #4, the adjuster can apportion the costs between the two coverages, or if there is no code upgrade coverage, the portion of the work necessary for the upgrades can be denied. In many case the adjuster can simply call the architect or engineer and ask what portion of the total fee was for the code upgrade work vs. non-code upgrade work.
5) Provide an opinion regarding what the reasonable price should be for the necessary structural engineering work, or an opinion on the correct method of repair. This would be an insurance company investigative expense, or if paid by the insured, it is not generally covered. This may occur when the insured has hired an apprently over priced architect and the insurance company is an agreement to pay the reasonable fees. The adjuster can hire a competing expert merely to give an opinion on what a fair price for the services would be. The insurance company expert doesn't need to actually do the engineering, look at causation etc. He just needs to say what a fair price is for preparing the documents.
In my opinion the adjuster needs to carefully consider what an engineer is being hired to do, if the carrier authorizes an engineer expense. Telling an engineer to simply provide a report is unprofessional. Why should the carrier pay good money to learn something they already know or things that are not in dispute? For example if the carrier already agrees that the damage is due to wind racking the structure, it is probably not necessary to pay the engineer for a causation analysis. Maybe what the carrier needs is an analysis of the extent of the damage; an opinion on the repair method; or an estimate for what the architectural drawings and engineering calculations would cost. When hiring an engineer it is important to identify what he is being hired to do.
Adjusters are often afraid of appearing to unduly influence an engineer. In a case where a causation analysis is needed, there is a simply solution. The assignment can be worded like this:
"Please inspect 1122 Main St. and determine the cause(s) of the damage. Please report any evidence that the damage was caused by wind. Please report on any evidence that the damage was not caused by wind. Please report evidence of any other causation or contributing factor, if any".
By asking the engineer for both evidence that might result in a denial, and for evidence that would presumably result in coverage, there is no undue influence on the engineer.
When the insured or insured's contractor hires the engineer it is also important to identify what he is doing. If the engineer is doing the work required by the city to get a permit to fix the house like it was, then that work is generally covered by the policy.
If the insured's engineer is providing consulting and opinion to fight the carrier on a causation question, that work would generally not be compensable.
If the insured's engineer is doing both, the adjuster might need to apportion the bill into a covered portion and a portion that is denied.