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

Most structures in mountain towns like Steamboat Springs have sloped roofs for snow loads in winter and early spring. Windstorms affect sloped roofs in various ways—some less noticeable than others.

Wind damages roofs by uplifting the roofing materials. Experts Kenton Shepard and Nick Gromicko note:

The location of damage on a home will be affected by the orientation of the wind to the roof structure, and by the shape of the roof. . . Uplift is strongest at areas of the home where the wind loses laminar flow. The areas most commonly affected include:

• upwind eave edges;
• upwind rakes;
• upwind corners; and
• the downwind side of ridges.

It’s at these areas that you’ll be looking most closely for wind-related damage. In addition to uplift, areas which lose laminar flow also experience turbulence. This buffeting or fluttering effect can also loosen and displace roofing materials.

Shepard and Gromiko’s diagram provides an excellent illustration of the effects of wind described above.

Policyholders with homes located in areas hit by windstorms should examine their roofs carefully and consult a roofing expert if they notice any signs of damage. Insurance adjusters may rush a claims investigation and miss roof damage that may be apparent upon a more thorough and careful examination.

Roof damage may not become apparent until snowmelt or rainstorms cause leaks into home or business interior spaces. The passage of time between a windstorm event and the insured’s discovery of the damage should not negate coverage under the homeowner’s policy, especially where the insured could not have discovered the damage until later water intrusion revealed the damage.

In addition, even if the roof is an older roof, the condition of the roof prior to the windstorm should not negate coverage. As long as the roof was not leaking prior to the windstorm, a policyholder with a replacement cost policy is usually entitled to a new roof if the windstorm caused serious damage to the roof. When an insurer agrees to insure a structure against windstorm damage, the policyholder may assume it intended to insure the structure in its current condition, “even if the structure is in an objectively unreasonable condition.” Koory v. W. Cas. & Sur. Co., 737 P.2d 388, 391 (1987).

Claims professionals looking for more information on effects of windstorm and tornadoes on buildings should attend the 13th Annual Windstorm Insurance Conference^® held at the Buena Vista Palace Hotel in Orlando, Florida, January 30, 2012 to February 2, 2012. Several attorneys from Merlin Law Group will be present as faculty and will provide expert advice and materials on numerous windstorm and adjusting topics.

After hurricanes have affected a region, homeowners and businesses are advised to have a licensed professional roofer examine their roofs in the expectation that hurricane winds may cause damage. In many instances after Hurricane Ike went through Texas, businesses and homeowners didn’t know that the gale-force winds extensively damaged their roofs until months down the road when the rainy season began. The rains came and suddenly business owners and homeowners discovered that the winds formed cracks in the membrane of their roofs and caused minute ripples, which allow water to seep into structures. Over a course of a few months, relatively young roofs deteriorated quickly with the rain, turning the roof into a total loss.

There are many different types of roofs, and they are all rated for a certain amount of years depending on the type of material the roof is made out of and what kind of conditions (or region) the roof is expected to weather. In Southern California, a roof can be rated a 10, 20 or 30 year roof. After the strong Santa Ana gusts last week, building owners may want a professional to examine their roofs to see if any repairs should be reported to their insurance companies. In particular, roofs over 10 years old, may be more susceptible to strong winds. Winds may cause buckling or bring off tiles which cover the felt underneath. If the winds caused severe cracks or loosened too many seams, rain may come into a building, or a roof may be damaged enough to collapse.

A professional roofer can identify cracks and loose seams which we may not be readily seen. In the long run, a proper examination may be the difference between a few leaks and a roof collapse. Southern California is about to enter its winter rainy season.

More information on how an insured home or business owner may find help in dealing with wind related claims may be found at the non-profit insurance consumer protection organization, United Policyholders.

Large trees toppled cars and roofs causing extensive damage. The wind has also blown off parts of roofs of many structures. Los Angeles County declared a state of emergency, a move that hastens the ability of state and federal authorities to provide assistance.

Forty-two damaged houses and apartment units were declared unsafe for habitation by early afternoon in Pasadena alone. A service station in Pasadena was demolished by a large uprooted tree.

Wind gusts stronger than 140 mph -- which would be equivalent to a Category 4 hurricane -- have been measured on the Sierra Crest mountain ridge, according to the National Weather Service.
Lower-lying areas also have been hit hard by Santa Ana winds, with 80 mph gusts. Some of the strongest gusts were measured:

• 94 mph, Mt. Elizabeth near Sonora
• 106 mph, Grey Butte, near Mt. Shasta
• 97 mph, Whitaker Peak, near Castaic Lake
• 72 mph, San Rafael Hills, near Glendale
• 83 mph, Acton

Although Santa Ana winds are common, wind gusts of this magnitude are not. Some damage may be subtle and require an examination by professional roofer or contractor to find. In his post, The Science of Roof Damage Claims Caused by Wind, Chip Merlin explained the importance of understanding the subtle damage to roofs and structures that can be caused by wind.

Damage should be reported to your insurance company immediately. Document damage, mitigation efforts and repairs with receipts, work repair estimates and photos.

Many businesses across Southern California may have business interruption claims that arise from the power outages caused from these unusually strong Santa Anas. Michelle Claverol details the ins and outs of Utility Service Interruption Coverage in her post, Service Interruption Coverage May Help Connecticut Businesses Get Ready for the Holiday Season - Understanding Business Interruption Coverage, Part 96.

This kind of widespread wind damage does not occur often in Southern California, and it brings a reminder that Southern California is well into our fire season.

Policies typically contain a provision excluding losses caused by water driven by wind, unless the insured property first sustains actual damage by the force of the wind, and water then enters the property through those openings. This exclusion is considered clear and unambiguous and will be enforced according to its terms. Florida Windstorm Underwriting v. Gajwani, 934 So.2d 501, 506 (Fla. 3d DCA 2005). Thus, both wind-created openings and the passage of rain through those openings into the damaged property are often conditions precedent to recovery.

A difficult situation arises when, under the same policy exclusion, a temporary covering, such as a tarp over a roof, protects an opening in a building caused by a non-covered peril. Some jurisdictions deny coverage of personal property within a structure when water enters through the cavity the tarp was covering because the tarp – a temporary covering – did not qualify as part of the insured structure.

This issue was presented to Oregon’s Supreme Court in Dewsnup v. Farmers Ins. Co. of Oregon, 349 Or. 33 (2010). The primary issue addressed was whether a tarp constituted a “roof” within the meaning of the policyholders’ insurance policy. Plaintiffs Beth and Tim Dewsnup sustained losses due to water damage while their roof was undergoing repair. Although their insurance policy generally excluded coverage for water damage, they contended that an exception to that exclusion applied:

Whenever water damage occurs, the resulting loss is always excluded under this policy, however caused; except we do cover:

Loss or damage to the interior of any dwelling or separate structures, or to personal property inside the dwelling or separate structures caused by water damage if the dwelling or separate structures first sustain loss or damage caused by a peril described under SECTION I—LOSSES INSURED—Coverage C—Personal Property.

The trial court ruled against the policyholders on summary judgment, and the Court of Appeals affirmed. Dewsnup v. Farmers Ins. Co. of Oregon, 229 Or.App. 314, 320 (Or. Ct. App. 2009) review allowed, 348 Or. 114 (2010) and rev'd, 349 Or. 33 (2010). The Oregon Court of Appeals reasoned that the exception to the water damage exclusion did not apply because, at the time of the loss, the policyholders' roof was not a “roof” within the meaning of the policy. In particular, the court held that a “roof,” by its ordinary definition, is permanent, and because the policyholders’ roof was undergoing repair at the time of the loss, no permanent roof was in place to which the exception could apply.

Fortunately for the Dewsnups, Oregon’s Supreme Court overruled the trial and appellate decisions and held a tarp constituted a roof, and the policy that covered the peril of wind that blew off the tarp and created an opening in the structure. The Court’s holding relied on its definition of the term “roof.” It defined “roof” to mean, “sufficiently durable to meet its intended purpose: to cover and protect a building against weather-related risks that reasonably may be anticipated.” In the Court’s view, a tarp constituted a roof.

Are policyholders covered? As long as the temporary roof is “sufficiently durable to meet its intended purpose,” policyholders can argue coverage is provided.

Sometimes it’s nice to see common sense in the interpretation of an insurance policy. If courts reach the opposite conclusion and deny these types of losses, many policyholders would be punished for maintaining and improving their structure. Nonetheless, policyholders need to contact their insurance agent before making any structural repairs to their building and verify coverage will be provided if necessary. Knowledge is power, and all policyholders have the available resources to contact their insurer and make certain coverage exists.

In Contractors Cannot Legally Negotiate Insurance Claims, I noted the following:

People who act as contractors for policyholders can negotiate insurance claims only if they are licensed attorneys or licensed public insurance adjusters. If properly licensed, they can negotiate only if they are retained by the policyholders. In jurisdictions that allow a contractor to work on and act as a public insurance adjuster on a single claim, I imagine some contractors are retained as both. A conflict of interest seems inherent in the dual roles, and virtually every Bar Association in America would prohibit an attorney from representing a client as a contractor and legal counsel at the same time.

As I noted in Failure to Communicate with the Insured's Contractor is Bad Faith, this does not mean that once a policyholder has retained a contractor or roofing contractor insurance adjusters should not seek out and consider their opinions. However, it is illegal for an insurance adjuster and roofing contractor to negotiate or adjust a policyholder's claim together.

The ad by All Star Roofing seems to indicate that after an insurance claim denial, policyholders should retain All Star Roofing to guide them through the claims process with the insurance company. The ad further indicates something about a "free roof program." My impression is that the first ad encourages policyholders to engage a non-lawyer for legal advice and help with an insurance claim or to engage a contractor to act as a public adjuster. This is the exact activity which the Arizona Department of Insurance warned against in the Contractors Cannot Legally Negotiate Insurance Claims post.

I have noticed a trend at insurance fraud seminars where insurance restoration contractors and roofers are discussed. The insurance restoration industry has exploded over the last dozen years. There are many legitimate players in that industry and some unprincipled players who will do anything to make money. For example, Comments on Unauthorized Public Adjusting noted how some construction contracts are deemed illegal public adjusting contracts by the California Department of Insurance. Problems arise in the insurance restoration industry because it is not licensed by the departments of insurance, and in many venues, there is no government oversight which protects the public at a time of crisis.

I think one of the best observations about this situation was made in Greenspan Public Adjuster Interviewed About Unauthorized Public Adjusting, where lawyer turned public adjuster Masood Kahn said:

We do not let our lawyers, doctors, real estate and insurance agents, etc. engage in their professions without being licensed. Even our mechanics and our hairstylists are regulated and held to a certain minimum standard. Accordingly, individuals negotiating and compromising the rights of policyholders, particularly after they have suffered a loss, must be regulated, licensed and held to a higher standard.

Unfortunately, there are an abundance of construction firms, water and smoke remediation firms, and accounting companies that are engaging in unauthorized public adjusting, and breaking the law regularly, mostly with impunity.
...

Unless a CPA is an employee of the insured, it’s illegal for them to represent a policyholder for compensation in the settlement of an insurance claim without a license. A CPA would be an improper person to measure inventory losses. Additionally, simply having a CPA designation will ensure he/she has the skills necessary to measure and adjust the business interruption aspect of the claim. An insured would need the skills of a forensic insurance accountant who has intimate knowledge of the particular business, and one who is skilled in representing policyholders.

Given the expected strength of Hurricane Irene, I am pretty certain that Gene Veno will make certain the South and North Carolina Departments of Insurance are aware of these important consumer protection issues.

If a commercial flat roof EPDM layer is damaged by hail and the insurer’s adjuster admits part or all of the EPDM must be replaced, the insurer will likely issue a check for coverage of the EPDM layer only. The insured must have an expert examine the board insulation and all layers down to the roof deck to determine if the roof system condition is adequate to satisfy the applicable building code and manufacturer’s specifications for placing new EPDM on top. If the insulation or roof deck are degraded or in an otherwise improper condition for placement of new EPDM on top, the insured’s replacement cost insurance policy may require the insurer to replace the insulation and/or decking as well.

The Colorado Court of Appeals confirmed this in Dupre v. Allstate Ins. Co., 62 P.3d 1024, 1031-32 (Colo. Ct. App. 2002). The policy in Dupre required replacement of portions of Plaintiff’s house with “equivalent construction for similar use” and “the plain meaning of the term ‘equivalent construction for similar use’ includes maintaining the property's prefire function.” Id. (Emphasis added).

The Court determined that replacing portions of the insured’s house to pre-fire functionality included replacing parts of the house that were not directly fire damaged but had to be brought up to code to allow for fire damaged items to be properly repaired or replaced.

[W]hile an actual cost policy is designed to avoid placing the insured in a better position than he or she was in before the fire, a replacement cost policy allows for such a possibility because it is intended to allow the insured to replace the damaged building. 

Id. at 1030. (Emphasis added).

Prior to the fire, plaintiff's house was a habitable dwelling yielding rental income. Merely restoring it to its prefire condition [not in compliance with code] would have rendered it uninhabitable and thus unfit for any similar use. Such a result does not comport with the plain language of the limitation or the reasonable expectations of an insured purchasing a replacement cost policy.

Id. at 1031.

The same concept may apply to an insured’s hail damaged roof—especially if the roof is an older roof with substrate conditions that may no longer conform to code or manufacturer’s specifications. To simply restore a roof to its pre-hail damaged condition may render it unfit for similar use if the substrate or deck is deteriorated and insufficient to support a layer of new roof materials. Obsolescence and deterioration are insurable risks, and a property insurance policy may require the insurer to pay for either after hail or another covered cause of loss has damaged a policyholder’s roof.

In next week’s post, I’ll provide Tips For Ensuring Adequate Insurance Payments To Properly Replace A Policyholder’s Hail Damaged Roof.

Insurance carriers may dispute the extent of damages to a roof and issue payment to the policyholder to repair areas of the roof that the insurance carrier agrees were damaged by a hurricane. If the policyholder takes that insurance claim payment, hires a roofer and signs a contract for roof repairs, they will likely file a repair permit application with the local building code department. The Ordinance or Law additional coverage can be triggered if the building code department rejects the permit application because the building code requires certain upgrades, so that complete replacement of the policyholder’s roof is necessary. Building code departments have many different reasons for rejecting repair permits, but the most common reason is when the percentage of repairs exceeds 25% of the total roof area. It may also be that the building code requires the roof to be replaced because of certain required code upgrades (such as tie downs, etc.) that cannot be accomplished without the replacement.

Residential insurance policies that contain the additional coverage for Ordinance or Law may contain a provision worded similarly to this example:

Ordinance or Law

You may use up to 25% of the limit of liability that applies to Coverage A for the increased costs you incur due to the enforcement of any ordinance or law which requires or regulates:

The construction, demolition, remodeling, renovation or repair of that part of a covered building or other structure damaged by a Peril Insured Against;

The remodeling, removal or replacement of the portion of the undamaged part of a covered building or other structure necessary to complete the remodeling, repair or replacement of that part of the covered building or other structure damaged by a Peril Insured Against.

The typical Ordinance or Law provision states that a policyholder may use the additional coverage for increased costs incurred when building codes require the removal of the undamaged part of the building to complete repair to the area of the building that was damaged by the loss claimed. In the roof example, replacement of the entire roof would be covered, if it were required by building codes.
In Florida, one way for policyholders to claim this additional coverage is to demonstrate that they have “incurred” the expense that the code upgrade requires. In the roof example, that may include providing the insurance carrier with the signed contract for replacement of the roof, along with the permit application, rejection and documentation from the building department.

Again, it is important for Florida policyholders to be aware of Ordinance or Law coverage and to speak with their agents, public adjusters or attorneys to verify if their policy contains this coverage and also whether they can use the coverage under their particular situation.

Generally, policyholders are not familiar with their rights under their insurance policies, and may not be familiar with structural damage related to hurricanes. For instance, a policyholder may notice some broken, missing, shifted, or cracked roof tiles after a hurricane and think that the damage is only limited to those affected tiles. He may have someone perform a minor repair to the affected tiles and take no photographs. Down the road when that policyholder files a claim with the insurance carrier, he will be asked if there is any photographic evidence of the damages claimed. When that documentation is not produced, particularly in a late filed hurricane claim, carriers deny the claims citing “foot traffic” as a cause for extensive roof tile damage. This is particularly the case where the insurance carrier discovers, through the policyholder’s testimony, that there have been power washing companies on the roof since the hurricane.

“Foot traffic,” an insurance carrier’s explanation for extensive tile damage spread over several areas of the roof, can be refuted by providing pictures or videos of the damages to those areas following the hurricane. Additionally, the pictures or videos can help to reveal a broken bond between the roof tiles and the roof decking. The forces of the wind during a hurricane can bend and flex the plywood beneath the tiles, causing the failure of the bond between the tiles and the deck.

The pictures could even reflect specific areas of the roof that are still well-bonded and show no signs of damage. This can be important to refute arguments that the cause of de-bonding tiles is an installation defect issue with the roof as a whole and not caused by the hurricane.

If there is one thing we learned from the 2004 and 2005 hurricane seasons in Florida and litigation that has ensued, it is shoot pictures first and ask questions later.

I often feel as if one gets a lot more from teaching a subject than simply being taught by another because you have to research, prepare, write about, present and answer questions on the issues. Teaching aspects of insurance coverage makes me a much better insurance attorney.

Roof damage disputes have been significant areas of contention lately because many of the insurance company expert vendors have been providing opinions, seemingly minimizing the impact that wind has on roofs. Accordingly, I need to know this area to do my job. I felt that others in the field needed more knowledge on the topic as well.

Our law firm has a competitive edge over many other policyholder firms because we have invested in a full time “Knowledge Manager.” Ruck DeMinico is an attorney with a library science background. He can help us find rather obscure, but significant, information regarding our cases that can literally mean the difference between winning and losing. Often, the amounts of recovery for our clients are enhanced because information is power and provides our attorneys with better arguments than the insurance counsel we oppose.

Regarding my presentation on the effects of wind on roofs, I asked Ruck to make a bibliography on the topic so others could have a list of scientific references for use in their cases. Some of the more important papers include:

• Baskaran, A., Murty, B. and Wu, J. “Calculating roof membrane deformation under simulated moderate wind uplift pressures”
• Xu, Y. L. “Fatigue damage estimation of metal roof cladding subject to wind loading”
• Lee, K., Rosowsky, D. V. “Fragility assessment for roof sheathing failure in high wind regions”
• Ali, H. M., Senseny, P. E. “Models for standing seam roofs”
• Baskaran, B. A., Koa, S., & Molleti, S. “A novel approach to estimate the wind uplift resistance of roofing systems”
• Cochran, L. “Wind engineering as related to tropical cyclones”

For readers of my Blog, simply click for a download of the bibliography.

I cannot emphasize enough how important it is to understand the physics of wind loads and flow if you are going to be able to fully find and explain the extent of damage caused by wind. Many of these scientific papers develop concepts of how subtle fatigue damage during a high wind event can lessen a structure’s life expectancy because the fastening and structural systems were altered as a result of having been pushed and pulled by the wind. I have been amazed at the numerous engineering committee comments regarding building integrity issues.

Tim Marshall has been my partner in this presentation. He is the other Tim Marshall, and not the infamous one from HAAG Engineering that is the insurance industry’s darling forensic engineer. I suggest that policyholders may want to hire Tim so that they can freak out the insurance industry by claiming that they have a report from Tim Marshall that found significant roof damage.

To be fair to HAAG and its Tim Marshall, they sponsor an in-depth roofing class that provides significant information regarding roof damage claims. While I have heard grumblings that the class is more concerned about how to not find roof damage and thereby lower claims payments, virtually everybody I have talked with urges others to go and learn from HAAG’s experiences on this topic and from what that Tim Marshall has to teach.

I am sorry that everybody could not attend the seminar here in Providence. I promised that the PowerPoint presentation would be placed up for review by all, and it will be available here following the Conference. I will make this topic part of firm’s regular seminar presentations to public adjusters in the future because it is important to understand these issues.