Foran, Glennon, Palandech, Ponzi & Rudloff, specializes in litigation arising from property insurance claims. It is no secret that disputed claims are on the rise. Our firm is currently litigating dozens of property cases involving alleged hail or wind damage to roof coverings, rooftop equipment and other building materials such as siding. In addition to litigation, there is a tsunami of appraisal demands sweeping across the industry. More and more states are expanding the appraisal process to encompass scope disputes in addition to pricing. Resolving disputed claims in court is generally undesirable for all parties given the cost, expense and uncertainty of modern litigation. Comprehensive and clean scope documentation can assist in resolving disputes without litigation and, when litigation is unavoidable, can be a key tool to successfully defending the company in court. Today’s digital, mobile-first technologies that help capture and organize better data and documentation have tremendous potential for claim documentation and, relatedly, claim resolution.
There is an old saying that “a picture is worth a thousand words”. Photos remain the most common and valuable form of property documentation. Camera technology like iPhones, drones, and panoramic devices now provide increased data value. Pictures are often relied upon in court cases and can provide compelling evidence if captured correctly. There are several qualities we look for in securing photo documentation:
Photo Quality: What is the quality of the photos? Do they clearly and accurately identify the cause of loss? Do they help tell a comprehensive story of the loss?
Organization: Are they photos correctly organized by structure, area and other relevant locations? Are the photos clearly labeled and do they include detailed captions?
Measurements: Is there clear and accurate measurement data appended to the photos? Are there useful and descriptive annotations that overlay the photos?
Reliability: Is it clear who took the photos? Are the photos time and date stamped to confirm when they were taken? Are they geo-stamped to confirm where they were taken?
Property photos on losses don’t require a National Geographic photographer to become useful or permissible in resolving disputes. The photos should be clear and interpretable and more photos are generally better than less. What matters most is the photo documentation should be comprehensive, descriptive and useful for communicating the unbiased facts.
Nearly as important as photos are the site notes, forms, diagrams and measurements. Insurance coverage disputes can take a long time to resolve. It may be years before a litigated claim is ultimately decided in a court of law. With the passage of time, memories fade and personnel changes occur. The average age of an insurance adjuster today is 55 years old so many adjusters are nearing retirement age. From the standpoint of the company’s lawyer, personnel change means that the field adjuster who performed the initial field investigation may not be available or cooperative by the time a dispute heads to court. Even if these witnesses are available and cooperative, they often struggle to interpret their own “chicken scratch” diagrams or notes created several years earlier in a coffee-stained workbook or legal pad. And even if the notes are sufficient to refresh the witness’ recollection, “old school” style field notes are certainly less convincing to a judge or jury because they rarely tell the story of the loss adjustment.
A clear and well documented scope cuts down on litigation expense as well. When we receive a claim file to prepare to defend a matter we must understand how the claim was adjusted often without having any prior knowledge or involvement in the matter. We value claim file documentation that is clear, factual and written in natural language to be commonly understood. That includes specific descriptions of damage, measurements in familiar and relevant calculations, and notes that can be clearly interpreted. We’re increasingly seeing the use of advanced technology including digital laser measurements. Tools like Spike or Leica that accurately capture data on inaccessible property locations are highly useful. Those technologies can be adapted to include photos that also capture accurate measurement data from far distances. Documentation that is opinion based, general or vague (e.g. “standards grade window”) is subject to attack because it lacks precision and requires interpretation. While estimates produced by Xactimate or Symbility are an important part of the industry, the macro codes (such as “WDV D>” to describe a standard grade, double hung, vinyl window) that exist in those software platforms are not as valuable in court. It’s about clear, specific facts and natural language as much as possible.
Scope disputes create more litigation than any other aspect of the property loss adjustment process except, perhaps, causation issues. Modern technology platforms like Spex help the industry focus on making the scope the priority to resolving the claim or, alternatively, defending the company’s position in court or appraisal. This technology assists insurance professionals in capturing and organizing field data, forecasting reserves accurately and quickly, and collaborating with the field adjuster more efficiently on the production of estimates or other deliverables.
A Public Adjusting firm recently said that, from their perspective, it’s always “the best inspection that wins.” That is absolutely true when a disputed claim ends up in court. After years of representing insurance companies in court we have learned that the playing fleld is not level. A quality property scope based upon an assembly of facts, not opinions, can level the playing field by giving the company a clear technological advantage over our opponent. But, equally important, a well documented scope can facilitate early dispute resolution either at mediation or prior to suit commencement. If the parties can agree on cause and scope, pricing disputes can often be compromised and resolved. Relatedly, the available scope technology enhances the customer claims experience. Policyholders involved in natural disasters or costly losses are naturally upset and impatient; they want accurate, timely and fair compensation for their losses. Businesses involved in larger commercial losses fret about extended downtime brought on by adjustment disputes and related restoration delays. A properly documented scope creates transparency which, in turn, fosters mutual understanding and respect. Customers who understand the basis for their claim payments are far less likely to be mislead by their public adjuster or by policyholder’s counsel.
For all these reasons, we believe it is only a matter of time before scope technology, like Spex, is adopted by the claims industry on a wide scale, and becomes the new standard of care for the adjustment of property losses.
Foran, Glennon, Palandech, Ponzi & Rudloff