Property Insurance Coverage Law Blog : Florida Insurance Lawyer & Attorney : Merlin Law Group Law Firm : Tampa, Houston, Coral Gables, Gulfport

Since 2004, the majority of our law firm's large insurance battles have focused on hurricane loss insurance disputes. It is not surprising that we are getting phone calls from people asking whether our firm will open offices somewhere between North Carolina and Boston as Hurricane Earl is projected to hit that area. I was surprised by a recent newspaper article that indicated our firm "specializes" in sinkhole losses.

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The Statute of Limitations is defined as the time period within which you must file a lawsuit. Unsurprisingly, there appears to be some confusion over when the statute of limitations runs out against the victims of Hurricane Ike, and public adjusters are not the only ones confused – many lawyers are unsure as well. There is one thing that lawyers are sure about, though: it’s better to be safe rather than sorry!

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The Galveston Island and Bolivar Peninsula slab cases are settling. There was an agreement between the Texas attorneys that nothing would come out in the press until the clients signed the agreements. Since even the Texas Windstorm Insurance Association (TWIA) participated with a press release, I assume that the gentlemen's confidentiality agreement to wait on telling everybody publicly that a settlement has been reached, even before clients have signed the releases, no longer applies. The vast majority of my clients have only received letters from our firm, and I am awaiting final figures from TWIA so that we can consummate the deal. I hope everybody is not optimistically jumping the gun.

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The oil spill attorneys advertising for a mass of clients and recent advertisements in Texas regarding Hurricane Ike claims, seem to indicate that all my colleagues always win, and win big. Nothing could be further from the truth. The truth is that if you are going to trial or push for what should fully be paid, at least one party to the litigation will lose and, sometimes, lose after a lot of money is offered to settle. Everybody loves to talk about their wins. Losses happen, and I am reminded of that bitterness and horrible feeling of injustice every now and then.

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The Texas hurricane insurance coverage disputes caused by Hurricane Dolly and Hurricane Ike are fully engaged. Texas’ two year statutes of limitation are approaching. New law suits are being filed, pending lawsuits are being set for trial, settlement conferences are causing great frustration, and the discovery battles between insurance counsel and policyholder counsel are considerable and contentious. Sadly, this is a pretty normal state of affairs on a two year anniversary following a major catastrophe.

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Today’s deposition of Professor William Spelman starts a series of depositions in the Texas slab cases involving TWIA. Several weeks ago, policyholder attorneys, including myself, met in Galveston to organize a series of depositions and decide upon the work assignments for these cases. This will be the first of many depositions and discovery attempts by policyholder attorneys to gain additional recovery for those individuals who suffered the most devastation caused by Hurricane Ike.

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Insurance coverage disputes are often decided by laws and regulations made outside the insurance contract. Insurance companies have known this for years. They employ an army of lawyers and seemingly have an unending treasury to lobby for laws and regulations that favor insurance company interests.

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A recent order from Galveston County regarding the TWIA litigation specifically names the TWIA representatives who will be deposed and the manner in which the depositions will take place. Suffice it to say that it is no easy challenge preparing for these depositions (see attached order). As members of the Plaintiff’s Ike committee, the members of our firm have read and catalogued thousands of TWIA documents, emails, correspondence and forms in preparation for these depositions. We are expecting more as the depositions start.

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The Texas policyholder bar representing Texas "Slabbers" met yesterday in Galveston. The bottom line for those with the most significantly destroyed buildings is that these cases and the litigation discovery is being coordinated and will be moving much quicker.

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Texas is where "the game" is being played regarding insurance coverage disputes in 2010. The Windstorm Insurance Network will hold its second Texas Insurance Symposium on May 11, 2010, in Dallas, Texas, where many of the issues related to windstorm coverage will be discussed. Certainly, the coverage issues raised by Hurricane Ike litigation will be highlighted.

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(Note: This Guest Blog is by Javier Delgado, an attorney with Merlin Law Group in the Houston, Texas, office. This is the first in a series he and fellow attorney Tina Nicholson will be writing on Texas property insurance issues).

“WHAT DO YOU MEAN YOU CAN’T TELL ME EVERYTHING THAT YOU HAVE LEARNED ABOUT TWIA?”

No, this is not a typographical error. There are many things that we have learned about Texas Windstorm Insurance Association (TWIA) and many things that we cannot openly discuss.

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Does anybody think that TWIA is doing a "good job" of adjusting hurricane claims other than the private member insurance companies on TWIA's Board of Directors? In a prior post, TWIA Insurance Claims Under Investigation by Regulators and Media, I noted that the Texas Department of Insurance attorneys are conducting an investigation into activities of TWIA's claims conduct. The Houston Chronicle’s Purva Patel has been doing her own outstanding investigative reporting which is providing shocking and needed transparency into the real world activities that have gone on in the field concerning TWIA's claims conduct and the motives behind it.

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Houston Chronicle reporter, Purva Patel, filed an article, "They Want ‘Profits' of Ike," noting that Hurricane Ike policyholders who have wrongfully been denied payments for expected costs of general contractor overhead and profit are bringing their actions in class action lawsuits. Our law firm has filed some of these cases with Javier Delgado taking the lead. Javier was noted in the article:

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The Bolivar Peninsula TWIA policyholders have had the most frustrating insurance claim experience of any group in recent memory. While we have been having success with other Hurricane Ike claims, the Slabbers claims resolutions have proven difficult. They have not just back and taken this abuse either as I noted in Texas Windstorm "Slabbers" and Policyholders March on Austin.

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Suppose you knew that your insurance company had started a new claims practice program called “Quantum Leap” to increase corporate practices by making certain no claim was overpaid—would you buy that insurance? Would you feel peace of mine if you knew that secret program was in place and had such a claims philosophy?

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Back in April, an attorney in our Houston, Texas, office, Javier Delgado, wrote a post for this blog warning TWIA policyholders to be careful when choosing how to challenge a TWIA determination of damage to property (Don't Be Fooled By Texas Windstorm Insurance Association's Misleading Letter).

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Yesterday’s post, Physical Damage is Needed to Collect for Loss of Warranty, may lead some to think that property insurance policies require “structural” or a “functional” destruction before coverage is not afforded. This simply is not true. Alterations to the physical appearance of a structure or personal property are covered so long as the cause is a covered peril.

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I was asked twice on Friday at our seminar in Houston whether a policyholder could collect for the loss of their roof warranty. I felt the questions were valid because Hurricane Ike has caused many to lose warranties on their roofs as a result of wind speeds being in excess of allowable warranty requirements. In essence, policyholders suffer financial damage because they no longer have warranties on roofs due to the physical wind speed event of an act of God, Hurricane Ike.

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The seminar our firm hosted for public adjusters went extremely well, with very practical information exchanged between adjusters, engineers, and attorneys. The Texas Department of Insurance had an attorney from its enforcement division attend. I felt it was a significant learning experience for her as well. Most people do not understand how complicated evaluating damage and investigating coverage matters can be. I am certain anybody not familiar with claims handling who attends one our claims seminars quickly appreciates that insurance adjusting is a demanding job....if done correctly and ensuring that full benefits are paid promptly.

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A Texas Department of Insurance (TDI) attorney familiar with the ongoing investigation will be at the Public Adjuster Seminar we are hosting tomorrow in Houston.

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As a follow-up to my post on Saturday, TWIA Insurance Claims Under Investigation by Regulators and Media--An Invite to TWIA Claims Executives to a Public Meeting in Houston Next Friday Regarding Those Accusations, where I extended an open invitation to Texas Windstorm Insurance Association (TWIA) executives and claims managers to attend the seminar my firm is presenting this Friday in Houston, I sent a letter to Jim Oliver, General Manager at TWIA.

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I get asked that question quite often. Doing what I do for a living, given my last name, and having proven my prognostication prowess (with money backing up my opinion) by opening our Texas office BEFORE the first of two major hurricanes to hit Texas, I can understand why many come to me for that answer rather than professional meteorologists and psychics. I am not betting on any “major” hurricanes this year. El Niño seems to be preventing tropical storms from making the trek across the Atlantic Ocean. Upper level wind shear has been destroying the movement towards the coastal United States and Gulf regions. Let’s hope it stays that way. And, as I suggested in May with a post, Weak El Nino and Cooler Tropical Waters Lead to Predictions of Fewer Hurricanes, who really knows?

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The Houston Chronicle ran an article by Purva Patel today, See what blew in with Ike: a battle, which explains the lifted shingle issue at the heart of numerous Hurricane Ike Claims. It is not clear at this time how Texas Insurance Commissioner Mike Geeslin will resolve the issue, but consumer advocates hope Geeslin will prove to take a stand for his constituents, as did his counterpart in Florida, Kevin McCarty.

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I have been involved in a lot of disputed property insurance claims in many venues over the past twenty-five years where emotions run high, but the Texas Windstorm Insurance Association (TWIA) is the blue ribbon winner in Texas for policyholders that hate how they have been treated. And, it is not just limited to the customers of TWIA. A number of independent adjusters representing TWIA are ready and willing whistleblowers in lawsuits against TWIA regarding these practices. They are upset as well.

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Insurance claim denials and disputes involving “matching” are frequent. I received this recent comment on the topic of matching:

Hey Chip

Back on 5/17/09, Cat adjuster posted a comment regarding matching of aged paneling and tile floors. You advised that maybe the adjusters were relying on Texas Case Law regarding causation. In my experience, the adjusters and appraisers I am dealing with in Texas simply don't feel they owe for match. For instance, I am dealing with an adjuster who agrees that the siding on this Galveston Home was discontinued in the 1930's and is obviously unavailable and can not be matched. He agrees to replacement of the two damaged sides, but insists the carrier does not owe for match of the two remaining sides.

I have argued that failure to replace all 4 sides will not completely indemnify the Insured. He is not moving at all. I have not found any case law or statutes dealing directly with this issue.

Any thoughts??

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Imagine a situation where a butcher sliced some meat you ordered, weighed your cut, and then told you that you owed $43.79—but refused to tell you how he calculated the price. Would you simply agree and pay the butcher? Of course not. But this is what happens all the time when insurers refuse to turn over engineering reports or honestly explain how evaluations of damage were arrived.

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Merlin Law Group will host a seminar in Houston, Texas, for public insurance adjusters close to the anniversary of Hurricane Ike. I promise that this will be dedicated to a "lay of the land" regarding tips and strategies for public insurance adjusters to service policyholders with quicker and fuller resolutions. Appraisal and the processes and techniques to obtain a better recovery will be taught and a special analysis regarding TWIA practices will be provided.

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I just finished a two day settlement conference of a commercial insurance claim dispute held on the 51st floor of Fulbright & Jaworski in Houston. The view from the conference room was beautiful and in juxtaposition to the manner my client felt the insurance claim was handled. As is becoming customary for many of my cases, the terms of the settlement are confidential. The resolution ended very amicably, although the process was somewhat frustrating. The significant aspect to others is this was a matter whose facts are similar to, and seem repeated in, thousands of other Texas losses, no matter if the loss is small or a complex middle eight figure claim. Insurance claim denials and delays seem commonplace in Texas.

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As we have seen with the Katrina and Wilma litigation, courts will enforce the anticoncurrent causation clause, standard in most all risk and wind insurance policies. Many who suffered total losses could not fully recover because they did not have adequate flood insurance. Generally, policyholders with insufficient flood coverage limits fall into three categories:

1. Those who did not purchase flood coverage.
2. Those who underestimated the value of full replacement cost.
3. Those correctly estimating replacement coverage but not able to purchase the amount through National Flood.

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(The recent State Farm Lloyds v Johnson decision from the Texas Supreme Court has generated a lot of debate within our firm. It is an important case, but it is important to remember that the Court warned that the record was not developed sufficiently to rule upon State Farm's arguments. Courts do not generally provide advisory opinions, and this opinion is particularly interesting because it addresses several hypothetical scenarios and how the law should be applied to each).

The facts involve a hailstorm that moved through Plano, Texas, in April of 2003, damaging the roof of Becky Ann Johnson's home. She filed a claim under her homeowners insurance policy with State Farm. State Farm's inspector concluded that hail damaged only the ridgeline of the roof, and estimated repair costs at $499.50 (less than the policy's $ 1,477 deductible). Johnson's roofing contractor concluded that the entire roof needed to be replaced at a cost exceeding $13,000. (These facts and degree of disagreement seem typical even for the losses we have encountered following Hurricane Ike).

Johnson demanded appraisal of the "amount of loss" pursuant to the appraisal provision in her standard-form policy, but State Farm refused to participate in an appraisal. State Farm argued that the parties' dispute concerned causation and not "amount of loss," so that appraisal was not appropriate. Johnson filed suit, seeking to compel appraisal. On cross-motions for summary judgment, the trial court agreed with State Farm that no appraisal was warranted. The court of appeals reversed. The Texas Supreme Court affirmed the court of appeals.

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Some Mondays are more interesting than others. When I go to conferences with adjusters, I make a point to ask about "in the street" information on insurers I am litigating against. The information and leads to witnesses or evidence are often extremely valuable to my clients. Adjusters know when the orders from claims management are wrong and aimed at paying less than what is fairly owed. Most want to disclose facts about insurers that wrongly demand underpayment.

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My work day started at 4:30 am EDT in Tampa, with a trip to South Padre Island regarding a Hurricane Dolly dispute. It will end at sunset following meetings on Hurricane Ike matters. As my pilots are working on getting me safely home through the summer Gulf Coast weather, I am wondering how Judy Guice did in her argument earlier today before the Mississippi Supreme Court.

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As I mentioned in yesterday’s afternoon blog, FEMA issued a signed memorandum authorizing an additional 60 day extension for Ike and Gustav victims to submit a proof of loss. Now a policyholder has a total of 330 days from the date the damage was incurred to file. The memorandum notes that FEMA will be closely monitoring the extension to determine whether additional extensions are warranted. This 60 day reprieve may be your last chance to file a proof of loss and recover the insurance proceeds you are owed. Failing to timely and properly file a flood proof of loss is a bar to recovery of the claim.

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Insurance claims decisions cannot be made in good faith without full investigation and honest consideration of the resulting information. Some adjusters are not truly listening to their policyholders and considering what their policyholders tell them. Some carriers seem to conduct investigations with cursory expert work or only consider the opinions of the typical insurance expert without giving full consideration to other opinions. Many insurers are not conducting full investigations of Hurricane Ike claims, instead doing just enough looking to find reasons to deny or underpay.

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Why do some elected representatives kick the people who voted for them and pander to insurance companies? Tina Nicholson forwarded me a bill that has passed the Texas Senate that guts all consumer protections for TWIA policyholders.

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We have received a number of questions following Hurricane Ike regarding cancellation of insurance policies. Most of the time, the reasons for cancellation are legitimate. Sometimes, the cancellation is based on mistakes of facts. Once in awhile, the cancellation is based on a bad motive and leaves the policyholder in a very difficult situation. 

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I am certain some insurance Texas adjusters are going to be surprised to learn that Texas case law has held that when a partial loss happens, depreciation SHOULD NOT be deducted from the loss. I mention this due to the hundreds of loss statements prepared by insurance company representatives where depreciation is routinely deducted.

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Would you expect Americans to get a fair trial in Iran? Probably not, because most would believe that the judge and jury would rule against Americans no matter what the evidence showed. Many policyholders first call our office while waiting for a conclusion from the insurance company's expert. Usually, the expert becomes involved after the policyholder complains about the insurance adjuster’s first conclusion. The policyholder, now worried about cementing an already bad situation with a bad finding from an alleged expert, calls to see how we can help.

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Thursday’s Hurricane Ike policyholder attorney meeting in Houston, which our law firm organized, was a great success. More than 30 attorneys from the Galveston and Houston areas registered. We coordinated litigation and shared ideas and information to help our individual clients. This will eventually help all insureds involved in litigation receive the benefits owed by their insurance companies. I am certain the judges assigned to the cases will be happy to hear we are working on methods to streamline the litigation process so the cases can move quickly and cost efficiently.
After the meeting, I reread an appellate decision involving Texas Windstorm Insurance Association (TWIA), Tex. Windstorm Ins. Ass'n v. Poole, 255 S.W.3d 775 (Tex. App. Amarillo 2008), from a new perspective. The Court determined what kind of an entity TWIA is. The opinion starts with an amusing story:

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(*Chip Merlin's Note--Rocco Calaci has been a noted meteorology expert witness in the Katrina Legal Wars. After meeting him at a recent FAPIA Convention, I invited him to write a series of guest blogs. Click here to read his previous guest blogs)

Whenever a hurricane strikes a community, we obsess over the maximum wind speed and storm surge depth. In my last blog, I mentioned many other weather elements within a hurricane that can cause damages. Now I want to speak my mind on how we need to look at hurricane damage from another perspective.

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Our law firm is helping to sponsor a seminar and meeting with Hurricane Ike policyholder attorneys this Thursday, April 16, in Houston. We held a similar meeting following Hurricane Katrina and felt it was beneficial for attorneys and clients to meet, learn, and share ideas regarding the common problems and issues arising out of Hurricane Katrina claims, denials, and delay.

The Ike meeting will start promptly at 8 am with a nationally recognized claims practice expert providing an in depth seminar. Other attorneys are scheduled to speak on common discovery issues. We hope to discuss methods to decrease costs of experts and other common costs as well as best practices to avoid losing arguments we expect the insurance companies to raise. We intend to share ideas about how to speed up the litigation, so that the Hurricane Ike lawsuits move along as quickly as possible.

If you are an attorney who does not represent any insurance companies and you are actively helping Hurricane Ike policyholders, you are invited. I encourage you to attend since there is everything to gain and nothing to lose.

Currently, about twenty attorneys are attending this one day conference.

There is no charge. Lunch and cocktails are provided in return for your attendance and ideas.

Please contact Javier Delgado at (713) 626-8880, in our Houston office to get more details and clearance to attend.

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One of the most fascinating parts of my job is learning of the extraordinary events that happen to people. Just when I think I have heard it all, I catch myself saying, "you've got to be kidding!" The client's typical response usually is, "I know, I wouldn't have believed it either, but…," and the remaining details are explained. Sometimes, I notice that I am smiling at the story and thinking hard about how the catastrophe can be covered under an insurance policy. Then, I end up apologizing for not seemingly being more empathetic to their predicament, but the mental exercise of applying a theory of financial insurance recovery to the facts is fun for me. This is how I use my limited talents; it has become my life’s work.

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This is a Blog and not a book. So, I will try to give everybody the Readers Digest version of some thoughts I have on the very complex and important coverage topic.

The Texas Windstorm Insurance Association covers "windstorms." One of the most classical types of windstorms are the hurricanes that menace those of us living along our country's Southern waters in the summer and early fall.

Some modern policies exclude, charge higher deductibles, or cover certain aspects of "Named Windstorms," which are hurricanes or tropical storms named by the National Weather Service. Those policies even limit how long windstorm coverage lasts or is effected after the "Named Windstorm" diminishes.

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My posts which discussed the roof damage claims denied by TWIA (See Internal Texas Windstorm Roofing Claims Memo Explains Damage is Not Covered, The TWIA Roof Damage Memo: Checking Basic References to Resolve Adjustment Questions, Roof Repair Methods Prove TWIA is Wrongly Denying Roof Claims, and "Physical Direct Loss" Caselaw and TWIA's Roofing Memo) resulted in a number of comments. The author of the internal TWIA memo is Reggie Warren. He is in TWIA’s claims management of TWIA and gave powerpoint presentations to Hurricane Ike catastrophe adjusters. We are in the process of collecting as much information as possible about Mr. Warren, since he appears to set TWIA’s claims policy.

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The deadline for filing a federal flood proof of loss for a Hurricane Gustav or Ike claim has been extended twice by the National Flood Program Administrator for a total of 270 days from the date of loss.  That deadline is fast approaching, and if you have not yet filed a proof of loss, you should calculate your deadline and calendar the date now so that you do not miss it.  Failing to timely and properly file a flood proof of loss is a bar to recovery of the claim.

To calculate your proof of loss filing deadline, count 270 days from your date of loss. For example:

• A September 11, 2008, Ike-related loss must have a proof of loss submitted by June 8, 2009.
• An August 28, 2008, Gustav-related loss must have a proof of loss submitted by May 26, 2009.

Policyholders should also keep in mind that:

• Federal flood proofs of loss must be delivered, not mailed (i.e., get it received and in the hands of the company listed on the policy by the deadline. Do not just send it to the adjuster on the deadline day); and
• The proof of loss should be submitted on the standard form utilized by FEMA, and it must be completely filled out.

You can read the February 20, 2009, extension letter here.

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I have received three questions regarding proofs of loss in the last two days. This post will provide a general and basic understanding of a topic about which I could write a small book.

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I was honored to be given the Policyholder Attorney Honorable Mention Award from the Insurance Law Center. It was meaningful because I am a policyholder attorney in every case. However, some who read the comment posted by the Insurance Law Center with the award might have the wrong impression about the success that our firm, not just me, had in the Katrina Cases we litigated. This is what was said:

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(*Note:  This Guest Blog is written by Javier Delgado, an attorney with Merlin Law Group in the Houston, Texas office).

Texas Windstorm Insurance Association says you only have 30 days to appeal its determination of damage to your property! DO NOT RUSH TO APPEAL before you learn what TWIA is not telling you; you will give up valuable legal rights and remedies.

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A reminder that the Windstorm Insurance Network is sponsoring a special Texas Windstorm Insurance Symposium. It will be a one day event on April 2, 2009, at the Hilton Hobby.

Follow these links for the Program Agenda and a listing of the Breakout Sessions.

Online registration for the event is closed, but walk-in registration onsite will be accepted on a space-available basis.

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(*Note:  This Guest Blog is by Jean Niven, an attorney in the Tampa office of Merlin Law Group).

Hurricane season is fast approaching, leaving coastal residences and businesses vulnerable to the whims of Mother Nature. Surviving natural disasters should not be just a warm up to the difficulties encountered in filing an insurance claim. The purpose of insurance is to provide peace of mind. When disaster strikes the insurer is tasked, pursuant to Florida law, with providing prompt assistance in the form of a competent adjuster who has the best interest of the insured as its first priority. Sadly, that scenario has become a fairy tale for many insureds. Instead of providing the friendly professional assistance advertised in TV commercials and on bill boards, the insured is frequently faced with obstructionist tactics designed to wear down even the most stalwart of personalities. This at a time when a person is most vulnerable and frequently has limited financial capability.

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(Note:  This Guest Blog is by Frank Chimento, Director of Business Development and Client Services at Merlin Law Group).

I would feel confident making a wager that if Americans were polled on a scale of 1 to 10, with 1 being the least, their level of understanding or interest in insurance matters would be somewhere around 2.5. At least it was for me, until one day at the Almeda Mall in Houston, Texas.

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(*Chip Merlin's Note--Rocco Calaci has been a noted meteorology expert witness in the Katrina Legal Wars. After meeting him at a recent FAPIA Convention, I invited him to write a series of guest blogs. Click here to read Part 1 of this guest blog)

Besides mesocyclones, there were numerous microbursts during Hurricane Ike. A microburst can best be described as strong downward (vertical) winds that result from a strong thunderstorm cell collapsing. The outflowing wind pattern is omni-directional, creating an elongated horizontal vortice along the leading edge of the winds.

This diagram obtained from the Internet (generated by the 45th Weather Squadron, USAF) depicts the wind pattern of a microburst as it hits the ground.

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I’ve been reading an outstanding book by noted author, Charles Swindoll about the life of the Apostle Paul. The book is simply titled, Paul: A Man Of Grace and Grit. While gaining an in depth understanding of the persecution this great man endured while remaining steadfast toward his mission at hand, I was reminded of the resolve of the hurricane victims in Texas.

I remember shortly after Hurricane Ike devastated the Texas coast, Chip Merlin and I were walking along Bolivar Peninsula. I believe we were in Crystal Beach to be precise. Among the heaps of destruction and the busted concrete slabs and the tattered wooden pilings, I remember Chip stopping to point out to me how many United States and Texas state flags were flying high, along with POW and Vietnam Veteran flags as well. I also remember him clearly stating that, “Texans are not going to just lay down over this without a determined fight.” Texans have grit!

On a personal note, I’ve also witnessed the tremendous understanding that Texans have displayed. For example, in talking with literally hundreds of hurricane victims and hearing about even more, I’ve never once heard a policyholder verbalize wanting anything more than what they’re owed contractually from their insurance company. I can’t recall anyone wanting vengeance against TWIA for only receiving an arbitrary 11.2% payment. Instead, I’ve witnessed an outpouring of empathy for fellow storm victims, a spirit of cooperation and a resounding sentiment of not wanting handouts from anyone. Texans exhibit grace!

Hurricane Ike has brought out the best that Texans offer even in the face of unprecedented hardships, insurance claim denials, severe underpayments and political and legal posturing aimed at preventing a timely and full recovery.

Even this weekend, residents on Bolivar Peninsula are getting together to share information about how to rebuild and recover from the storm. One of our Houston based attorneys, Tina Nicholson, is participating in that effort. Two weeks ago, a group of caring citizens banded together and marched on Austin to voice their concern and their expectations. All over the damaged areas of the state, home and business owners are pulling together; single-minded in their mission to hold insurance companies accountable to the promises they made and to rebuild their communities and their lives.

It is true that in times of trials and tribulations our true character emerges and is tested. I find inspiration and hope from the Texans I’ve met. Insurance companies like TWIA should take note that the people who suffered at the hands of Hurricane Ike should not be taken lightly; behind their tremendous grace is unrivaled grit!

http://www.crystalbeachtoday.com/amenities/ for more information on the event this Saturday.

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(*Chip Merlin's Note--Rocco Calaci has been a noted meteorology expert witness in the Katrina Legal Wars. After meeting him at a recent FAPIA Convention, I invited him to write a series of guest blogs. His previous guest blog was, Is The Saffir-Simpson Scale Still Relevant.)

Is a hurricane only wind and water?

I have been collecting and analyzing meteorological data from Hurricane Ike for the past several months. The actual date of my research and analysis began on September 14, 2008, the day after Hurricane Ike hit southeast Texas.

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For those of you that read something and you think it is dead wrong, do your eyes squint and head start shaking? Mine did when I first read the internal TWIA roofing memo. As I read it, I was thinking:

"Does the TWIA claims executive who wrote this not understand the basic insurance principle of what constitutes a direct physical loss?"

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Previous posts highlighted TWIA's secret internal memo (Internal Texas Windstorm Roofing Claims Memo Explains Damage is Not Covered and The TWIA Roof Damage Memo: Checking Basic References to Resolve Adjustment Questions) which wrongly orders denial of coverage for roofing damage. In response, we received a technical manufactuer's bulletin from a certified roofing contractor which helps explain why this is factually a covered loss.

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The post from this morning, Internal Texas Windstorm Roofing Claims Memo Explains Damage is Not Covered, raised a number of interesting methods to research this coverage issue. Many risk managers and public adjusters will simply call me to get a quick opinion regarding many day to day coverage issues. I thought it might be interesting to see what adjusters may have in their basic training materials to answer the questions raised in the memo. I have no idea if the TWIA claims executives looked at any reference materials. I hope they authored the claims memo in ignorance, because the opposite poses a different set of problems.

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The independent adjusters for Texas Windstorm Insurance Association may end up being some of the best witnesses for policyholders in the litigation that is starting. The desk TWIA adjusters in Austin are not listening to them and do not trust them to determine what is damage and what is not.

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On Friday, one hundred and forty-eight Texas public insurance adjusters attended a seminar our law firm sponsored in Houston. I am pretty sure it was the largest ever gathering in Texas of people dedicating themselves to the study of helping property insurance policyholders. It was thrilling, exciting, and taxing for me. I loved every minute of it, and several public adjusters have asked us to hold another seminar this summer.

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A new client informed me last week that his wife was going to protest against the Texas Windstorm Insurance Association (TWIA) in Austin, Texas. From what I hear, she is going to have quite a few neighbors with her as they commemorate the sixth month anniversary of Hurricane Ike by creating a storm of controversy as they march to TWIA headquarters. Power to the People!

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If you want to find a bunch of irate policyholders with plenty of stories to tell, hang out with Tina Nicholson and Javier Delgado in our Houston office. Commercial and residential policyholders have had enough frustration trying to do it themselves and are seeking legal counsel to fight the delays and denials from their insurance carriers. Anger at the insurance company and the adjusters working their claim is the prevalent emotion. Over the next several weeks, I plan to write much more on Texas property insurance law and protection it provides because Texas is the hottest new venue in the insurance litigation war. We are in the middle of it.

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Coordination between litigants following catastrophic losses is becoming increasingly frequent. This is good if the result speeds the resolution of claims and reduces the expenditures to policyholders and insurance companies. However, the Devil is in The Details, as with most things in life.

It is not uncommon for insurance companies to try to get an advantage through case management and discovery orders applicable to all cases. I imagine insurance defense lawyers are thinking the same skeptical thoughts about policyholders’ attorneys.

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My good buddy, Tom Grail, told me the parable of Hurricane Ike Insurance Claims. To appreciate this, one must first understand that the total loss structures in Galveston and Bolivar receive uniform estimates of wind damage from the Texas Windstorm Insurance Association (TWIA). The amount of damage caused by wind for nearly every structure is approximately 11%. The reports are virtually identical for every total loss structure, despite differences in the age of the structure and quality of construction.

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Recently, our firm has been questioned about the appraisal of Hurricane Ike claims. Appraisal is an informal process which determines the monetary amount of disputed damage claimed under a property insurance policy. Questions have come from policyholders and public adjusters regarding a variety of issues.

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Federal Code and Regulations typically require that Proofs of Loss for National Flood Insurance claims be filed within 60 days following the loss. They have to be done completely and on time. The only exception is a written waiver from the Administrator of the National Flood Insurance Program.

On October 20, 2008, a 120-day extension was issued. That extension was close to expiring, and on February 20, 2009, the NFIP Administrator issued an additional 90-day extension to file proofs of loss for Hurricane Ike and Gustav.

Flood policyholders now have a total of 270 days from the date of loss to submit their proof of loss. For example, a September 11, 2008, Ike-related loss must have a proof of loss submitted by June 8, 2009.

You can read the February 20, 2009, extension letter here.

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(*Chip Merlin's Note:  A fascinating aspect of our work is learning about many different things that have nothing to do with the law. We have to understand construction, restoration and building repair to be effective for our clients. Our guest bloggers from TSSA Storm Safe know more about glass windows, doors and glazing than anybody that I have ever met. Their two hour lecture to my law firm was eye-opening. While it may seem weird to some that this topic can be so important, we routinely represent clients whose buildings have tens of millions of dollars at stake in litigation regarding glass windows and doors. This discussion is very timely given the disagreements of wind damage caused by Hurricane Ike.)

I am going to ask you to take a moment to look at a structure; it could be your home or the office building where you carve out a living. In essence, it is one big puzzle constructed out of concrete, steel, wood, rebar, aluminum and, last but not least, glass.

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A Comment from a previous post, How Ike Insurance Claim Help is Supposed to Be, provided insight to the understanding of the claims process from two adjusters in the insurance industry. The comment is worthy of repeating here:

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I wonder how hard the Hurricane Ike insurance company adjusters are working to pay benefits? I have always found that the harder and longer you work at something, the better the results are.
Similarly, one would expect that the longer an adjuster inspected a structure and looked for damage, the more benefits would be paid.

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Hurricane Ike insurance claims are getting to the point where people are upset that their insurance claims have not been paid. They are seeking answers and looking for help. This is common following disasters.

Usually, the upset policyholder has been through the following: provide notice of the claim, hope the field adjuster gets the Home Office to pay, wait, provide more information, wait some more, call, provide more information, receive a letter (maybe with a small payment) that explains that the investigation is continuing, write a letter in response, wait, call, wait, and then nothing or a denial letter.

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(*Chip Merlin's Note--Rocco Calaci has been a noted meteorology expert witness in the Katrina Legal Wars. I met him at a recent FAPIA Convention where he presented a speech about hurricanes. I invited Rocco to write on today's topic after he briefly mentioned it in his speech.)

Since the release of the Saffir-Simpson Scale in the late 1960’s, it has been considered the “standard” in how hurricanes have been categorized. It is my personal opinion that the Saffir-Simpson Scale is no longer relevant due to new technologies and the fact that the estimated levels of destruction rarely match the actual destruction observed from hurricanes over the past decade.

The use of the Saffir-Simpson Scale, along with other meteorological “beliefs”, must be put aside and replaced by factual and verifiable research.

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(IMPORTANT UPDATE TO THIS POST:  On February 20, 2009, the NFIP Administrator issued an additional 90-day extension to file proofs of loss for Hurricane Ike and Gustav.)

Javier Delgado, in our Houston office, called to tell me he had just been retained on several flood insurance claims. I was apprehensive because I know there is a National Flood Insurance deadline quickly approaching. Javier has a lot of work to do in a short period of time. From past experience, I know people will miss the deadline or fail to properly complete the National Flood Proof of Loss form.

Since the deadline is approaching, I suggest everybody interested in this topic read my prior post, A Warning Regarding Federal Flood Proofs of Loss.

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The Windstorm Insurance Network is sponsoring a special Texas Windstorm Insurance Symposium. It will be a one day event on April 2, 2009, at the Hilton Hobby.

The final seminar schedule should be out shortly, but it promises to be a very lively presentation. Wind versus water fact and legal issues will be analyzed. Tim Marshall, of HAAG Engineering, is going to make a presentation. Bad faith, appraisal procedures and law, and many other topics with a Texas twist will be part of this one day insurance event.

Mark your calendars and register at the Windstorm Insurance Network web site.

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The national media can be fickle. Hurricane Ike devastated Galveston and the Bolivar Peninsula. Those communities and people in them are suffering as much as those in Louisiana and Mississippi following Hurricane Katrina. Yet, I have seen little in the national media regarding this story.

The Houston Press ran an excellent article, Hurricane Ike's Wake, detailing the effects of Hurricane Ike. It also questioned why there is so little national media attention to the devastation. Even the charitable contributions to Hurricane Ike relief efforts has been minuscule compared with Hurricane Ike.

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(IMPORTANT UPDATE TO THIS POST:  On February 20, 2009, the NFIP Administrator issued an additional 90-day extension to file proofs of loss for Hurricane Ike and Gustav.)

We are still receiving questions regarding Federal Flood Proofs of Loss. The Proofs of Loss have to be filled out correctly and received by certain dates, which have been extended regarding Hurricane Gustav and Hurricane Ike claims.

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Last weekend, our law firm hosted an information and help forum for Hispanic policyholders at a Houston mall. They came with photos, policies, letters, small dollar checks, and, most importantly, stories of their interaction with their insurers. While I am certain that our firm fails to hear when adjusters properly adjust claims -- people most often come to us with distressful situations looking for help, there are major adjustment problems in Houston.

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Javier Delgado and I were quoted in a story that ran last week in the Houston Chronicle. The reporter, Purva Patel, noted numerous stories of people having a very difficult time getting paid for Hurricane Ike damage claims. I was going to remark on the numerous Internet comments posted from readers in Houston to the article, however, Slabbed beat me to it and said all I would anyway. So, go to Slabbed and get the scoop.

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I spent the Thanksgiving Holiday in Key West. For those that have never been there, it is a unique part of Florida. You will not find prettier water anywhere in the United States, and the sunrises and sunsets are spectacular. Key West is the Southern most point of the United States and only 90 miles from Cuba. Everybody should visit Key West for a long weekend. Like Hawaii, many never go back to the mainland.

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As the New York Times explained, mobile homes burn easily. Governor Arnold Schwarzenegger called for a review of building standards following the complete destruction of 500 manufactured homes in the Oakridge Mobile Home Park. California building officials have noted that building regulations must be strengthened to account for the wildfire hazards in California. Regulators asking for tougher building codes to prevent widespread catastrophe are nothing new and, in the long term, are generally good for society and insurance companies.

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Reporter Robert Stanton ran a story in last Thursday's Houston Chronicle about his non-medical diagnosis of "Post Ike Stress Syndrome."  While he noted that Ike was not the first Galveston storm he has been through, he wrote that significant visual reminders of "lives torn asunder" were beginning to take their toll on the most steadfast of Texans. He expressed concern for his community and the history of Galveston being "pushed away" as the coastal area tries to recover. I share his concern.

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The Austin American-Statesmen quoted Galveston Judge Jim Yarbrough as stating that Hurricane Ike recovery efforts are going to be more of a marathon than a sprint. He is right, especially for those in areas that had a combination of storm surge and wind related damage. The Judge noted that it was going to take at least two years before a substantial recovery is made. Sadly, he is entirely accurate. 

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Our office in Houston has been without power for a week. Tina Nicholson, who heads up our Houston office, held out for awhile, but has worked out of Gulfport since Wednesday. Frank Chimento spent most of the week working out of the Houston Omni, which is flooded with adjusters from all over the country. Initial reports have ranged from $8 billion to $18 billion in covered damages. The sense I get is the $18 billion figure may be breached.

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State Farm has apparently made a significant push in manpower and communications regarding the adjustment of claims in Louisiana and Texas. It takes thousands of adjusters and sufficient communications to get the job done promptly.  Delay caused State Farm's old claims mantra under Frank Haines--"pay neither a penny more nor less"--has no place in the claims process, especially following a catastrophe. Good luck to the company with the "Good Neighbor" slogan. Many of my policyholder colleagues simply hate when I say anything nice about State Farm or any other insurance company. I appreciate that, especially if they feel that they have been wronged by insurance company adjusters or attorneys.

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Wind versus flood. Insurance companies will use causation to deny claims just as they did in the hundreds of cases we litigated after Ivan and Katrina.  We will retain meteorologists and structural engineers as this issue  will be litigated in Texas and western Louisiana. Rimkus and Haag are located in Texas. I wonder how many outcome oriented reports they will issue this time around to support lowers claims payments by insurance companies.  I wonder whether the insurance industry has made a bonafide search for engineering firms that are not beholden to them and who will write reports that are in the customers' best interests.  I am not holding my breath.

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As Hurricane Ike menaces Florida and possibly other areas of the Gulf Coast, insurance industry analysts have re-evaluated Hurricane Gustav.  Now that insurers have some preliminary estimates, it appears that the $10 billion valuation of claim severity will be much lower, possibly less than $5 billion.  See "Insured losses mount, slowly, as Gustav damage keeps homeowners away," BestWire, 09/03/2008, Carr, Sean P., and "Coast residents file 1,500 storm claims," Clarion Ledger, Ayres, Jeff, 09/05/2008. That is fantastic news.  Insurers in the Louisiana and Mississippi markets do not need further justification for raising rates or simply leaving those markets.  Re-insurers are important to provide capacity; eight figure catastrophes significantly affect the ability of insurers to purchase reinsurance contracts. Unfortunately, Hurricane Ike may change all that.  Working very late on Friday night, I spoke with an opposing State Farm attorney. We agreed that Ike would devastate Mississippi and Louisiana.  There is only so much emotional trauma people can take, much less the financial hardships these storms cause.

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Just when the lights are turned back on, roads cleared and the messes cleaned up from Tropical Storm Fay and Hurricane Gustav, here come the next two platinum hits on the 2008 Storm Charts. Tropical Storm Hanna cannot seem to figure herself out.  She will likely move along the Carolinas and up the Atlantic Coastline. Hurricane Ike is very, very troubling.  Already a category 4 hurricane, Ike is aiming for South Florida--the worst possible place to come ashore.  A category 4 hurricane that hits Dade or Broward county will cause unprecedented property loss.  Moreover, it would be a financial catastrophe to the state of Florida, as the legislature agreed to underwrite the hurricane insurance policies. I pray Ike goes elsewhere, and it is a long way from land. However, the initial models look bad.  Insurers and policyholders should prepare and plan for the logistical needs in the aftermath of what could be one of natures worst storms.

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