Hail Damage Causing Billions In Claims
HAIL DAMAGE CAUSING BILLIONS IN CLAIMS
According to Verisk Analytics, hail has caused more than 4.5 million claims between 2008 and 2012 resulting in $32.1 billion of insured losses. Analysis by Xactware determined that 36 percent of all property claims nationally involved roof repairs, which accounted for 24 percent of all property claim costs between 2008 and 2012. The company performed a risk analysis and determined that if severe thunderstorm losses continue at the current rate, the cost of doing business could become unsustainable. Further, according to the National Insurance Crime Bureau (NICB) the number of questionable hail damage claims rose 136% between 2006 and 2009. According to an article published on 5/2/2014 in the Claims Journal, “The Emerging Hail Risk: What the Hail Is Going On?” recent reports indicate hail damage claims have doubled over the past few years.
The cause of this significant increase includes the fact that there have been significant hail events in large metropolitan areas. However, there is an abnormally high percentage that are being disputed. In Texas alone literally hundreds of lawsuits are being filed each week in Dallas, Tarrant, Potter, Hidalgo and other counties. These lawsuits allege underpayment of hail related roof damage claims.
There are some red flags to hail damage claims that may be exacerbated or fraudulent. Firstly, claims that are submitted late, months or years after the reported hail event may be deemed suspicious. The insured may be absent from the claims process, leaving only a contractor or public adjuster involved. Roof damages that are not leaking and damage that is not visible to the naked eye is another issue. And, then there are the pesky claims of damages involving lost granules which have exposed the asphalt which may now cause deterioration and can be a nuisance. Similarly the claims of minor dings in metal roofs that may now collect water, etc., causing rusting over time and leaks, are a similar pattern.
Strategies recommended by Steven Badger with Zelle Hofmann Voelbel & Mason LLP, include:
- Finally he recommends that “insurers can also decide to step up and start fighting the worse abusers, not only in the claims process itself, but also in the shady underworld of referral fees, inflated invoices, kickbacks and outright fraud”.Engaging qualified engineers with real experience in identifying hail damage;
- Refusing to negotiate claims with contractors and other individuals acting as unlicensed public
adjusters; - Holding the insured to its policy burdens (establishing physical loss or damage and
establishing a date of loss within the insurer’s policy period); - Refusing to accept inflated Xactimate estimates but instead require read bids from real
contractors; - Refusing to pay “10+10” overhead and profit when general contractors are not reasonable necessary and their costs not incurred (there is no “TDI
Bulletin” or “three trade rule” dictating otherwise); - Closely monitor appraisals to avoid the inevitable manipulation of the process and race to the
courthouse for a favorable umpire appointment; and steer clear of the predictable traps.
Contact your local Investigative Engineers Association member to assist with investigation and reporting on these types of claims.