Let’s consider the following scenarios. For purposes of this discussion, we assume you handle hail claims all over Texas:

  1. For all claims statewide in which the carrier pays for full roof replacement, the carrier still denies payment for particular roofing system components.
  2. The carrier pays Overhead & Profit for Dallas claims, but denies Overhead & Profit in Amarillo.

My previous post in this Aggregate Litigation series generated interest and discussion regarding potential Class Actions. In this post, we will discuss requirements for Class Certification. In addition, how those requirements influence whether a Class Action is the best option for recovery under different circumstances.


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Let’s consider the following:

  • How many public adjusters and lawyers do you know who routinely represent policyholders on claims that total less than $500?
  • How many public adjusters and policyholder lawyers do you know who refuse to resolve any claim unless the carrier pays for every lower-value damaged component in the roofing system?
  • What if a means existed to efficiently prosecute smaller claims that are not typically prosecuted because the costs are likely to exceed the benefits?


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I recently deposed corporate representatives from American Family, Auto Owners, State Farm and Allstate Insurance Companies and received the following admissions from some of those corporate representatives:

  1. the independent adjuster (often catastrophe adjusters) failed to follow key aspects of the insurers’ own claims handling guidelines;
     
  2. the independent adjuster failed to properly document the claims file, including failure to enter log notes regarding investigation of the claim;
     
  3. refusal by the independent adjuster to consider additional evidence submitted by the homeowner regarding the property damage claim;
     
  4. there was zero oversight the by insurer’s claim file manager, including no supervision of the independent adjuster;
     
  5. the claims manager failed to have any meaningful participation in the claim and failed to ensure the claims file was properly documented.
     
  6. the independent adjuster made an on site coverage determination and informed the homeowner in-person of the denial of coverage– without prior review of the claim or any supervision by the insurer’s claims manager.


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Louisiana Citizens Property Insurance Company has settled a state class action case, Press v. Louisiana Citizens Fair Plan Property Insurance Corp., for failing to fully pay overhead and profit to insureds. The proposed settlement, for $23 million, covers claims from Hurricanes Katrina and Rita.


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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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On Bloomberg, I gave a television interview regarding the legal and financial aspect of claims and lawsuits which are being generated as a result of the BP Oil Spill. Lost profit and business interruption claims and disputes are not novel to those of us with commercial first party insurance claims experience. Every Sunday, Michelle Claverol, in our Coral Gables office, posts about lost profit cases, which often involve complex accounting and economic issues. The BP Oil Spill is causing an epidemic of these financial loss claims, which will largely be brought as third party claims under the Oil Pollution Act of 1990.


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