Insurance companies routinely have instructions for their claims adjusters on how to adjust various types of losses. State Farm has some of the most detailed claims guidelines in the industry. I have often stated that for first-party claims, relevant claims guidelines should also be provided to the policyholders who suffer losses. Why not?

While in our Phoenix office during a mediation on Friday, I was researching Arizona claims handling cases. I came across a trial court order which discussed State Farm’s Operation Guideline for handling hail and wind damage to composition roofs:1

Th[e] Operation Guide provides direction [to claims handlers] for handling roof claims that involve damage from wind or hail.

The “Adjustment Guidelines” section contains a subsection titled “Composition Roofs (asphalt, fiberglass).”

This subsection states in relevant part:

Damage occurs to roof coverings when water shedding ability or the life expectancy of the material is reduced. . . . ….

Granular Loss: Granular loss occurs naturally and is inherent to composition roofing products as a result of weathering. The general rule is we will not pay for granular loss, since it does not affect the watertight integrity of the roof. Granules serve two main functions on asphalt roofing, block ultraviolet light from the asphalt and provide color to the roof. . . . Hail can cause actual damage to composition roofing in conjunction with heavy granular loss. Where there is excessive granular loss accompanying actual roof damage caused by hail, and it affects the integrity and utility of the roof, consider payment for granular loss. . . .

Wind: Wind damage to asphalt shingles occurs when a portion of the shingle is blown off the roof, or the shingle is bent backwards and a fracture forms through the matting material. If the wind caused the seals to break, it may require hand sealing.

Unsealed Shingles: . . . It is important to note any unsealed shingles that may be observed during the inspection. The claim handler should consider whether the breakage of the bond was caused by accidental direct physical loss, which may include, looking for evidence of tearing on the shingle below or by observing residue underneath the shingle from the sealant.

The admission that "damage" includes a reduction in the life expectancy of the material is significant. Subtle damage caused by wind or hail often reduces the life expectancy of roofing materials. State Farm is to be congratulated for acknowledging this adjustment principal because many of its insurance competitors and their attorneys try to argue around this concept.

Those adjusting Hurricane Matthew claims for wind damage should remember this principal when asking experts whether the winds from Hurricane Matthew caused "damage" to a structure and its materials.

Positive Thought For The Day

I believe America is the most powerful country in the world and is a country that stands on principle. Its principles are enshrined in its very foundation and constitution, and it has a duty to serve humanity. America has a duty to follow its conscience to reject repression. It must reject oppression. It must reject humiliation. 
      —Abdullah of Saudi Arabia


1 Saracana Condominium Assoc. v. State Farm Fire & Cas. Co., No. 2:12-cv-02250, (D. Ariz. Aug. 18, 2014).

  • shirley heflin

    Dear Mr. Merlin:

    I find it difficult to congratulate State Farm on anything – let alone an acknowledgment of their “adjustment principal” that damage reduces life expectancy of roofing materials. Sustained “damage” reduces the life expectancy of any material. It took the exposure (through litigation) of internal Claims Manuals for this “adjustment principal” to be seen by all. State Farm didn’t tell us about it because they wanted to!

    Respectfully,
    Shirley Heflin
    Tampa, FL

  • David Stewart

    I tend to tell insurance adjusters I don’t care what their operation guidelines say. They are not part of the policy and the policyholder never agreed to them. Simply not within the four-corners of the policy.

  • Chip Merlin

    David,

    Thanks for your post. And, I agree that the Guidlines are not the policy.

    Still the policy is silent on all kinds of issues. And when guidelines help and prove a point in the policyholder’s favor, why wouldn’t you use them?

  • Jeffrey Pellet

    Mr. Melin.

    Thank you for the informative post. I do have a “nagging question” that seems to be a recurring issue.

    Post wind/water loss to a roof, if decking is damaged from moisture or other violation-s, would the damaged decking need to be included or, should it be included in the assessment towards the roof?

    Alarmingly, I see interior damage assessments with ceiling and attic insulation damages yet no mention of decking damages or, any attributable corresponding finished roofing damages to access the water or, moisture laden damaged decking.