Most policyholder advocates have made it up to New Jersey or another jurisdiction affected by Superstorm Sandy over the last year. Recently, I was in Atlantic City fighting over coverage for one of my clients whose carrier truly missed the boat. The purpose of the visit was to allow the carrier the opportunity to have its engineers inspect the property, something the carrier should have done months ago when my clients’s public adjuster provided an estimate that exceeded the carrier’s payment. My consultants and I sat quietly during the first hour of the inspection. As the carrier’s consultants began to leave the 4,500 square foot building, I asked a few simple questions.

First, is anyone going to inspect the sheet rock behind the siding? It is part of the claim the carrier is disputing.

Second, is anyone going to photograph the damage?

Third, is anyone going to ask the insured about the loss and the damage to the building?

Fourth, is anyone going to inspect the ceiling? It is another part of the claim the carrier is disputing.

Finally, can someone explain how the scaffolding and stucco figures are sufficient to make the necessary repairs?

It is my experience that carriers fail to fully investigate a loss and instead shift the burden onto their insureds. An insurer’s duty to investigate generally requires sufficient investigation to determine coverage under the policy in question. An insurer must investigate before it denies or settles a claim. The investigation should be reasonable, both in terms of depth and timeliness.1

In New Jersey, insurers have a duty to investigate all aspects of a claim, to determine coverage, and to fulfill their fiduciary duty to settle claims within policy limits.2

I have noticed a troubling trend where adjusters, contractors, and engineers retained by insurance companies conduct inadequate investigations. These inadequate investigations force many policyholders to sue to get the benefits they are owed. It is often a waste of time and money and unnecessarily delays recovery for months and years.

1 14 Couch on Ins. § 198:28.
2 New Jersey Mfrs. Ins. Co. v. National Cas. Co., 393 N.J. Super. 340, 353, 923 A.2d 315, 323–24 (App. Div. 2007), certification denied, 932 A.2d 31 (N.J. 2007).

  • David

    Larry, Well said. You know I contacted FEMA about this recently and was told that the adjuster had no motivation not to provide an adequate inspection and scope. I had the same problem with New Jersey Manufacturers lately also. They bowed to the push we made for our client and sent a contractor to assess the loss. The causation was found to be exactly as we had stated, and moved the claim from 7K to 48K with on dose of logic.

    In dealing with NFIP carrier specifically I am amazed at the will they seem to have to get involved in legal action for bad faith. I have one with Allstate where a re-inspection was demanded in these last few months. The carrier sent out the “sr” adjuster. She did not even inspect the crawl space, gave more money for what she could not see, and again failed to give 40K in damages on the main level of the home because she would not inspect to find the water had risen to this level. It would require and inspection, at this late date, pretty darn deep to see the damage in many cases, especially since it is mostly repaired at owner’s expense.

    If I did my job assessing a loss like most of the industry at this point, I doubt anyone would want me on their team to estimate!

    Thank you and Chip for the good sounding board.

    Be well


  • As a former IA, the lion’s share of my 10 years of experience was spent handling litigated and PA rep’d claims. During Katrina/Rita, the IA firm I worked for was tapped by an unnamed large carrier (not a good neighbor by the way lol)to handle X amount of re-opens. A large % of those claims had no interior damage noted by the original adjusters. The vast majority of those came from the original adjuster never going inside and handled the exterior and roofs and nothing else.
    These were hard to defend and even harder on my conscience