PAY OR NOT TO PAY?

How Carriers Create Their Own Claims Problems

Through my years in this trade, in different roles—carrier field adjuster, desk adjuster, public adjuster, CPAU, expert witness, and with advanced designations such as SCLA—I’ve developed some deeper thoughts about the industry as a whole.

Surprisingly, carriers sometimes create their own exposure to claims that should never have resulted in payment. They do this by hiring inexperienced, unskilled, or inadequately trained individuals and giving them the authority to make claim decisions on the insurer’s behalf. The consequences can cost carriers hundreds of thousands, if not millions, of dollars over time.

Perhaps in an effort to reduce overhead, limit exposure, or avoid some of the post-claim responsibilities associated with employees, the industry has increasingly relied on independent, non-resident adjusters working as subcontractors. They may be properly licensed, as Florida law permits, but they are not employees. I’ve addressed that subject in previous articles, so it will not be the focus here. I’m also going to set aside the unethical or unlawful conduct that can occur in claim handling and compliance.

This article is about something more specific: how ordinary claim-handling mistakes can cost insurance companies money—sometimes by paying claims, or portions of claims, that should never have been paid.

I’m not going to cover every possible coverage scenario. I’ll focus primarily on roofs, since they are among the most common subjects of property claims. Much of the same logic can apply to non-weather-related water damage and similar losses.

Not Every Claim Deserves to Be Paid

Homeowners aren’t always as innocent as they try to appear, and neither are the people who defend questionable claims.

Countless times, I’ve been asked to represent an insured on a claim that initially appeared to involve covered damage. Coverage had been confirmed. The damage was visible in the photographs. Then I arrived on-site and discovered that what looked like a new loss was actually an old leak that had been occurring for years.

There was no meaningful new damage.

But perhaps the neighbors had just received insurance-funded roof replacements. Perhaps the carrier was questioning the roof’s age and demanding a wind mitigation inspection or proof of replacement before renewal. Perhaps the homeowner was worried about being dropped.

So the thinking becomes: Why not try? Nothing to lose. Let’s see if insurance will pay for a whole roof.

It makes me angry. Sometimes I want to charge those people for my wasted time and travel—and report them for attempting fraud.

But this is reality.

Some people know they have existing problems and simply wait for a “better time” to submit a claim. They wait until the damage becomes extensive enough to justify a full roof replacement instead of a repair. They try to turn their homeowners policy into a piggy bank for their own negligence and lack of maintenance.

Instead of addressing a relatively minor issue—one that might fall below the deductible, demonstrate responsible maintenance, and avoid questions later—they wait.

Now we’re dealing with rotted decking, resulting interior damage, and an escalated claim that may never have needed to exist.

As a public adjuster, I could simply keep quiet, tell the client no, and walk away. But my moral compass doesn’t always let me pass these situations by in silence.

When the Desk Decision Makes Things Worse

In a properly handled claim, the desk adjuster should evaluate the field inspection findings, review the photographs and notes, and apply the actual policy language to the established facts.

If the evidence shows that the roof damage resulted from an excluded cause—such as continuous seepage or leakage, deterioration, or wear and tear—the carrier needs to address that exclusion directly.

And this is where things sometimes go wrong.

Now, before anyone misunderstands my position: resulting damage is not automatically excluded simply because the originating cause is excluded. Some policies contain ensuing-loss or resulting-damage provisions that may provide coverage, subject to their wording and applicable law. If the policy expressly provides coverage for a separate resulting loss, then that provision must be evaluated and applied.

But if the policy does not provide that coverage, or if the claimed damage falls within the exclusion itself, the carrier cannot simply pay because doing so feels like the compassionate or reasonable thing to do.

My question to my colleagues on the carrier side is simple: What exactly are you paying, and why?

If you have determined that the alleged roof loss resulted from an excluded cause, you need to understand the consequences of that determination before selectively paying portions of the claim.

Because once you reject the alleged covered cause but pay damage said to have resulted from it, you may create a serious problem of causation, allocation, and consistency.

Which interior damage resulted from the excluded condition? Which damage, if any, resulted from a separate covered event? How do you distinguish the two? What evidence supports that allocation?

That distinction may be relatively straightforward when there is a documented history of prior claims, unrepaired damage, or clear evidence of long-term leakage. But what happens when there is no such history?

What happens when the carrier has not adequately established which damage belongs to which cause?

You may have just made your own claim more difficult to defend.

Sometimes the attempt to avoid a dispute over a small portion of the claim ends up creating a much larger dispute over the scope of coverage.

That is not compassion. That is poor claim handling.

When the Inspection Creates the Problem

A similar situation occurs in the field.

Some field adjusters arrive at a property acting as though they own the world. They walk onto the roof with complete confidence, trying to impress—who, exactly? Me? The policyholder? It’s almost amusing.

Then the inspection begins, and it takes only a few minutes to understand what kind of person you’re dealing with.

The ladder isn’t properly secured. It doesn’t extend adequately above the eave. It’s positioned crookedly. The footwear is inappropriate. I’ve seen flip-flops, and I once watched a woman attempt to walk the hips of a tile roof wearing them.

Long story short: I watch inspections closely.

I’ve seen inspectors forcibly lift shingles to “prove” they are intact, only to damage or tear them. I’ve seen attempts to pull sample pieces without the necessary care or understanding of the roofing system.

And tile roofs? That’s another story.

Tile is not something you casually walk across as though you’re strolling down a sidewalk. It can be brittle, and improper foot placement or handling can break it.

Then it happens.

Of course, a broken tile does not automatically establish that an entire roof requires replacement. The extent of the damage, the repairability of the system, the applicable policy, and the actual facts still matter.

But careless inspection can create additional damage, complicate causation, and potentially increase the carrier’s exposure. That is not a theoretical concern. It is a practical one.

An adjuster who arrives to evaluate a claim should not become another source of damage.

The Industry Needs Better Judgment

So, to the carriers—and to anyone aspiring to call themselves an adjuster—know what you’re doing.

Understand the construction. Understand the policy. Understand causation. Understand the difference between damage that exists and damage that you create. And when you make a coverage decision, understand what that decision means for the rest of the claim.

Don’t overthink it. Use sound judgment.

And don’t allow yourselves to be outsmarted by insureds, crooked PAs, or contractors.

Yes, I’ll say it as a PA myself: there are bad actors on both sides of the fence.

The answer is not to automatically pay everything. It is not to automatically deny everything.

The answer is to investigate properly, apply the policy correctly, document the reasoning, and make decisions that can withstand scrutiny.