Fla. Court Clears Way for Video Recording of Adjuster’s Damage Inspections

William Rabb | Claims Journal

Homeowners and public adjusters may now feel a little more emboldened to record an insurance adjuster’s inspection of a home, after a Florida appeals court ruled in favor of the practice last week – the third such ruling in as many years.

The 4th District Court of Appeal, in West Palm Beach, held that because the American Strategic Insurance Corp. policy does not address the question of video and audio recording of an inspection, the case should be remanded and reconsidered. The court reversed a Palm Beach County trial court’s 2021 ruling in favor of the insurer, which found that the insurance policy did not authorize the filming of the insurer’s inspector.

“We conclude that nothing on this record precludes an insured from recording an insurance adjuster’s inspection while in the insured’s own home,” 3rd DCA Judge Martha Warner wrote in the opinion. “The trial court erred in entering declaratory judgment for the insurer.”

American Strategic, a Progressive Insurance Co. subsidiary based in St. Petersburg, argued that the HO policy did not permit the recording of its inspector. But the appellate court found that the policy did not forbid it, either. The judges noted that courts have consistently held that any ambiguity in a policy must be strictly construed in favor of the insured “and strictly against the insurer.”

An oft-quoted 1976 opinion from the 4th DCA said: “Where a contract is simply silent as to a particular matter, that is, its language neither expressly nor by reasonable implication indicates that the parties intended to contract with respect to the matter, the court should not, under the guise of construction, impose contractual rights and duties on the parties which they themselves omitted.”

More recent rulings from the 4th DCA and the 3rd DCA have found that an insurance adjuster has no legitimate expectation of privacy while in an insured’s home. In Silversmith vs. State Farm Insurance, the 4th District found in 2021 that Florida law, which prohibits audio recordings unless both parties agree, does not apply to an insurance inspection scenario. A year earlier, the 3rd District Court of Appeals declined to review a trial court order that allowed a recording of an inspection.

Those rulings rested in part on a 1994 Florida Supreme Court decision that persons objecting to being recorded in most cases must state “an actual subjective expectation of privacy,” and a societal recognition that the expection is reasonable.

pastedGraphic.pngIn the American Strategic case, homeowners Ryan and Andrea Gesten suffered damage to their home from a plumbing problem in 2019, the court explained. Ryan Gesten, himself a trial attorney experienced in insurance claims litigation, hired a public adjuster to assist in the claim. The claim totaled $81,000.

The public adjuster informed the insurer that he would be recording the carrier’s home inspection.

“This is being done for the benefit of transparency and accountability for both parties,” the public adjuster wrote to the insurance company.

American Strategic objected to the audio recording. On the day of the planned inspection, ASI’s attorney, its adjuster and an independent expert showed up at the property. The public adjuster had a camera strapped on. The ASI lawyer objected and the parties could not come to terms. The inspection was never completed, the court explained.

ASI then petitioned the trial court to bar the audio recording. The Gestens sued for breach of contract. The Palm Beach court granted summary judgment in favor of the insurance carrier, and the appeal followed.

The court opinion and the original suit filed by ASI explain that ASI argued that the recording would violate the policy and state law, and that the insurer had no way to record the public adjuster’s inspection. And because ASI’s lawyer was present, that would create an attorney-client communications that should not be filmed, the complaint said.

“Finally, there is a genuine concern (over) what the public adjuster may do with the images and audio tape of these individuals,” ASI’s petition reads.

There’s also the fact that the homeowners’ public adjuster was Scott David Thomas, a man who has become notorious in the Florida insurance industry for making things difficult for insurance company adjusters and experts in recent years. The state Department of Financial Services, which regulates agents and adjusters, in March of this year filed an administrative complaint against Thomas, charging him with repeatedly stonewalling insurance company adjusters on property inspections.

In some instances, Thomas became belligerent and disparaging toward Citizens Property Insurance adusters and other adjusters, refused to answer questions, demanded proof of the other inspectors’ workers’ compensation insurance, requested background checks on inspectors, often changed agreed-on inspection dates and refused to meet except on Saturdays. Thomas could ultimately lose his license if an administrative ruling goes against him.

The appeals court decision in the ASI case may not settle the audio-recording question completely. Samuel Alexander, the appeals lawyer for the homeowners who was also the attorney in the 2021 Silversmith case, pointed out that the concurring-but-dissenting opinion by 4th DCA Judge Mark Klingensmith took issue with his colleagues’ reliance on the Silversmith decision.

The Silversmith opinion “is in direct conflict not only with the statute with our prior decisions” in two other cases, Klingensmith wrote. Florida law’s prohibition on recording without a subject’s consent “prohibits what the appellees want to do,” and provides no exception for business interactions or for when an adjuster is in someone’s home.

That could crack the door open for further litigation on the issue in coming years, partly because American Strategic’s lawyers did not raise some issues at the trial court level.

“Because our opinion here does not explicitly rest on Silversmith as controlling precedent, we do not need to revisit Silversmith for the purposes of deciding this matter,” Klingensmith wrote. “However, in the future, I would consider doing so in an appropriate case.”

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.

Colo. Supreme Rules Adjuster Can’t Be Held Personally Liable for Denied Claim

Jim Sams | Claims Journal

A Colorado law that allows claimants to collect double coverage if a claim is unreasonably denied or delayed does not allow plaintiffs to hold claims adjusters personally liable, the state Supreme Court decided Monday.

In a unanimous decision, the high court said the plain statutory language makes it clear that insurers, not their employees, are responsible for delayed and denied claims.

“Because the insurer—not any individual employee—authorizes payment, this language indicates that an action for unreasonable delay or denial of insurance benefits is triggered by a decision of the insurer, not the adjuster,” the opinion says.

The question of a claim’s adjuster’s personal liability was brought to the Colorado Supreme Court by the US District Court in Denver, which is considering a lawsuit filed by injured motorist Alexis Skillett that seeks penalties for an alleged unreasonable denial of underinsured motorist benefits. Allstate Fire and Casualty Insurance Co. removed the case to federal court and filed an unopposed motion to certify legal questions to the Colorado Supreme Court.

Skillett was hurt in a July 2020 crash in Aurora, Colorado while riding as a passenger in her mother’s car. Another vehicle, while attempting to change lanes, struck the right front corner of the car.

Skillett settled with the at-fault driver’s insurer for $23,907.15 but asked Allstate — which insured her car — for an additional $10,000 in underinsured motorist benefits.

Allstate adjuster Collin Draine offered to pay $1,750, saying that the settlement had adequately compensated Skillett for her damages. Skillett filed a suit in state court alleging that the denial was unreasonable. She requested double the $25,000 per-person limit on her insurance policy, attorney fees and costs as allowed by Colorado Revised Statute Section 10-3-1116.

That statute was adopted in 2008 as a means of discouraging insurers from unreasonably delaying or denying claims. The statute prohibits “a person engaged in the business of insurance” to unreasonably delay or deny payment of a first-party claim.

Whether claims adjusters can be held personally liable for unreasonable claim delays or denials has been a contentious issue across the country. In 2019, the supreme courts for Iowa and Washington state ruled that their state laws do not recognize bad-faith claims against third-party claims administrators.

However, the high courts in Montana, Texas and West Virginia ruled prior to those decisions that an individual could bring third-party claims against insurance company employees for bad faith, according to an article written by Florida State University law professor Chad G. Marzen.

Skillet argued that the Colorado statute’s reference to “a person” allows lawsuits against individual adjusters in addition to insurers. Her lawsuit names Draine as a defendant along with Allstate.

Allstate countered that Skillett named Draine as a defendant only as a means of keeping Skillett’s lawsuit in state court, where jurists are generally thought to be more sympathetic to insurance claimants. Draine is a Colorado resident and federal courts generally do not have jurisdiction in disputes between residents of the same state.

According to the Supreme Court’s opinion, the Colorado Court of Appeals ruled in 2013 that individual employees cannot be held liable for bad faith. But in 2020, the federal district court in Denver created a conflict by finding that the statute could plausibly be interpreted to create a cause of action against an individual adjuster.

The Colorado Supreme Court even though an adjuster can be considered to be a “a person engaged in the business of insurance,” the use of that word in the context of the entire statute shows that the legislature intendedfor lawsuits to be filed against individuals, not individual employees. The law establishes penalties in instances when an “insurer” delays or denies payment of a benefit. Moreover, a preceding code section refers to instances when the insurer “delayed or denied authorizing payment” of a covered benefit, the opinion says.

“Insurers and insureds—not adjusters—are the parties to an insurance policy,” the court said. “They are the ones who undertake obligations under such policies, and it is the insurer—not the adjuster—who may be obligated to pay insurance benefits.”

The American Property Casualty Insurance Association applauded the ruling.

“This is a welcome and common-sense result that accords with a similar decision from the Washington Supreme Court in Keodalah v. Allstate in 2019,” stated Kenneth Stoller, APCIA assistant vice president and amicus counsel. “APCIA filed amicus briefs in both cases explaining why personal liability for bad faith would distort the role of the adjuster, significantly impair proper claims handling, and is not necessary to advance the legitimate interests of insureds.”

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.

Drones Help Insurance Companies Check Damage in Cedar Rapids

Erin Jordan | Claims Journal

Insurance adjusters who descended on Cedar Rapids after the Aug. 10 derecho storm are using drones to check roofs and asking homeowners with less severe damage to take their own photos.

Some of this is due to the COVID-19 pandemic, which has reduced the number of experienced adjusters willing to travel. But the changes also help speed up claims and get repairs done sooner, company representatives said.

“Drones or aerial imaging helps them estimate the claims,” said Scott Hauptman, vice president for claims for Grange Insurance, of Columbus, Ohio, which is working with Integrity Insurance, of Appleton, Wis., to handle at least 500 storm-related claims in Cedar Rapids. “It’s as efficient as possible and helps them (adjusters) safeguard their health.”

Cedar Rapids officials told The Gazette on Wednesday that 140 buildings are too damaged to be occupied. Several hundred more have non-structural or cosmetic damage.

Before buildings can be fixed and people can return to their homes, insurance companies must document the damage and determine how the loss will be covered.

Many insurance companies have sent catastrophic teams to Eastern Iowa. Nationwide Insurance, for example, stationed some at the Home Depot on First Avenue SE in Cedar Rapids.

“Really the biggest thing we’ve found in Cedar Rapids, due to lack of internet and power, is they (homeowners) weren’t sure if they had a claim filed or not,” said Courtney Kannas, property field claims manager for a Nationwide team that covers Iowa, Nebraska and parts of Kansas and Missouri. “If they didn’t have a claim filed, we could do that for them. We also could give them a high-level understanding of their policies.”

Integrity adjusters sent a drone Wednesday afternoon over the Wired Production Group’s building on N Towne Lane in Cedar Rapids to get a better look at a roof that was peeled off and a crumbled back wall.

“This 12,000-square-foot building is a total loss,” said Ron Rausch, Wired Production president and owner. “They (Integrity) brought a structural engineer in here to document that was the case.”

An adjuster also looked at millions of dollars in cameras and other equipment Wired Production uses to stage events for many Eastern Iowa companies, including The Gazette. When the roof was ripped off, rain and water from broken water mains flooded the offices and ruined much of the gear, Rausch said. The firm is setting up operations temporarily in Dubuque until the Cedar Rapids site is rebuilt.

“They were very amenable to letting us start the cleanup process and work with people we want to,” Rausch said of the insurance company.

State Farm, the first insurer to get Federal Aviation Administration approval to operate drones over people, has been using drones to gather information on Cedar Rapids claims, spokeswoman Tammi Estes said.

Nationwide hasn’t been using drones in Cedar Rapids because of the challenges of photographing around fallen trees, Kannas said, but the company is encouraging policy holders with minor damage to photograph the property and submit claims online.

“It gives us a better picture right away as to the extent of the damage they have to their home so we can get them emergency reimbursement or set them up with temporarily housing a little quicker,” she said.

A Washington, D.C., law firm said in a news release that homeowners and businesses hit by the derecho will face challenges in getting adequate reimbursement.

Weisbrod Matteis & Copley, which represents homeowners in lawsuits against insurers, pointed to an Aug. 4 webinar with insurance executives who said many older adjusters were reluctant to go out in the field because of risk of contracting coronavirus.

Some insurance companies also have struggled to get adjusters into states that require quarantines for visitors.

“After battling the insurance industry after Katrina, I fear that Iowans will be left at the mercy of a B team of insurance adjusters,” Jim Hood, a former Mississippi Attorney General who now works for the law firm, said in a statement. “Storm victims will need to quickly document their damages with drones, pictures and lists of damaged items.”

One insurance executive on the webinar said he thought fewer adjusters in the field would increase fraud.

“I do have some concerns we are going to have to do more virtual adjusting,” said Jed Rhoads, president and chief underwriting officer for Markel Global Reinsurance, based in Virginia. “If we’re adjusting claims through satellite imagery or drones or handheld devices, it could lead to new additional types of fraud.”

People could doctor drone or cellphone images or charge a company additional costs to procure the photos.

Integrity Insurance has been allowing virtual adjusting for several years, Hauptman said, and has developed strategies for detecting fraud.

“We have means on the back end to authenticate the pictures to make sure the time and location are appropriate,” he said. “The vast majority of our customers are great people. If there is fraud in an industry, that affects everyone’s rates.”

About the photo: Cleanup continues around the area in Cedar Rapids on Friday, Aug. 21, 2020 following the Aug. 10 derecho, which left hundreds of thousands of Iowans without power and displaced many whose homes were damaged or destroyed in the heavy winds. (Rebecca F. Miller/The Gazette via AP)

Policyholders—-What Are the Four Questions Every Insurance Adjuster Should Be Asked and Then Required To Answer?

Chip Merlin | Property Insurance Coverage Law Blog | October 2, 2019

Speaking at the IAUA Conference in San Antonio yesterday, I suggested that every insurance company should be demanding from their field adjusters and claims managers that they deal with their customers who ask these four questions:

  1. How much am I fully entitled to?
  2. When am I going to get those benefits?
  3. Are you certain that I am not entitled to more, and what are those benefits?
  4. Is there anything you can do to speed up getting what I am owed?

Claims managers, insurance regulators, public adjusters, attorneys for policyholders, and the media should be asking these four questions. These are questions I am demanding our Merlin Law Group attorneys and staff answer to our clients. It is the same question insurance companies should be asking from their own employees serving their own customers.

Does this happen? I would suggest that often it does not. It is almost as if the insurance customer after making a claim is the enemy and the amount demanded is fraudulent.

Claims managers should be asked whether they agree these four questions are the basis for good faith claims handling and that they should be penalized for failing to adhere to them.

I bet a big waffle answers will happen.

Thought For The Day

Criticism in good faith is good. When it’s targeted solely to destruction, I’m not interested.
—Andrea Bocelli

California’s Insurance Adjuster Act of 2019 Is Coming

Derek Chalken | Property Insurance Coverage Law Blog | August 5, 2019

California’s Senate Bill 2401 is making its way through the legislature and will hopefully bring some important changes to the way insurance companies train their out of state adjusters who handle California based policyholder’s claims. The bill, also known as the Insurance Adjuster Act of 2019, was created by Senator Bill Dodd to eliminate confusion and delays caused by out-of-state or unaware adjusters.

Of significance, the bill will require the California Department of Insurance (DOI) to produce an annual notice describing the most significant California laws pertaining to property insurance policies (including those regarding declared states of emergency) and require the out-of-state adjusters to submit a signed certification, under penalty of perjury, that they have read the most recent notices issued by the DOI, as well as a handbook for adjusting claims prepared by the DOI.

Another part of the act requires that carriers assign a primary point of contact for insureds during a state of emergency. This law was drafted with the hope that it would limit confusion created when carriers assign multiple adjusters to a single claim. For example, insurers often have a desk adjuster, independent field adjusters, contents adjusters and even ALE adjusters working on a single claim. The new bill will require the DOI to provide training standards for these adjusters and require the carrier provide a single point of contact. Insureds simply do not know which person to contact. The new law aims to streamline these communications with the insurer through one person.

These guidelines will hopefully increase the accountability insurers have when they assigned out-of-state adjusters to deal with increased claims activities following catastrophic disasters. If you feel your carrier is not abiding by their obligations to you, contact a Merlin Law Group attorney for a consultation.
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1 https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200SB240