State Farm Denied Water Damage Claim – The Mid-Atlantic Public Insurance Adjusters Association (MAPIA) held a meeting this past week with approximately thirty-five public adjusters. President Paul Yemm, yours truly, Holly Soffer and Tony DiUlio are pictured above. Soffer and Diulio did a great insurance loophole presentation highlighting Tony DiUlio’s discussion of the water loss resulting in a bad faith verdict against State Farm.

The purpose of the presentation was to highlight the growing insurance gap crisis created by insurance companies in the race to compete on price as a result of providing less coverage, which is often never disclosed or highlighted. Regulators and lawmakers need to address this property insurance gap problem.

State Farm Denied Water Damage Claim

State Farm Denied Water Damage Claim

In the State Farm toilet overflow case, State Farm actually submitted a notice of disapproval to change coverage, when the new language clearly provides less coverage in the case of a typical broken pipe leak.

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State Farm initially introduced a fairly standard “introductory” coverage covering water loss cases caused by burst pipes:

If the loss of covered property is caused by water or steam, we will pay for the cost of removing and replacing any part of the building necessary to repair the system or appliance. We do not cover damage to the system or device where water or steam escapes.

Then, with a very misleading notice stating that the endorsement was “not intended to change coverage,” State Farm issued this endorsement that clearly reduced coverage in my “access” and “tear-out” plumbing cases:

To tear. If the property insurance is caused by a water or steam leak from a system or appliance, we will also cover reasonable costs incurred by you to demolish and replace the part of the building or condominium that you only own. gain access to the specific point of that system or device where the water or steam is escaping. We will not cover the cost of repairing or replacing the system or the device itself.

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Imagine you’re a homeowner with an endorsement that claims it doesn’t change coverage, but actually gives you extra coverage. It is only once you are injured that you discover that your insurance coverage has actually been reduced and that you have been defrauded by the insurer. And that’s exactly what happened to the Aguiars…

I go to a lot of insurance conferences and watch a lot of insurance presentations. Tony’s was one of the best of the year. He even noted a small but significant change in the endorsement that no policyholder could catch – the inclusion of the word “fall”. He correctly noted that carriers are now including this language, making the property insurance policy more of an indemnification mechanism than insurance that will fund a claim.

Tony entered a bad faith verdict and was kind enough to provide me with his post-trial brief, in which he noted that the insurance contract was a binding and insurer-to-insured relationship:

State Farm Denied Water Damage Claim

The purpose of construing an insurance contract is to determine the intent of the parties by the language of the written instrument…. However, due to the “obvious disparity of bargaining power between the insurance company and the policyholder,” the court may depart from the plain language of the contract to determine that the contract is binding. Standard Venetian Blind Co. Am. Empire Ins. Co., 503 Pa. 300, 307 (1983). The essence of an attachment contract is that the consumer presented with it has no choice but to either accept the terms of the document as written or reject the transaction altogether….’The parties do not have equal bargaining power. and the weaker party must comply with the terms of the non-negotiable form contract. In other words, the terms are not negotiated, but dictated by the insurer.’ Rudolph Pa. Blue Shield, 553 Pa. 9, 17 (1998). “When a contract is considered a binding contract, its terms must be analyzed to determine whether the contract as a whole or its specific provisions are unconscionable.”…If the terms of an otherwise enforceable contract are found to be unconscionable, those terms are void.

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Denial of water loss claims is a growing problem. Insurers are rewriting longstanding premiums that fully cover the costs of pipes that unexpectedly break and cause water damage to homes and businesses. They limit the amount paid for damages, from the time the leak first occurred, and then other “minor” terms. They write policies that require policyholders to have Superman x-ray vision so they can spot leaks behind walls, including notice requirements that specifically indicate hidden water leaks!

I want to applaud United Insurance Owners, the American Association of State Insurance Regulators, Nancy Dominguez, and the leadership of the Florida Public Union, as numerous restoration contractors and public adjusters have shown me examples of people being defrauded who previously did not have standard coverage. Insurance Regulators, Jesse Sipe and the leadership of the New Jersey Association of Professional Public Adjusters, MAPIA and the Rutgers Center for Risk and Liability to proactively meet with insurance regulators and legislators on these issues and educate them about the crisis.

I went with PPAANJ leadership a few weeks ago to meet with the New Jersey Insurance Commissioner and his staff about these issues. As you read this, Holly Soffer is in Austin, Texas, meeting with officials from the National Association of Insurance Commissioners about what can be done to fix the scourge of uninsured water losses caused by recent changes to standard all-risk insurance policies. The

Those efforts are starting to work, and regulators are starting to listen. The National Coalition of State Legislatures held a webinar on insurance coverage gaps last week and noted:

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NCSL is pleased to partner with The Institutes Griffith Foundation to present a non-partisan, non-advocacy webinar that will explore the various insurance protection gaps that exist in the property and casualty space and consider how these gaps impact consumers and the industry. The primer will be for educational purposes only and will not take a position on any topic. The session will provide an introduction to the “Lunch and Learn: Insurance Gaps” session at the 2019 Insurance Task Force meeting December 12-13, 2019 in Phoenix.

Established in 1985, Merlin Law Group is a leading insurance litigation law firm committed to helping policyholders obtain fair and just results from their insurance companies. Property insurance law is a highly complex and specialized area of ​​law, and our firm represents policyholders when claims are denied, delayed or underpaid. State Farm is arguably the largest provider of property and casualty insurance in the United States. It offers a variety of policies for auto, life and home insurance. Although these are slightly more expensive than their competitors, State Farm makes up for it by extending special discounts.

Like any other company, State Farm has basic, cookie-cutter contracts—you choose a policy and pay a premium. When an accident occurs, you file a claim and your insurer pays the specific benefits. At least, that’s how it should work.

State Farm Denied Water Damage Claim

Unfortunately, the insurance industry routinely disregards these rights. Things have gotten so bad that each state has its own individual state agency to regulate the insurance industry. In Texas, this is our Department of Insurance.

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Despite being an established business, the American Association of Justice (AAJ) ranks State Farm as the fourth worst insurer in America, despite State Farm’s arrogance in calling itself a good neighbor.

AAJ’s report, America’s Ten Worst Insurance Companies – How They Raise Premiums, Deny Claims and Deny Insurance to Those Who Need It Most, conducted a comprehensive, in-depth study of a number of insurance companies. Some of the industry’s most prominent names have repeatedly cut corners, chosen strategies that changed consumer benefits, and refused to pay most claims in full.

Thousands of court documents, SEC filings, FBI reports, and state insurance department publications were studied and examined. Testimonies of former adjusters and agents of insurers were also reviewed to get a better picture of the situation. Along with a “3D” (deny, delay, defend) approach, the company also has a long history of not updating its policies.

According to the American Association for Justice, State Farm has been accused of shady, unfair practices in the following categories:

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Negligence – Homeowners insured with State Farm filed a class action lawsuit against the company for routinely undervaluing their property. The jury found that State Farm acted recklessly and with cruelty on most of its claims in the case.

Denying, delaying and defending claims – Like Allstate, State Farm denies claims, delays payments and defends claims that should be settled promptly. Unfortunately, all of them

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