Insurance Bulletins are often overlooked gems protecting policyholders. Various departments of insurance regularly issue bulletins to Insurance companies regarding claims handling. The Arkansas Department of Insurance issued a bulletin last week indicating insurers should stop denying windstorm and hail damage claims when there is a valid reason by the policyholder not to have timely reported the loss.

The bulletin should be read completely, but it states in part:

While a requirement in a policy to make a claim for wind or hail damage within 365 days of the date of the loss may be reasonable in most cases, there are situations in which the policyholder may not identify wind and hail damage within this timeframe through no fault of his or her own. It is the position of the Department that an insurer must recognize a good cause exception to a claims filing deadline in a policy for wind and hail claims.

Specifically, the Department’s position is that a wind and hail claim reported later than 365 days after the date of loss can be denied based on a policy provision that requires a claim be reported within such time, but that the policyholder must be provided the opportunity to rebut the denial by showing that there was good cause for the delay in reporting.

The Department also recognizes that there should be some final limitation for such claims, and will consider denials of claims reported more than 24 months after the date of loss to be reasonably denied pursuant to policy provisions. This amount of time will be deemed reasonable given the inherent difficulty in adjusting claims for losses occurring years before a claim is made.

I can imagine how this plays out in the field:

Adjuster—“Lady, why did you wait 20 months to report your hail damage?”

Policyholder—“I did not know that hail damaged my roof.”

Adjuster—“Did you know there was a hailstorm?”

Policyholder—“You hear and see hail whenever, but how do you know it caused any damage? It’s not like an airplane smashed through my living room, leaving a hole in the roof that anybody could see.”

Adjuster—-“So, how do you know this particular hailstorm caused the damage? Could it have happened three years ago?”

Policyholder—“Well, I saw that my neighbors started getting roofing companies on their roofs all about the same time a little more than a year ago or so. One of them at the shopping center told me hail had damaged her roof. That is why I called my insurance agent.”

Adjuster—“So, you noticed your neighbors getting work on their roofs, but you never inspected your own roof?

Policyholder—“How would you expect me to do that? And why would I? It was not leaking!”

Adjuster—“So it is not leaking now?”

Policyholder—“No, you moron. If it were leaking, I would have told you that was the reason I reported the claim to the agent. Anybody could have put two and two together and figured that the hail damaged my roof at the same time my neighbors were getting their roofs fixed and paid for by their insurance companies. I told you my neighbors all had their roofs getting fixed, and anybody could figure that hail does not happen at just one house like a fire; it spreads over a neighborhood. I am 67 years old and do not climb a ladder inspecting anything. I have never been on top of a house and never on a roof in my life. I could fall off and kill myself. Just because I am older does not mean I am stupid. You never ask me all these questions when I pay my premiums. Why don’t you get your butt up there and look at my roof?”

Adjuster—“Sorry, I did not mean to make you angry. I will send out an expert roof engineer from HAAG or Rimkus right away. They will know just what to do.”

Of course, anybody doing hailstorm claims work knows how this story normally ends. The policyholder will get a five-page letter two months later citing all kinds of policy language she has never read. The letter will cite the engineer’s finding that the engineer could not find hail damage that caused any “functional damage” to the roof, and the minimal cosmetic hail damage may have occurred from a number of storms that were greater than 24 months before the reported loss occurred. (Isn’t it amazing how HAAG and Rimkus engineering reports dovetail with the exact exclusions found in policy language and claims bulletins? It is almost as if those engineers knew what the policy language stated when writing their reports for their insurance company clients.)

Arkansas Insurance Commissioner Alan McClain was appointed this year by one of my favorite governors, Asa Hutchinson. I twice sat across from Arkansas Governor Hutchinson at Republican Governors Association dinners and came away very impressed. McClain should be praised for issuing this bulletin, which protects policyholders.

This is a common-sense insurance claims bulletin and a breath of fresh air. It resonates good faith fairness rather than allowance of technical defenses preventing the property insurance product from doing what it is supposed to do—pay for covered losses caused by covered perils.

This post also explains why Merlin Law Group attorneys have an advantage when we battle insurance companies. Keeping up with insurance bulletins and researching them is something few law firms do. Indeed, most lawyers not regularly practicing in this field have no clue that insurance commissioner bulletins exist.

Merlin Law Group Knowledge Manager Ruck DeMinico is an attorney and specializes in the art of insurance law research. He keeps our firm informed on these developments which would otherwise be missed. He is also the behind-the-scene final editor of this blog and keeps us on schedule so we can share these property insurance law developments with you.

Cheers to Ruck!

Thought For The Day

Being from the heartland of America, I do not think one should have to go to Washington to seek justice.
—Asa Hutchinson