(Updated May 23, 2019.)
Following close behind Rule Number One and Rule Number Two is--Rule Number Three: When You File a Claim, You Initiate an Adversarial Process.
Some will say, “Everybody knows that.” But few people understand just how adversarial the process really is. Many of my clients over the years have not seen Rule Number One and Rule Number Two lurking behind the insurance adjuster’s friendly demeanor. They’ve discovered too late that the insurance company was not their friend, and that the adjuster was not protecting their interests. They’ve been shocked and dismayed to see how the adjuster used insurance policy language to deny, delay, or diminish their coverage. They’ve been deceived by the claim adjusters’ warm smiles and empathetic assurances. They simply have not appreciated the extent to which the claim handling process was strewn with Landmines.
Here are just three of the many landmines that can quickly damage the pursuit of your claim. Will you face all of them in every claim? Maybe not. But read on because you don't want to locate an insurance landmine by stepping on it.
First, although California law requires the insurer to conduct a full and fair investigation of your claim, and to give as much consideration to your interests as it gives to its own interests, the cold reality is that the insurance adjuster is unlikely to do so. Most of the time, the adjuster’s concern will be to protect the insurer’s interests regardless of your interests. The goal of their investigation will be to root out every fact and circumstance that will permit the insurer to deny, delay, or diminish your coverage. In most cases it will be up to you to build your own case for coverage. Why? Because the contract says you have the initial burden of proof to establish the existence and scope of coverage. So it will be your job to understand your policy and document the facts and circumstances that prove the existence of coverage under the policy. It will be your job to overcome the adjuster’s arguments that there is no coverage, or that no decision on coverage can be made yet, or that there’s less coverage than you think.
Sadly, you must do your job as though you are preparing for trial. You must be methodical and meticulously thorough because the adjuster will not credit uncertain evidence, leaps of logic, or rebuttable inferences. If your evidence can be discounted, the adjuster will discount it. In fact, the adjuster will not concede coverage as long as he or she can make any argument that your evidence does not satisfy your burden of proof. Even in the face of hard evidence, solid logic, and compelling inferences, the adjuster is very unlikely to agree that the policy provides the coverage you seek. The best you’re likely to get in most cases is the adjuster’s noncommittal agreement to provide policy benefits (not the same thing as coverage) under a reservation of the right to later claim that coverage never existed and to argue that the insurer is entitled to get its money back. Thus, with apologies to Captain Jack Sparrow, the adjuster’s typical approach to your claim will likely be a classic adaptation of the Pirate’s Code: Take what ye can, give nothing back!
Second, the adjuster’s demeanor will be calculated to achieve their goal of denying, delaying, or diminishing coverage. Warm smiles and sympathetic nods will be calculated to gain your confidence so you lower your guard. You may say to yourself that Andrist was wrong; that this is different this time. But watch. Later the friendly demeanor may suddenly change to aloofness, indignation, or even hot bellicosity, all to wear you down, intimidate you, get you to concede an issue, or make you feel “lucky” to get any amount of coverage. The bellicosity thing is real. On more than a one occasion I have had to physically step between my client and an adjuster who was being loud and physically threatening toward my client. It’s all part of the adjuster’s game.
There are many variations on this game of demeanor. Often an adjuster will use dismissive wording and a conversational, off-the-record tone to suggest that a certain response is expected or that the answer will have no impact on coverage. Insureds often give the expected response or a less-than-precise answer because they’ve been led to believe the answer is not important. Other times the adjuster’s question will suggest that a certain response will actually be favorable to coverage when in reality the question is calculated to trigger a specific coverage defense. Always assume that the adjuster’s demeanor—and the wording and tone of his or her questions—are a calculated tactic aimed at building a case upon which coverage can be denied, delayed, or diminished.
In another variation of the demeanor game, the adjuster will ask to sit down with the insured and “just have an informal chat” about the facts. The conversation will proceed in a casual, friendly manner with the adjuster asking rambling and imprecise questions, mixed with observations about the weather and other incidental topics, and taking the occasional handwritten note. But at the end of the conversation the adjuster will ask the insured to sign the adjuster’s notes without reading them. The danger is of course obvious. Who knows what the adjuster wrote? Who knows whether the insured understood the questions and the import of his or her answers? The insured should never acquiesce to such a request. But watch for the adjuster to act surprised, saying the insured's "refusal to sign" suggests that the insured was not being truthful in his answers. The adjuster might even ask if the insured wants to change his or her answers. A naïve or timid insured may be tempted to sign the notes to appease the adjuster, trusting that the notes "surely" reflect what he meant and/or that the answers don’t really matter that much. That can spell disaster for the insured. The better approach—one that every reasonable adjuster should quickly accept—is to have the notes transcribed and then submitted to the insured for review.
Third, insurance companies don’t play fair. The landmines discussed above are clear examples of this reality, and there are innumerable other ways this can play out during the claims process. Adjusters misrepresent policy terms. They pretend they cannot not see the evidence of damage. Insurance investigators falsify inspection reports. Insurance company lawyers plead ignorance of inconvenient statutes and legal precedents, thumb their noses at legal procedures and court orders, and engage in scorched earth litigation tactics.
But it gets worse. Let me cite an example from my own personal experience.
My own home was damaged in the 2003 Cedar Fire. Upon arrival the adjuster literally put his arm around my shoulder and warmly assured me they would take good care of me. I didn’t believe it, of course, but I thanked him and then introduced him to my general contractor who was standing by.
My contractor asked the adjuster which estimating software he used to prepare his repair cost estimates. When the adjuster said he “always” used the Xactimate program, my contractor cheerily handed him the repair cost estimate that he had already prepared using Xactimate. Not surprisingly, the adjuster’s show of appreciation was less than convincing. And by our next meeting he had transferred my contractor’s Xactimate information to a different estimating program, one that had a very different format. It was simply impossible to compare the estimates line-for-line, but in a glance we could see that the adjuster’s estimate omitted many elements of damage that my contractor had documented. It also reflected changes in many of the measurements my contractor had taken. The net effect of course was a much lower cost of repair estimate.
When challenged, the adjuster claimed the changes were just errors and he quickly said that he would go back to his office and fix the problems. I insisted that we sit down together and compare the two repair cost estimates. When we did that comparison, the adjuster was forced to agree that our estimate had been reasonable and correct and that he was obligated to match his to ours essentially line-for-line. But it still took several weeks—and two more revisions—for the adjuster to provide a complete and correct repair cost estimate.
That was not the worst of it. Several weeks later the adjuster raised a nonsensical disagreement about an aspect of the planned repairs. He then set up an appointment to have his contractor meet with my contractor to discuss the issue. At the appointed time the adjuster’s contractor arrived in full contractor regalia, driving a contractor pickup, wearing contractor jeans, contractor jacket, and contractor boots, and sporting a contractor-size measuring tape on his contractor tool belt. He even wore a bright yellow contractor hardhat. (Safety first.) The guy's demeanor was that of the harried, no-nonsense career contractor, and he seemed indignant, even angry, that he had to spend his precious time opposing what were “obviously unnecessary” repairs. Yet during the inspection of the damages—during which he claimed he could not see some very obvious burn marks inside the house—he seemed ignorant of certain basic repair procedures.
The following day I called the adjuster to get the contractor’s license information. After a lengthy discussion the adjuster finally had to admit that his “contractor” had not been a contractor at all, but rather was just a fellow claims adjuster with whom he “sometimes consulted in cases like this.” It had been a complete fraud. And if the adjuster was to be believed, it was one he’d committed before. Had I not known to inquire about the guy's credentials, I would never have known he was not a real contractor. I'd have been deceived into believing he was an experienced contractor on whose expertise the adjuster could properly rely to reject my contractor's planned repairs.
Such landmines are more commonplace than you might think, especially in claims process which is inherently--but not always obviously--an adversarial one.
The remainder of this series will reveal many of these landmines and provide tips on how to detect and counter them. Meanwhile, no matter what the issue may be, and no matter how complicated the facts or uncertain your case, always remember Rule Number One: The Insurance Company is Not Your Friend.