An Insurer's Actions May Excuse Mitigation Requirements
(Note: This Guest Blog is by Corey Harris, an attorney with Merlin Law Group in the Tampa, Florida, office. This is part of a series he is writing on post-loss duties).
I recently took the deposition of an independent adjuster who worked on behalf of one of the larger insurers in the state. While most of the deposition was pretty standard, I was shocked when the adjuster said that he had advised the homeowners to stop making temporary repairs to their home. When I asked him to explain why he did not think it was a good idea for temporary repairs to the roof and exterior of the building to be completed, he answered that coverage had not been established yet and he did not think the repairs should be made until it was.
This exchange surprised me for a number of reasons. First, it is a fundamental part of insurance that a policyholder has a duty to take reasonable steps to mitigate damages. Making temporary repairs to a leaking roof would seem like a logical place to start, especially in Florida during the middle of the rainy season. Second, I was surprised that this individual did not seem to understand the potential problems that his advice could have caused.
In my last post, I detailed some of the potentially harsh consequences of a policyholder’s failure to properly mitigate damages, however, an insurer may be estopped from arguing as much if its actions encouraged or led to the insured’s failure to mitigate. See for example Kubista v. Romaine, 549 P.2d 491 (Wash 1976).
An insurer’s agents and representatives can bind the insurer through their actions and statements. See Old Republic Ins. Co. v. Von Onweller Const. Co., 239 So.2d 503, 504 (2d DCA 1970); Hughes v. Pierce, 141 So.2d 280, 284 (Fla. 1st 1961). Thus, if an adjuster tells a policyholder to stop making temporary repairs, it is only logical that the insurer should not be able to later deny coverage based on a failure to mitigate. Furthermore, the insurer may be liable for any further damages that the insured property sustained as a result of the adjuster’s instruction to stop making repairs, even if these damages are not covered under the policy.
The homeowners in my case were lucky that no additional damages occurred as a result of their stopping repairs at the insistence of the adjuster. However, the insurer and adjuster are lucky as well, because they could have been held liable for any resulting damages. This is why educating both adjusters and policyholders about the proper steps to take after a loss is very important to both sides, and failing to do so can cause more coverage disputes than necessary.
Your article only serves to reinforce my continuing comment that education is sorely lacking if an adjuster working for a carrier makes that type of inane comment.Even a rookie should not make such a stupid comment.I guess this situation is like manna from heaven for litigators it however illustrates the industry wide lack of committment to properly educating claims personnel. With the disappearance of veterans from the field this is unfortunately what the future looks like.
Ins. Vet:
Hello there! I wholeheartedly agree w/your comment:
"...With the disappearance of veterans from the field
this is unfortunately what the future looks like..."
THIS IS TRUE FOR ANY FIELD MIND YOU !!
Take care,
SHIRLEY HEFLIN
Vet,
It is unfortunate when there is a lack of knowledge on any side of the industry. You are absolutely right that the seasoned veterans are continuing to disappear and a lack of training likely leads to many problems that should never arise. In many cases, individuals will have to take it upon themselves to learn so that these mistakes can be avoided. It may be difficult, but it is definitely possible.
Thanks for reading. Your comments are always appreciated.
After reading this article and the subsequent comments I am reminded of the many calls I fielded from insured’s informing me their insurer's field representative advised to cease any further mitigation efforts. Absolutely befuddling! Most recently, an insured contacted my office informing me of a water loss with a large amount of ensuing mold as a result of a burst water heater in her non-owner occupied condominium insured with a DP-3 with a fungi endorsement. Additionally informing the insurer’s independent field representative initially inspected the loss and damage 7 days prior whereat he advised the insured to wait to mitigate the loss and damages until he had approval from the In house examiner. After my office was retained, I contacted the field adjuster who strongly stated “I am waiting on approval from the desk adjuster to advise the insured to mitigate.” Our industry suffers not only from lack of education, but from lack of authority and/or fear to “displease” (cost $$$$)one’s employer