If you’ve ever received an email from me, you know I try to inspire people with the tag line under my signature: “Make a difference today.” This post no doubt reaches a wider audience than my email. We need to make a difference, together, today and every day.

Those within the property damage insurance industry must each do their part in addressing the many problems we all face day to day.1 This blog addresses one such problem I faced this week. I will write a series of posts detailing additional issues we all face. I hope we can all do what we can day to day to make our industry better.

This Week’s Issue

I helped a client reach resolution this week. We achieved a six-figure settlement in a Federal Court case in a Midwestern State. The commercial property loss happened two years ago. The carrier issued complete claim denial until we were in the middle of the Federal Court Settlement Conference.

After a long day back and forth, we reached resolution. The client was thrilled. I should be, too, right? Wrong.

The client netted a not-insignificant six-figure claim payment. The claim payment, though, was two years late and still significantly less than the client spent replacing the damaged property.

The carrier denied coverage based on a host of exclusions seen in most commercial property insurance policies. Long before I became involved in the case, however, the public adjuster cited a policy provision to the carrier that seemed to provide coverage. The carrier continued to issue a complete coverage denial.

Case resolution turned on a 2006 case decided in that Midwestern State interpreting the policy provision the Public Adjuster cited to the carrier. It became obvious during the Settlement Conference the carrier knew about the 2006 decision—that is, knew the law of that state held the cited policy provision gave coverage for the loss at issue—but still denied the claim for two years until we could get in front of a federal judge to discuss settlement.

How Could This Happen?

This Midwestern State, like many states, seems to have laws that all favor the insurance industry in situations such as these:

  1. no law exists there allowing the policyholder to receive attorneys’ fees upon successful case/claim resolution of a disputed claim;
  2. no law exists there allowing the policyholder to receive prejudgment interest from the carrier for the amount that should have been paid at the time of loss; and
  3. no law exists there allowing the policyholder to recover the money spent on engineers and construction consultants to repair the damage and prove insurance coverage.
  4. no law exists there allowing the policyholder to recover additional damages for the carrier failing to follow good faith and fair dealing in the wrongful claim denial.

Given the scenario and the legal environment in that state, the client responded to my intense frustration with following simple statement: “Phillip, of course the carrier denied payment as long as it could. They had no risk of greater loss. I am glad I got some of the money back and don’t have to take a total loss.”

What Does This Mean For Me?

If you live or work in a state with laws that disfavor policyholders, make your voice heard to the people that can change the situation. Call your political representatives and insurance commissioners. Write them letters. If you don’t know who or how, contact me and we’ll figure it out. Let’s make a difference. Today.

Motivational Poster Of The Day

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