Filed Under:Claims, Catastrophe & Restoration

The Disasters Keep On Coming

Preparing for the Unexpected

This may be a very good decade to be a catastrophe adjuster. At least, such men and women will apparently be fully employed. Claims ranging from the Deepwater Horizon oil spill in 2010 to the blizzards this past winter and the tornadoes in the spring—estimated at an insured loss of $2.5 billion—and the flooding in the Red River and Lower Mississippi basin, from Missouri to Louisiana, loss, insured, and otherwise, will cause gray hair in the underwriting departments and fatter wallets in the independent claims industry.

Who would have dreamt the mess Mother Nature would inflict in this year’s annual tizzy? Drought in the West, tsunamis in California, wildfires in Texas, floods in the North and South, and powerful windstorms, accompanied by vicious hail, from Oklahoma to New York.

Of course, there is always the issue of like kind and quality. I told the class about how I had once caught the famous news broadcaster, the late Paul Harvey, in a conflict of interest. He had two sponsors one day for his radio show: Allstate and General Motors (GM) Genuine Parts. Allstate, I knew, was an active participant in the I-CAR program, which had much to say about using after-market parts in body repairs to save money, arguing that these parts, usually foreign-manufactured as opposed to used parts from a junk yard, were of “like kind and quality.” I am sure the folks at GM Genuine Parts, however, would have strongly disagreed. Just what does “like kind and quality” mean? More than one court has had its say, and in a few, the conclusion was “diminished value,” now claimable in several states.

Coverage is Key

Nothing in the field of claims is static. Change is constant in statutes, contracts, court decisions, and especially coverage. The ISO is a business, and its business is making changes to policies to make them more accurate. I had told my class about a situation where an insured’s water pipe had broken while he was out of town for the weekend. The water spilled into his home the few days he was away, and he came home to find his basement flooded. Then, a few weeks later, he received the water bill—several thousand dollars for all that water. But wasn’t the water his “personal property” under the homeowners form? He could not use the water—it was damaged by the leak, a covered peril. So, wouldn’t the water bill be part of the damages?

The Final Step: Disposition of Damages

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