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JimF
USA
1014 Posts |
 Posted - 03/11/2003 : 11:01:37
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Let me share a couple of real life claims stories from the road:
A few years ago, I along with many other cat adjusters, was sent to Appleton, Wisconsin for a large area hail storm. In the end, I would guess that 95% to 98% of insureds who reported a claim, were paid for the full replacement of their roofs by many different adjusters working for many different carriers.
A rather physically large male adjuster weighing around 300 plus pounds and working for another vendor was staying in the same hotel with many of us working for our vendor. About a month later, I was in the lobby as this adjuster was checking out to leave for home (most cat adjusters were present for several months for this hail storm). When asked, he whiningly replied that this storm was a bummer and he had not made any money as he only had three claims with hail damage. When asked how many roofs he got down on his hands and knees to inspect, his answer was NONE. For everyone else, it was understood that this hail event was caused by pea sized hail, and while the damages were not readily visable from a standing position, they were clear as one neared the shingles by stooping or kneeling. There were elevated and significant visible levels of granular loss in most gutters and downspout exits, even to the untrained eye.
Did this adjuster treat his insureds fairly?
Did this adjuster fulfill the obligations of the carrier under the insurance contract?
Can anyone understand and appreciate affected insureds who might have hired a Public Adjuster to protect and enforce their rights under the insurance contract?
Does this type of claims handling and adjusting by improperly trained adjusters happen more often than you might think?
In the second scenario, a large fire department with a brand new fire station, had a large long asphalt shingled roof with numerous slopes and offsets. Hail damages in the area were slightly larger than pea sized and all of the vents and metal flashings on this roof were damaged totally. Yet visible hail damage was apparent only on limited slope shingles and generally more on scattered isolated shingles. There was significant granular loss however which the fire department asked be taken into consideration.
Within a one mile area of this claim, 90% of reported claims were paid for full replacement of roofs.
The initial adjuster was unwilling to recommend anything more than the replacement of a couple of slopes which would have constituted a small fraction of the roof surface. Based on complaint, the carrier engaged a forensic engineering firm which inspected the roof, significant metal flashings, metal vents and granular loss. The engineers agreed with the scattered and somewhat isolated visible damages, but also agreed that there was and would be some diminuation in useful life of the roof shingles and thus, the roof systems.
As I mentioned earlier, the dilemma then was arriving at a 'value' for this diminuation of use and of value. While neither the engineers, the adjusters or the owner fire department could argue with any degree of specific certainty, it was generally agreed that this brand new roof with 25 year shingles could no longer be expected to last for the remaining 24 and half years. While different ranges of remaining life were speculated on, it was agreed in the end, that the roof system in it's entirety had suffered a diminuation in useful life of somewhere between 20% (5 years) to 25% (6.25 to 7 years) and in the end, the carrier appropriately paid a diminuation of use/diminuation of loss value of 25% (for the full replacement of the roof) for the value of the damages sustained, to the satisfaction of the engineers, owner and carrier.
Diminuation of value from covered causes of loss to insured risks is a very real problem which should be understood, recognized, reported and applied when encountered by adjusters who would be professionals in the claims handling process. |
Edited by - JimF on 03/11/2003 12:06:25 |
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CatDaddy
USA
310 Posts |
Posted - 03/11/2003 : 11:25:17
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| Please explain the "Diminuation of Value" scale and how it should be properly applied to granular loss. |
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CCarr
Canada
1200 Posts |
Posted - 03/11/2003 : 14:58:13
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Reg, you and I understand what 'moderate' is. However, applying that to a level of damage, specifically to this granulation issue; is another matter. Jim's posts shed some light on it, but also illustrate it that it can be a rather abstract application.
Your comments, "our 15 year study ....", it is unclear to me if you are saying this is a Haag item, or from some other source. Could you elaborate on that, and where I may review it?
I see now that this discussion has come full circle, and starts now, where an old forum left off last year. Where is Lanny the roofer, remember him?
Diminuation in value (also spelled 'diminution'), aka 'DV', is a concept that has been part of contract and property law for years. In the last few years it aggressively entered the insurance claims world, in the auto insurance sector.
In November 2001, The Georgia Supreme Court ruled against State Farm, regarding DV; relative to auto claims. In summary, the ruling stated that physical damage resulting from a covered event can reduce the value of property (car), even if the vehicle is repaired to pre-accident condition. That case, and others, has caused the ISO to create wordings to specifically exclude DV losses. The inference of that, relative to property insurance, and specifically considering this granulation issue and its non repair or indemnification; is quite clear to me.
DV, is rooted in the "reasonable expectations" rule, at law. Within that concept, is what is known in contract law, as the "Black Letter Law". This law applies where there is a breach of contract conditions, the breach specifically relating to the lack of compliance to the contract conditions (perhaps - not paying for the hail damaged roof, evidenced by an accelerated loss of granulation).
Under the "Black Letter Law", the party not in breach is entitled to the cost of compliance with the contract conditions, unless that amount is grossly disproportionate to the value that would be produced by compliance.
When an amount is grossly disproportionate, the party not in breach is entitled to DV; that being the difference between the value generated by the resultant performance under the contract and the value that would have been generated if there would have been compliance originally.
An amount is considered as "grossly disproportionate" within this concept, when it would not be considered to be proper mitigation to comply with contract conditions.
Consider this within the context of the asphalt shingle roof with a granulation loss following a hail storm. The roofing has suffered an economic loss, even if the only measurement of that is in accelerated loss of life expectancy. However, indemnification is not necessarily replacement of the roofing; but some other amount of loss.
This is where the "reasonable expectations" rule is considered, and its economic value; when there is noncompliance with reasonable expectations.
However, in reality, how do we measure DV, relative to a granulation loss; is it a very subjective exercise?
Fema has an ongoing DV compensation program in NM, as a consequence of the Los Alamos fires in 2000. Some of the fundamentals or principals applied in that situation; may be worthy to explore.
Lannie, you could review the Georgia case, and your companies application of the ruling; to see if there are any parallel applications or any fundamental scale that was utilized. |
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CatDaddy
USA
310 Posts |
Posted - 03/11/2003 : 16:16:21
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CCarr - Lanny the Roofer? Did I get promoted and not know it?
I am really enjoying reading everyone's points of view on the subject. Its good to see you guys arguing with someone other than me. Its refreshing because I was starting to get a complex.
And yes my Mississauga Ice Dog, the discussion would have started now but most of what I would have said has been said my others previously. Some things were said that I would not have said by the same parties I will note for the record. I am kinder and gentler now.
I will say what others have said, roofs are made to wear and do so based on their respective rating. Granules come off when it rains, when it snows, when the wind blows and yes when it hails. Can hail cause significant enough granule loss that might warrant a roof replacement? Yes it is possible. Never say never. Should you replace a roof everytime you find granules in the gutters after a small hail storm. Certainly not.
This another of those case where bigfoot might exist and maybe some of you have already seen him.
No one has given any type of scale or guidelines that outline DV effects on roofing due to granule loss because there are not any. You can have your opinions. I respect your arguements as they are well researched.
Rugg's quote from Haag's report is good. I would stay with that.
CCarr - I am well aware of the GA ruling. My wife worked on it. Stick with apples to apples.
CD |
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CCarr
Canada
1200 Posts |
Posted - 03/11/2003 : 16:48:28
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Lannie, the CD; you are a different person than Lanny the Roofer. Lanny came to CADO last year some time, he is a roofing contractor, who had some pretty specific opinions on things. That is what I meant by 'full circle'.
I certainly haven't argued with anyone on this thread. It had been a good discussion, until the personal attacks came out.
I certainly don't know of a DV scale. But, that is why I mentioned the FEMA DV compensation plan and the GA ruling.
Again, if someone wanted to find and review the FEMA DV plan, perhaps there is some logic in it for consideration of a 'scale'. Why I suggested you, Lannie, to consider the DV auto ruling, is that perhaps there is some logic in the application of the ruling by the carrier that could be transposed from auto to property; with regards to the overall issue of DV and a 'scale'. That is the 'apples to apples', that I was hoping may be found in your basket. |
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mshort68
USA
138 Posts |
Posted - 03/11/2003 : 17:25:46
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| Clayton, how are you going to compare a Yugo to a home. Please help me understand? |
The grass is always greener on the other side, but it still has to be mowed! |
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CatDaddy
USA
310 Posts |
Posted - 03/11/2003 : 18:00:31
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Wooooaaaaah Mr. Short. Slow down my friend whose heart is bigger than his brain. Jim and Clayton are entitled to their opinion. This has been a good thread with great dialog. Lets keep it civil. Take another Prozac you beast.
I guess I meant to say "defend yourself" instead of arguing. Sorry.
CC, I see the similarities in the situations but I am not ready to make that leap. I am not the auto expert in the family so it would not be fair for me to elaborate having limited knowledge of one side of the coin. Besides, class actions give me a migrane.
Thanks for all of your replies and posts.
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Edited by - CatDaddy on 03/11/2003 19:46:30 |
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KileAnderson
USA
875 Posts |
Posted - 03/11/2003 : 19:06:49
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Clayton, Bill, Jim, and everyone else. Please accept my humble appology. I will try to temper my words in the future. A trip to the doctor this morning confirmed what I migh have expected. My blood pressure was elevated, but now that I'm back on the proper medication I can continue this discussion on a more civilized level.
I don't accept the idea that granular loss seen in the gutters and downspouts and no other visible damage to the shingles is indicative of direct physical damage to the shingle. I also don't accept the idea that said granular loss presents a diminished value situation.
I say this for the reasons I have previously stated. It is a wearable surface and some granular loss is to be expected on any weather event, rain, hail, wind, even excessive heat. That being said, those of you who's opinions differ please explain to me why an insurable loss has occured because of the hail, but not because of a heavy rain? Both loosened granules and both created more wear and tear on the surface of the shingle than a regular sunny day.
Now for my second question and if you think it is too far off topic, maybe we can start a second thread. How does an insured get his house fixed and his possesions replaced when he is given exactly what he is owed by the carrier and then the PA takes 30% of that? If the repairs can made for the lower figure then the claim was overpaid and the PA has helped the insured commit a fraud. If the amount is not enough then the PA made a nice pay check but did a disservice to his client because they are not fully indemnified for their loss. If there is a logical explanation for this, I would like to know what it is. |
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KileAnderson
USA
875 Posts |
Posted - 03/11/2003 : 19:28:34
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| Bill, I want to publicly apologize to you for disparaging your proffesion and you personally. After discussing this with another adjuster who knows you and whom I respect I have come to the conclusion that I have unfairly painted you and your profession with a wide brush. Please accept my appology and refer to Catdaddy's new thread where I will elaborate on the reasons I have for my views on others who share you profesion but not your ethical standards. |
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Catmandale
USA
67 Posts |
Posted - 03/11/2003 : 20:30:52
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Well, I might as well weigh in for my beating too.
I am somewhere between you folks on this. The majority of my training and experience on roofs comes from Haag, Big Red and hands-on hail cats.
It is my understanding that the granules are applied to protect the felt or whatever the mat is made from. The granules are applied such that there are enough to cover the surface, and some additional are embedded in the emulsion as it varies in thickness.
I have seen gutters containing what appeared to me a tremendous amount of granules. That alerted me to be careful and complete in my close-up inspection of the shingles. I would be looking for voids in coverage by granules (in addition to bruises.) That would mean exposed emulsion or matting. I would call the voids damage in an early stage. Over time, the voids are going to lead to shingle failure earlier than would have occurred in the absence of the event. The degree of accelleration is site and occurrence specific.
Obviously the color of the shingle is a factor, as voids show more in contrast. The size, direction and spacing of the hail is something to be considered. From the roof, I look at the surrounding roofs... as well as the antennas, vents and other indicators of the roof I am on. (More than once I have been treated to a view of a neighbors ball pien loss.)
I think that a part of Kile's position on this is that, if there were enough granules knocked off to create significant voids, they can be seen. We pay for what we can see or prove otherwise, and that's all.
I have not seen many instances of granular voids without accompanying bruises. That is not to say it doesn't happen.
The thing about what Jim and Clayton did though is this. They thought it through and kept an open mind. Listening is an underrated skill.
Even if the PA (or roofer, or contractor)is wrong, you can learn from what they say and how they approach the issue. And they might just be right.
Never say never.
I'm sorry if I rambled. I'm full of NyQuil.
Dale Strain |
"When we thought that we had all the answers,
suddenly all the questions changed."
Mario Benedetti (1920); Uruguayan writer.
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CCarr
Canada
1200 Posts |
Posted - 03/11/2003 : 20:35:50
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Thank you Kile, in regards to my specific concerns as noted, for your unnecessary comments earlier today.
You are a better man, in many ways, when you do not exhibit that kind of thing.
Further, the acknowledgements and apologies noted in your last two posts; make you even a stronger man, for recognizing it and adressing it.
I've put it behind me, lets get on with life.
Cheers. |
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JimF
USA
1014 Posts |
Posted - 03/11/2003 : 22:06:46
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Ok, please let me start all over and see if I can clear up some misconception here about what Clayton, Bill and I have said and are saying. And Clayton and Bill, if I misrepresent your positions, please feel free to correct my misunderstandings.
First of all, we acknowledge and concur that granular loss occurs naturaly in the aging cycle of shingles due to such factors as location, temperatures, weathering, slope exposure, etc. Where we differ in our belief is that a greater than average granular loss from hail quickens the life cycle of the shingle thus reducing the value of the shingles and roof systems, and thus creates a diminution of value even if it doesn't meet the insurance 'standard' for roof replacement. And the insurance industry 'standards' for total roof replacement vary from carrier to carrier and adjuster to adjuster so as to render the standard standardless, and thus damage replacement decisions are rendered as broadly subjectively as determination of a standard valuation tool for dimunition of value would be.
We also suggest and agree with the many here, that any granular loss from any causation to include the aging cycle, reduces the ability of the shingle to withstand the ultraviolet exposures which damage shingles further. That too is naturally expected in the roof system life cycle.
We now go further than some perhaps, in saying that from a policy and policy interpretation standpoint, that there are absolutely no exclusions or limitations which would apply to limit coverage for granular loss from a covered loss event.
Now what none of the three of us have said is this, and it is an important point: granular loss alone absent other symptoms of hail damage or hail exposure would not trigger indemnification of loss. In other words, if Bill, Clayton or I were to inspect a claim for a reported loss from a hail event, we would not recommend nor expect an indemnification payment being made to an insured for granular loss alone.
We do believe that the 'broad evidence rule' accepted in most state's courts requires a full review of all evidence on the part of an insurance carrier and therefore an adjuster in making coverage decisions involving damages from a covered loss event.
As an example, suppose you inspected a loss which involved a completely new roof, and discovered extensive and severe hail damages to vents, flashings and other building components, but for the life of you could not readily observe bruising or indentations but did notice significant quantities of granules in the gutters and downspouts. Would you take 'all' of those factors into consideration before deciding whether to recommend payment or non-payment of the claim? Well, the courts have spoken on this issue, and we suggest consideration of all factors in determining loss be considered and not just visible bruising or indentations or whatever other standards you have adopted personally. Sometimes the cumulative nature of multiple factors would suggest damage and hence coverage, and sometimes it would indicate otherwise.
We agree that there is no 'scale' for determination of DV which is set in stone nor adopted as some industry standard, and likely at best is whatever subjective agreement that parties to the insurance contract can agree on.
We would suggest, that given two exactly similar buildings with the same exact roofing systems which differ only by a physical separation of 10 miles, would experience two different life cycles to their roofing systems if one risk experienced hail storms without measurably visible damage several times during a 20 year period while the other roof did not suffer any exposure to hail. A greater loss of granulation, however slight, would speed up the aging process of the shingle and thus reduce the life cycle.
And if you were to inspect a risk where every indicative factor including perhaps granular loss, damage to soft metal flashings and vents was present, yet there was no visible evidence of hail damage to the roof shingles by the unassisted naked eye, and you were aware that 90 plus percent of surrounded risks on all sides of the risk at hand had experienced total roofing loss from hail, what conclusions would you draw? Obviously your answer would be subjective.
How could you possibly argue that this risk had not suffered some dimunition in value?
And on the stand as an adjuster/witness, how would you explain your recommendation under provisions of the insurance contract? Would you honestly be able to explain to the court why you had not exercised a broad evidence approach in arriving at your decision and recommendation under such a claim?
Dimunition of value is already an accepted concept in insurance and real property law, and we suggest that you will within the next few years discover that it is one of the new frontiers of valuation and litigation which adjusters and carriers will be wrestling with and adjusters should ignore the concepts at their own peril.
Keep your eyes and ears open to the concept of dimunition of value in claims handling, for it is one of the next and newer trends in property insurance and you'll be hearing more about it in the not too distant future. Don't say you weren't warned. |
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CatDaddy
USA
310 Posts |
Posted - 03/11/2003 : 22:25:15
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JimF - If I was on a roof and found damage to soft metals and some granule loss and I had totaled the NEXT DOOR NEIGHBORS houses on both sides because I found 6+ hit per square, why would I total the home with no damage? I wouldn't.
UV rays cause aging to composition shingles. There is no acceleration to the aging process from granule loss if the loss is not enough to expose the mat below the granules. If you lose a few more granules in the summer of 2000 due to hail, whats to say the shingle will ever lose another granule throughout it useful life, 20, 25 , 30 years? I've seen plenty of 25 year old 20 year 3 tabs covered in granules.
We get paid to make the tough calls too. |
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CCarr
Canada
1200 Posts |
Posted - 03/11/2003 : 22:25:41
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Sounds good to me, and I couldn't have summarized it that well.
I do want to emphasize Jim's last two paragraphs, regarding the future of DV for first party property claims. |
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CatDaddy
USA
310 Posts |
Posted - 03/11/2003 : 22:32:20
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I guess DV property claims will be the next big legal play. Good luck. There is no relationship between what we discussed earlier and homeowners claims. Atleast try it with mobile homes first; they do have wheels.
Insurance contracts clearly cover actual damage, not "what if". |
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Is granule loss considered hail damage?
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