Month: May 2016

Hail Storms, Wear and Tear, and Inadequate Maintenance

Hailstorms are wreaking havoc as noted in Brandee Bower’s post yesterday, Greetings From Hail Alley. After contacting their insurance companies, some policyholders unfortunately find their insurance companies deny the claims based on exclusions in the insurance contract involving wear and tear as well as inadequate maintenance.

To be fair, roofs get older and there is always wear and tear on older roofs. Rarely are close up pictures taken of roofs taken just before a hailstorm occurs. Accordingly, changes in the condition of some roofs caused by the winds and hail in a hailstorm versus pre-existing wear and tear become an issue.
My impression is that many insurers are increasingly claiming exclusions caused by wear and tear as well as inadequate maintenance. Indeed, insurance company engineering firms are increasingly advertising their services for these issues. There is nothing unethical about this, but the trend is landing many hailstorm losses into denials and subsequent litigation.

An excellent case regarding these issues is Monterra Apartments Ltd. Liability Partnership v. Sequoia Insurance Company.1 Sequoia denied that the hailstorm damaged the roof and claimed that the damage was wear and tear or inadequate maintenance. Regarding these issues, this is what the court found:
The policy clearly and unambiguously excludes coverage where wear and tear is the sole cause of damage. The last sentence quoted above clearly states, however, that the exclusion of coverage in Section I.B.2.1 does not apply—in other words, the policy provides coverage—where an “excluded cause of loss” results in a “specified cause of loss.” The phrase “specified cause of loss” is defined in Section I.H.11 to include “hail.” Therefore, replacing “excluded cause of loss” with “wear and tear,” and “specified cause of loss” with “loss from hail,” the clause reads: “if [wear and tear] results in [loss from hail], we will pay for the loss or damage caused by that [hail].” Thus, when wear and tear contribute to damage by a hailstorm, the policy provides coverage for the hail damage. Further, the policy covers any ensuing damage from the hail, such as water penetrating the roof as a result of the hail.

…The “Covered Cause of Loss” can be stated as “hail” or “loss from hail” because hail presents a “risk of physical loss” and is not excluded by the policy….Using these substitutes, the key provision reads: “if [inadequate maintenance] results in [loss from hail], we will pay for the loss or damage caused by [the hail]. This produces the same result as the wear and tear exclusion discussed above. Thus, when inadequate maintenance permits hail damage to occur, the policy provides coverage for the hail damage.
The parties dispute whether hail or inadequate maintenance damaged the roof or resulted in moisture penetrating the roof. This factual issue is for the jury.
The bottom line is that the insurance company better be prepared to show that all the damage was caused by pre-existing wear and tear or that all the damage resulted from inadequate maintenance. Sometimes that is the case. But in many cases, older roofs having wear and tear are also torn up by the winds and hail stones which are occurring much more often today.

1 Monterra Apartments, LLP v. Sequoia Ins. Co., 2012 WL 827075 (D.Ariz. Mar. 12, 2012).

Hiring a public adjuster can help with home insurance claims

Some homeowners hit with ‘deductible double whammy’ after hail storms, torrential rains

WYLIE, TX. – The battered roof of a Wylie house got reinforcing patches Monday.  Homeowner Janie Abraham looked on, hoping this will be the end of a month long rough patch, “This has been epic”.  Abraham has been through one damaging hailstorm followed by an even more destructive one, “I have never seen back to back storms like there were here”.

Then, over the weekend, it was all compounded by torrential rains that came down–and came in—through Abraham’s compromised roof, where the first temporary patch job didn’t hold, “It was coming down in a hole in the fireplace.  This is the second time we have emptied this bowl here.”

Many of her neighbors are in that same boat—taking on water.  As we toured the home of Florencio Contreras, he pointed out a water stain across the ceiling of a bedroom, “I have to go up and look at this because this is something that happened last night”.  The water is seeping in through his hail-pockmarked roof.

A few streets down, Russell Smith’s soggy insulation is being sucked out of the attic by a remediation company, “Next two days at least I know it is forecast to rain”.  He nervously waits to see whether his roof patchwork will be up to the task, “Yes sir, hoping the best and praying that it will”.

Insurance adjusters have already swept through this hard hit neighborhood, but they advise residents to report any new damage as new rounds of weather roll in.  “Always good to notify your insurance carrier and say this is what I am seeing today”, says Robert Smeltzer of Allstate Insurance.

Janie Abraham did just that, but got hit with the deductible double whammy. Damage from separate storms meant she had to pay her share twice.  She says has given–and taken–about all she can, “I finally lost it this weekend.  That is the first I have broken down.  I can’t take one more ounce of stress.  They would have to just put me in a rubber room and bounce around for a few days and just get out of it”

(© 2016 WFAA)

Insurance companies hire unlicensed adjusting firms

ALICE, Texas – Justin Dunavant and his wife aren’t sure what they miss the most, their dog or their garden.

They haven’t been able to be around either since moving out of their home in March.

The couple and their three children have been living in a nearby Holiday Inn for two months while they wait on a claims dispute to be resolved with their insurance carrier.

The United States Army veteran has filed a lawsuit against his insurance company because they are approving a claim amount that sits about $100,000 shy of what a public adjuster said would be needed to repair damages caused in January.

On what would have been a typical Thursday morning, an SUV ran three stop signs and careened into the corner of the home.

The damage is significant, with the entire laundry room turned to rubble and cracks present in the home’s ceiling throughout.

When the Dunavants’ insurance company rejected several repair estimates from the company’s own approved vendor, Dunavant said he hired a public adjuster.

In March, that adjuster pointed out that there may be a problem with the dust in the home. He determined the cracks in the ceiling were releasing asbestos and a family doctor ordered Justin and his family to vacate the home immediately.


The public adjuster also requested that the company send out a licensed adjuster, not a contractor, to look at the damages. They eventually did. However, the company that adjuster was working for was not licensed with the Texas Department of Insurance.

“What we’re finding is although most of the adjusters are licensed individually, a lot of the companies are not licensed at all,” said Shannon Loyd, the attorney representing Dunavant.

Loyd is also part of a non-profit group called Texas Policy Holder Advocates, whose mission is to help consumers fight their insurance company without having to hire an attorney.

WATCH: Advice to get your insurance claims paid

The group filed complaints with the Texas Department of Insurance on several adjusting firms it discovered were unlicensed but still adjusting claims on behalf of large insurance companies.

“When we started figuring out how many of these big companies weren’t even licensed, it was very surprising that no one seemed to be paying any attention to it,” said Loyd.

Channel 2 Investigates discovered that since 2014, TDI has received complaints of 10 unlicensed insurance adjusting firms.


The agency did not fine any of the companies found to be conducting business without a license. Instead, it warned the firms asked that they get a license.

“In those 10 cases, it was a technical violation. There was no consumer harm,” said TDI representative Jerry Hagins.

[RELATED: Attorneys: Insurance carriers delaying, underpaying thousands of homeowner claims]

But Loyd said she fears without accountability the companies could be harming Texas policy holders.

“If they are not going to follow one area of the Texas insurance code, what makes me think they are going to follow the other part?” she said.

Consumers can look up an adjuster and an adjusting firm’s licensing information on TDI’s website. The agency also encourages consumers to file complaints.

Channel 2 Investigates would like to hear from any Texas insurance policy holder having a dispute with their insurance carrier.  Select “Investigates” in the tab of our contact form.

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