State Farm policyholders ought to concentrate on its firm’s water harm claims processes, as famous in State Farm’s Water Protocol. After studying the details and allegations of a latest water declare denial, I might counsel in addition they needs to be involved with alleged specialists offering opinions about the reason for water losses.
These are among the allegations of details that the policyholder reported earlier than the skilled was retained: 1
[H]eavy winds and rains handed by means of Plaintiff’s Property. The heavy winds prompted tiles to fall from his roof which allowed rainwater to penetrate into his residence, inflicting substantial harm all through the Property. (PAF 5) Following the February 21, 2023 windstorm, Plaintiff observed giant quantities of water all through his residence. Plaintiff promptly positioned towels all the way down to dry out all noticeable moist areas inside his residence. He additionally contacted Glenn Herrara at Skyline Builders to cowl the roof openings brought on by the February 21, 2023 windstorm (PAF 6). Regardless of Plaintiff’s efforts to mitigate and clear up the water damages, he noticed water damages all through his residence together with harm to the hardwood flooring, staining within the ceilings, harm to the French doorways in the lounge and fundamental hallway, and discoloration and water damages in and round his kitchen and cupboards, amongst different areas all through his Property. . . .
Previous to the February 2023 windstorm, there was no proof of any discoloration, cracking or every other damages to the flooring, partitions, French doorways or kitchen areas. Plaintiff resided within the residence since 2005 and would have realized these damages in the event that they had been current earlier than the windstorm. The damages, which had been something however minor, arose on or after the February 21, 2023 windstorm. (PAF 8). Plaintiff has at all times saved his Property nicely maintained. He at all times promptly employed somebody to examine and restore any and all current damages. In 2017/2018, Plaintiff’s residence sustained damages and he pursued a proper declare together with his insurance coverage service at the moment. Nonetheless, Plaintiff ultimately employed Mr. Herrera to restore these damages and paid Mr. Herrera out of pocket to repair the foundations of the house (re-supporting), repairing the cracks within the ceiling and partitions, and changing the flooring. (PAF 9). Following the repairs carried out by Mr. Herrera in 2018, Plaintiff by no means noticed every other damages to his residence till the February 21, 2023 windstorm occasion.
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Right here, the extreme windstorm allowed heavy rain water to penetrate into Plaintiff’s residence. (PAF 5). The February 2023 windstorm occasion prompted intensive, rapid harm to the structural components, together with the roof, flooring, partitions, doorways, framing and home windows. These damages arose after windstorm occasion, and weren’t pre-existing in nature. (PAF 8-10). This was initially confirmed by State Farm, who acknowledged that the damages to Plaintiff’s Property resulted from the wind/rain storm occasion on February 21, 2023. Extra particularly, State Farm’s personal adjuster inspected the Property and confirmed that the damages had been the results of the windstorm occasion, which invoked protection beneath the Coverage, prompting State Farm to difficulty a fee of $71,594.55, representing State Farm’s whole evaluation of the damages associated to the Water Harm Declare. (PAF 27). State Farm’s estimate and fee accounted for the water harm to the partitions, doorways, framing and home windows. (PAF 27-28). Thus, when fee was made to Plaintiff, protection was not in dispute. Nonetheless, given the numerous distinction between State Farm’s estimate of $71,594.55 in comparison with the estimate from Plaintiff’s contractor within the quantity of $760,340.21, State Farm “tried to reconcile” the estimates to find out if additional fee was owed and due. If reconciliation didn’t work, State Farm knowledgeable Plaintiff that it’ll rent a 3rd occasion to supply an estimate of repairs. (PAF 26). In different phrases, State Farm led Plaintiff to consider that the one difficulty in dispute was the worth and scope of the lined water damages between the 2 estimates.
As a substitute of reconciling the 2 estimates to find out the true worth of the scope of repairs for Plaintiff’s broken residence, State Farm rapidly switched gears and retained a ‘trigger’ skilled. The one doubtless cause why State Farm would retain an skilled to find out the reason for damages it had already paid for is as a result of State Farm realized that Plaintiff’s estimate was extra in keeping with the precise damages sustained within the Water Harm Declare and that it had underpaid and undervalued the damages to Plaintiff’s Los Angeles residence. State Farm’s retention of Engineering Methods, Inc. (‘ESI’) was deliberately set as much as create a protection dispute. To no shock, State Farm’s retained engineer got here up with the acquainted causation protection of ‘pre-existing damages’ to defeat fee of what was initially a lined declare.
What does the policyholder argue about State Farm’s water harm trigger and origin specialists?
ESI inspected the property on October 24, 2023, eight months after the windstorm occasion and over 4 months after Plaintiff reported the Water Harm Declare to State Farm. (DAF 4, PAF 31). Six months after inspecting Plaintiff’s property, ESI submitted its report back to State Farm, setting forth their alleged opinions and conclusions as to the trigger and origin of the Water Harm Declare. ESI basically concluded that all the harm to the inside and exterior of the house was pre-existing and resulted from age, deterioration, deficiencies within the design and development of the house, lack of routine upkeep and repairs, amongst different issues.
All of ESI’s conclusions are primarily based on defective and misguided assumptions and/or are contradicted by substantial proof on this case. Specifically, whereas ESI concludes that the water harm noticed was the results of ‘age-related deterioration’ over an extended time frame, conveniently omitted from ESI’s report is that it inspected the house eight months after the storm. In different phrases, whereas ESI assumes that the damages pre-dated the loss, ESI carried out its investigation 8 months after the water harm loss occurred and did not seek the advice of with witnesses with private information of the pre-loss situation of the inside components of the house, most importantly, Plaintiff himself. Had ESI communicated with Plaintiff himself, ESI would have realized that the alleged ‘preexisting’ damages and deterioration it noticed didn’t exist previous to the Water Harm Declare and as an alternative, Plaintiff noticed all of those water damages after the February 2023 windstorm occasion. All different damages had been well timed repaired.
ESI doesn’t establish case-specific proof of gradual results of wear and tear and tear and earth motion to the Property over time. ESI did not account for the truth that the windstorm occasion occurred eight months previous to the time the water intrusions occurred and thus, can’t say when the harm occurred and didn’t carry out any analysis of how lengthy it might take for such alleged ‘pre-existing’ situations to look. Equally, there is no such thing as a proof that ESI had or requested for pre-loss images of the inside of the house. ESI didn’t converse with Plaintiff earlier than concluding that the damages had been brought on by lack of routine upkeep and repairs. ESI’s conclusions are additionally refuted by State Farm’s declare file which acknowledges proof of prior repairs to the house. (PAF 52). ESI’s conclusions are additionally refuted by State Farm’s declare adjusters who decided that the reason for the damages was the results of the windstorm occasion and the opposite adjuster, Mr. Thomas Jones, who agreed with Plaintiff’s flooring skilled that the stable oak wooden flooring all through the house wanted to get replaced for a uniform look.
ESI recognized 4 attainable causes of the damages however failed to clarify how any of them prompted the harm or was the predominate reason behind damages to the house. ESI has no concept how a lot water entered the house on February 21, 2023 and if these water intrusions prompted the damages noticed, but, summarily concluded that all the damages had been pre-existing and attributable to the whole lot however the windstorm occasion.
On this case, the court docket declined to grant State Farm’s movement for abstract judgment, 2 indicating that the policyholder needs to be allowed to show the details and allegations concerning the fallacious, biased, and end result oriented claims investigation and that discovery ought to proceed. So, there could also be extra to report about this case sooner or later. For all we all know, the ESI specialists and State Farm could also be fully proper.
Alternatively, many people are skeptical of specialists, and I famous and offered an instance 16 years in the past in Insurance coverage Firm Consultants Are Typically Biased And Consequence Oriented. The sentiment might finest be described in my put up, The Plague of Improper and Insurer Worded Engineering Reviews by Insurance coverage Firm Retained Engineers:
As we speak’s weblog isn’t going to endear me to HAAG, Rimkus, JS Held, and different recurrently retained forensic engineers working for insurance coverage corporations. These engineering and consulting companies are large enterprise. A lot in order that Sedgwick, a big impartial adjusting agency, has acquired plenty of these engineering companies. I can think about lots of you questioning how an adjusting agency representing the insurance coverage firm’s curiosity can acquire an impartial and trustworthy opinion beneath such circumstances.
Many skeptical public adjusters, contractors, and critics inform me that they don’t have to attend to know what the engineering report goes to say if a sure engineer has been retained. Not solely are the scientific findings hostile to the policyholder, however the wording of the report additionally inextricably dovetails with the insurer’s exclusionary or limiting coverage language. It’s a lot simpler to show that an engineering report’s conclusion is fallacious than it’s to show that the errors and fallacious conclusions had been the results of bias or an outcome-oriented mind-set.
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I lately attended the Georgia Affiliation of Public Insurance coverage Adjusters assembly, the place an skilled in fireplace harm and remediation gave a unprecedented admission concerning the kinds of monetary strain positioned upon forensic specialists relating to their stories. He defined how his testing resulted in conclusions that infuriated the desk adjuster, who must pay extra on the declare. Reasonably than ship his report back to the policyholder, it was buried. The desk adjuster employed one other skilled who carried out totally different testing to reach at an misguided conclusion. Ultimately, the reality was uncovered. His level was that this was not an remoted occasion and that many adjusters, sadly, aren’t in search of the reality however a report which results in much less paid on a declare.
One cause I wrote Supporting the American Policyholder Affiliation With Time and Cash Is an Obligation If You Are a True Policyholder Advocate, is due to the APA’s warnings about end result oriented stories. The engineering stories usually appear to dovetail with exclusionary language from the coverage. Policyholders have cause to be skeptical.
Once more, the findings of this lively case might be sorted out later. The teachings are that some insurers have claims processes designed to not pay sure claims and that skepticism is deserved when studying the insurance coverage firm’s skilled trigger and origin report.
Thought For The Day
“Blinding ignorance does mislead us. O! Wretched mortals, open your eyes!”
—Leonardo da Vinci
1 Oakenfold v. State Farm Gen. Ins. Co., No. 2:24-cv-07455, [Doc. 32], 2024 WL 5337691 (C.D. Cal.).
2 Oakenfold v. State Farm Gen. Ins. Co., No. 2:24-cv-07455, 2025 WL 574629 (C.D. Cal. Feb. 14, 2025).
