Forums

Leland,
In reference to......

I posted some case law on this issue in an older post. An insured had a policy that excluded "backup". But they paid extra for a flood damage endorsement. The flood damage was partly due to a drain backup. The insurance company tried to deny the flood claim even though the insured had paid extra for flood coverage

....I guess it would depend on the definition of "FLOOD" and whose definition did the endorsement recognize as FLOOD.
If the endorsement recognizes that the NFIP definition and a General Condition of Flooding did exist at the time of the above referenced loss, then I could understand how the company errord when denying the claim.
Many "Sump Pump" Endorsements exclude damage by "FLOOD" as defined by NFIP. Yet some endorsements out there can pick up damage for "FLOOD"....all depends on the endorsement.......

I had a flood insurance policy as well.

Both the insurance company that provided the flood insurance and FEMA have determined that there was no flood.

The backup endorsement covered seepage from the foundation that was not within 10 days of a flood. The water was in the basement for 21 days.

The insurance company that provided the backup endorsement is not arguing that there was a flood.

 

The endorsement clause for overflow from system designed to remove seepange from foundation is posted in another reply.

The other reply aso has the specific language regarding the denial of claim.

The endorsement language regarding the additional coverage for system desinged to remove seepage from foundation is posted in another reply.

The language from the denial letter is also included in the previous reply.

The endorsement changes the policy with the following:

"The flood definitions are added:

15. "Flood" means a general and temproary condition of partial or complete inundation of normally dry land areas from:

a. the unusual and rapid accumulation or runoff of subsurface waters from any source;

b. the overflow of inland or tidal waters; or

c. waves, tides, or tidal water.

"Flood" does not mean standing water, not caused by "flood", on the "residence premise", that does not leak or seep through walls, windows and/or external openings of the dwelling and/or other structures. Damage resulting from sewer back up, sump, sump pump or sump pump well overflow caused by "flood" is not covered by this endorsement."

The insurance company denial letter left out the following (it was ot included in my earlier post on the endorsement):

"Exclusion A.3.b. Water Damage is deleted with respect to coverage provided under ADDITONAL COVERAGES, 155. Back-up of sewer, drain or sump pump.

 

Wangerin:

In one of your post you indicate:

The house has a crawl space under half the house and basement under half the house. Everything in the basement was on pallets, apparently to keep it from coming into contact with seepage from the foundation.

. It sounds like this IS NOT YOUR POLICY AND YOU ARE NOT THE POLICY HOLDER.
That being said, would you please identify yourself. Are you a Public Adjuster? An insured's relative?
I would also suggest that you take your issue to someone that can give you a "legal opinion" as we do not know: 1) What State did this occur in 2) what HO policy form, etc. is the endorsement attached to 3) Is it a standard or manuscripted HO policy, etc.
Joe

I am not a public adjuster.

My son and I have been providing the responses.

My son owns the house. I am on the loan as a cosigner. I fronted the money for the repairs that I think are covered by the insurance.

The case is not large enough to take to an attorney. The amount of loss is $4,300 less a $250 deductible.

We sent you a private message indicating that if necessary the case is headed to small claims court. The informal court should allow for a letter (expert opinion) stating that the insurance company erred in denying the claim. My son is seeking such an expert opinion. I don't believe there is any dispute as to the facts and circumstances.

Currently the case has been turned over to the Montana Insurance Commissioner to seek an explanation from the insurance company regarding concerns about the denial letter.

The insurance policy is an HO3.

The policy is a standard policy with the endorsement for $5,000 of coverage for averflow from system desinged to remove seepage from foundation. Policy language is provided in earlier responses.

I am a Certified Public Accountant. My son is an enrolled agent. We frequently represent taxpayers before the IRS and/or Montana Department of Revenue during audits, collections, appeals, and/or informal hearings. My son is prepared to represent himself at an informal proceedings on the denial of this claim in small claims court.

I have shared ideas and knowledge with other CPAs. If a CPA didn't have the particular expertise needed, he/she could team up with a CPA that had the expertise or simply refer the case to the other CPA.

I found this forum by searching on the internet for information on drain backup endorsement. All of the inforamtion that I found indicated that while the insurance companyies initially deny such claims they eventually pay.

My understanding on takes of this particular exchange is that adjusters are indicating that the insurance company erred. We have sent those adjusters private messages indicating the interest in obtainging such a written opinion for use in small claims court.  It would be expected that such an expert opinion would result in payment to the adjuster that was willing to provide it.

I don't really understand why this comments seems to be so against sharing with public adjusters. There are three classes of insurance claims adjusters: staff adjusters (employed by an insurance company or self-insured entity), independent adjusters (independent contractors hired by the insurance company) and public adjusters (employed by the policyholder). "Company" or "independent" adjusters can only legally represent the rights of an insurance company. Why is there such an opposition to sharing with an adjuster who is not hired by the insurance company?

I do now understand that in order for someone to help my son, the adjuster would need to be a public adjuster. I guess that is why the opposition by indpendent adjusters to participate in the discussion. However, I did identify in an early reply that this discussion was by the insured and not the insurance company or an independent adjuster. My user ID clearly indicates that I am a guest. I do not feel that there was any attmept to decieve anyone that this was for the sole purposes of helping an independent agent representing an insurance company. It should be somewhat obvious that I have no power to cause anyone to participate in the discussion.

The expression "pay it forward" is used to describe the concept of asking that a good turn be repaid by having it done to others instead.

As a Montana CPA, I answer questions from other CPAs and taxpayers about Montana tax law. Other CPAs help me out with questions about taxes in their state. If the questions become complex, we enter into an engagement where there is compensation. With most attorneys, the initial consultation is without obligation to enter into an engagement for compensation.

A construction worker, driving an old pick up, in Montana helped pull out a truck that was stuck in the snow. The man he helped wanted to pay him. The construction worker simply told him to pay it forward by helping out someone else that he saw that was in need. The construction worker's wife called him at noon and told him that a brandnew delux pickup paid in full was just delivered to their driveway. The man he helped was Bill Gates.

I was working in my office one Christmas morning. A man stopped by and wanted to borrow a gas can. He was stranded in Deer Lodge with his dog. We put gas in his can and I invited him and his dog over to join my family for Christmas dinner. My kids emptied out their piggy banks to help him out with some cash for his journey to Seattle.

"Be not forgetful to entertain strangers, for thereby some have entertained angels unawares."

With all due respect, I don't think you will find any compentent independent adjusters who would issue a written statement saying that your insurance company erred.

Seriously, if I gave you some basic facts about a tax matter, would you write a letter stating that my CPA made a mistake? Would you write that letter knowing I was going to present it to the IRS? Would you write that letter knowing that you have been made aware of only SOME of the relevant facts?

There is no way that a professional adjuster could give an informed opinion based on the limited facts you presented.

We don't even have a copy of the policy!

All experienced adjusters know to read the policy, sometimes over and over and over.

I'm not sure if you can understand this, because we already said it several times and you haven't posted the FULL policy or even the FULL paragrpahs relating to your loss. You haven't even given us the form number so we can look it up ourselves.

Imagine if I asked an attorney, "Hey, I signed a home repair contract. Now the contractor says i owe an additional $3000.00. Do I have to pay?"

I could make a list of at least 30 things the attorney would need to know to answer such a question, besides the fact he would need to read a copy of the contract.

You seem to be looking for an easy way out of your problem. You want a letter to show the judge, so you can win your case. What good would such a letter be? A letter from an adjuster, probably not qualified as an expert, living in a different state, commenting on how a third party he's never met misinterpreted a contract the adjuster has never read, and relating to a loss he has only partial knowledge of.

Such a letter would be essentially worthless.

There's a lot of experienced people here that would be willing to give you good advice just for the satisfaction of helping a stranger and the learning experience. But you aren't meeting us half way.

It is not unusual for an adjuster to look up wording in a policy that the adjuster has read many times before. Since the facts and circumstances of each loss can be different, the wording can apply in subtly different ways. If an adjuster reads the wording for one set of circumstances, he might need to read the same wording again on a similar loss, to make sure he interprets the policy correctly for the new set of circumstances.

Many times, when I have a policy in my hands, I have questions about how to intrepet it. I will often ask my co-worker or my boss. I often send emails to the insurance company asking them to decide what a sentence means in a particular case. Sometimes there is case law that determines how to interpret a sentence in a policy. Every state has different case law. Sometimes there are statutes that override what the policy says. Given that interpreting a policy often involves such careful analysis and research, how would you expect anybody to give an opinion on a policy they've never seen?

Besides the policy, the facts of the loss can affect the coverage decision. Trust me, we don't have all of the facts of your loss.

For one insurance company I work with I am required to do a recorded interview on all water losses. I ask a long series of questions about who, what, and where. Sometimes the information elicited by the interview will result in a denial of the claim or it will result in coverage. The same answers might result in the opposite decision for a simliar policy with a different carrier.

Since you posted a cute story to encourage us to help you, I will post a cute story to illustrate why we can't (until you provide more info).

A wealthy New York attorney moved to a farm are in Vermont. One day he walked to the edge of his property and met the old farmer next door. The farmer asked him if he could describe a legal dispute the farmer was involved in, and get an opinion.

The farmer proceeded to tell a long and dramatic story with all of the complex details of the dispute. Apparently the farmer had a years long dispute with another neighbor. Then the farmer asked if it was a good case to take to court.

The attorney, visibly excited, said YES! The attorney said it was a great case, and he would take it on a contingency (no upfront payment from the farmer)

Then the farmer said, "Well, I guess I won't be needing your help, then."

The attorney was incedulous: "Why not? It's a great case! You will win for sure!"

The Farmer replied, "Well, to tell you the truth I told you my neighbor's side of the story, so I could get an unbiased opinion."

Jim, There is another thing that you should know is that there have been others posting inquiry's like yours, while misrepresenting their identity (which was later revealed). This is typically done to encourage us to slander othjers in our industry. This is why some vent their frustrations when questioning you.

I as well as others on this sight will post their understanding of the policy and endorsement once we have further details. Please provide this information. This is a good topic for our board as well as a learning experience.
(This comment is not meant to belittle your son's damages)

I am sure that once the Montana DOI reviews your claims if there is any validity then you will prevail.

I think your adjuster is correct.  In our area, seepage is a problem for those basements like yours that do not have a sump pump.  I had a house like that.  Seepage is not covered under any policy that I have been involved with.  The source of the water is the cause under the policy. 

The back up endorsement you describe covers overflow or back up from a system designed to carry off water.  Putting things on pallets is prudent but is not a proper system designed to carry off water.  An example of a covered system may be drain tile installed below grade outside the foundation wall or an interior system installed around the perimeter of the inside of your basement floor.  The floor could be cut out and a drain installed to direct the flow to a sump pump pit.  If this were installed, then during a heavy rain, the sump pit would fill up, the sump pump should pump it away but if it fails or can't keep up and overflows, then damage would occur and you would likely be covered.  That is the type of loss the policy probably envisions. 

But seepage itself is excluded even if you didn't know there were issues with drainage.  My second thought is the length of time the water stayed in the basement.  My expectations are that, absent a long term flooding situation, a covered loss is generally sudden.  If water stayed in the basement for 21 days, then it may have been excluded for that reason.  But from what has been described, the adjuster was correct.  If you have questions, a call to the adjuster directly for an explanation should be sufficient to answer your questions.  They should be able to point out in the policy where their decision came from. 

Jim,
You have sent me several PM's and I am, as others are willing to take a look, but we expect you to be up front with us....you appear to be annoyed because I/we ask about the actual policy and the endorsement. You state it is a standard HO 3......ok, Who's.......ISO, Citizens, State Farm, AM FAM.....they are all different.......what edition is it? 04 91.........10 2000.....etc.
So, I hope you get the idea that there is more than just a "standard H0 3" involved.

Now, that being said, have you invoked appraisal or mediation?
Check your policy and you will find one or the other or both in the policy......

We also have to be careful NOT TO GIVE ADVISE THAT CAN BE CONSTRUED as being "legal advice" as we are adjusters, not lawyers.....

Give us all the info and let us kick it around, if you wish.
Joe

I agree that an independent adjuster could not issue a statement that the insurance company erred. An independent adjuster can only represent an insurance company.

On the other hand, a public adjuster can represent the insured and could write such a letter if he believed it to be true.

I represent taxpayers before the IRS all of the time. Believe it or not one of the best arguments and most common arguments for abatement of penalty is the CPA made a mistake. Of course, CPAs generally represent taxpayers not other CPAs.

The reason for me sending personal messages was to see if people were interested in looking into the case in depth. I have provided the entire policy, entire endorsement, and entire denial letter on a share file that I provide access to. The facts and circumstances in this case are not that complicated. The relevant endorsement language which is much shorter was posted in this forum and I felt was adequate for this venue.

I would expect anyone giving an opinion to be used in a small claims court case to have complete access to the entire policy, endorsement, denial letters, facts, etc.

I think I mentioned how CPAs share information. I would expect that another CPA interested in doing the amount of work you indicate would not do it for free in a forum. They would issue an engagement letter which owuld explain what was necessary for the engagement and the fees that would be charge for their services.

I did not post a story to encourage you to help me. A lot of people were "just saying" why should we help. I provided an answer as to why people do help. I often tell my clients that they shoudl be careful about asking me my opinion. As you have discovered, I have one.

It is a cute story but does not get to the crux of why an independent adjuster can't help an insured but a public adjuster can. I think it has to do with licensing.

24 Jan 2012 11:37 AM is the date of my post in this thread where I provided the actual endorsement.

I feel the main polciy is to large to post here.

I did post the relevant endorsement on January 24.

The relevant language is "system designed to remove subsurface water which is drained from the foundation area".

 

There is an exclusion in the main policy (standard HO3).

I did post the relevant endorsement on January 24.

The relevant language is "system designed to remove subsurface water which is drained from the foundation area".

The claim was denied because the adjustger alleged the basement floor drain was working. However, with 18 inches of water in the basement it obviously overflowed.

There is no dispute that the water that overflowed was drained from the foundation area.

My son was provided a number for supervisor and left several messages with no return phone call.

The matter has been turned over to the insurance commissioner. I am sure the commissioner will get a response. However, I do not have confidence that the response will be theone my son wants. It will probably end up in small claims court.

Unauthorized practice of law is a big issue.

I was on every radio station and major daily newspaper in Montana on the issue that effects claims adjusters, CPAs, bankers, insurance agents, realtors, etc.

A lot of what we do is practice of law. However, the real question is whether it is unauthorized.

The petition on unauthorized practice of law before the Montana Supreme Court received more public comment than any other issue that they could remember.

Ultimately the rest of us, the ones who are not attorneys, won. We are already regulated and do not need to be further regluated by a commission on unauthorized paractice of law.

The facts are simple the basement floor drain overflowed in the process of removing subsurface water drained from the foundation area.

I did post the relevant endorsement on January 24.

The relevant language is overflow from "system designed to remove subsurface water which is drained from the foundation area".

I did post the relevant endorsement on January 24.

Mr. Wangerin- why would you ask for our advice and then reject it when we give it?

Why would you tell us what the relevant language is, at the same time you are asking us for our advice?

If you are qualified to know which language in the policy is relevant, then you are qualified to answer your own question!

You say you want help, but your actions say differently.

In my view you are wasting our time.

We've told you what we need to help you for free and you have refused to provide it, although it appears you are willing to give it to an adjuster that agrees to be hired by you.

If you insist on refusing free expert help and are so set on hiring somebody, then I recommend you hire an attorney or a public adjuster on a set fee or hourly rate. Most of us here could give an expert opinion in less than 30 minutes if we had the policy, endorsements, and other details. I'm sure you could convince a public adjuster to help you for one hour and pay $100.00. You might have to ask more than one.

I really enjoy helping people, including strangers, and I love coverage questions. But I can't help you on the terms you require and I doubt any other qualified adjusters here would be interested either.

Frankly you've been wasting our time and goodwill. With all due respect I suggest that you undertake a huge attitude change this minute or save us some aggravation and go somewhere else.

Jim,

Based on your post from Jan 24th which reads.

15. Back-up of sewer, drain or sump-pump. We will provide coverage, for up to $5,000 for directloss to Coverage A - Dwelling and coverage C - Personal Property caused by water which backs up through sewers or drains or water which enters into and overflows from within a sump pump, sump pump well or other type system designed to remove subsurface water which is drained from the foundation area.

I would have to say that there is no coverage for your loss based on the senario as you have described. The reason is because this endorsement, as you have provided, does not override the exclusion for ground water seepage through the basement walls which is the CAUSE OF LOSS.

The CAUSE OF LOSS is not the failure of the drain in this senario.

ok... I have been waiting for days but here it is. 18" of water did not "seep" had there been that much hydrostatic pressure the walls would have collapsed. Seepage accounts for water spots, maybe a small stand (1/4") of H2O. This was flood.

Half of the house had a basement and half of the house had a crawl space.

There actually was no seepage through the basement walls or foundation walls. The subsurfacewater drained from below the foundation area.

The cause of the loss was the failure of the drain system designed to remove the subsurface water which drained from the foundation area.

If the subsurface water which had drained from the foundation area had simply went down the drain, it would not have caused a loss.

One interpretation would be that a policy exclusion would not apply to an endorsement that specifically provides that coverage.

Why would anyone pay extra money for a policy endorsement that included coverage for a system designed to removed subsurface water from the foundation area if such coverage was excluded form coverage?

I remember a court case where the judge said that if not ambiguous the endorsement would be contrary to the exclusion. The judge said that in either case, the endorsement should be interpreted in favor of the insured.