Over my 19-year career as a design professional in the construction industry—of which about 10 years have been spent in design, testing, consulting, and investigating residential and commercial roofs of every sort across southeastern United States—I have come to realize how many roof failures could have been prevented.
This is why in 2004 I called a well-known engineering firm that is exclusively preferred by large insurance carriers in south Florida and my insurance agent. I asked them to help me present a program to players in the insurance industry that was designed to offer a much closer view of the risks to roofs—and the subsequent risks to insurers. My goal was to bring a qualitative and quantitative approach to evaluating the insurable. Surprisingly, it seemed that not one of them was interested in hearing me, and the other could not reach too far enough into the upper levels of management to even be able to discuss it. Now, years later, the program has developed nevertheless and is known as the Uniform Mitigation Verification Inspection (OIR 1802).
Faulty Structures and Insurance Claims
Structural problems begin when one or more of the components in this diagram fail in their duty. This is how claims originate.
This breakdown in the cycle causes legal advisors, claims adjusters, appraisers, and other consultants to jump in the rat race—ultimately sending the mess back to design professionals and contractors.
How many of you have come across an alleged catastrophe loss only to investigate, analyze, and realize that the loss could have been prevented? Perhaps the problem could have been prevented if the design professional would have properly analyzed the data from wind uplift pressures, building height, slope, type of concrete roof tile, method of attachment, moment resistance of the selected method of attachment and adjusted the design; or if the building department having jurisdiction would have reviewed and rejected the permit application for not meeting the building code requirements? Instead, the claim goes to the insurer.
This poor planning happened on new projects that are now at least seven years old. These structures await yet another major event, which would fall to a knowledgeable adjuster and a legal team—that is if it does not settle on appraisal beforehand. And if it does go to trial, the defendant’s attorney would make a passing remark during the opening statement at the multiple-day trial: “Your honor, the defendant would like to cover all the plaintiff’s consulting and attorney fees.” Imagine the fees on almost three-year-old, multiple commercial hurricane claim!
How many of you have come across a catastrophe loss that was paid by the insurer only to realize that the building department having jurisdiction was unable to perform an inspection during such a stressful time as the aftermath of Katrina, Wilma, or Ike? This leads the design professional, who has never set foot on the job site, to verify and approve work that continuously causes distress and property loss to an owner. Or when problems are presented to the building official on-site—who had all the power, means and resources to go after and hold responsible both the installer and the design professional—there are no results. Yes, as unbelievable as it seems, it does happen.
These errors happen especially during major events when competent, qualified contractors, subcontractors, and installers (who are often arriving from surrounding areas) do not know about state or local requirements and ordinances. Because the building code requirements are not the same in central Florida, Tulsa, or Lubbock, then they may not carried out properly—or even worse not enforced. I once called a local building department in Texas to inquire about what edition of the International Building Code (IBC) was in force for a re-roofing project, and the engineer responded that there isn’t such a requirement in that county.
Is the qualified installer ultimately responsible if the project has been permitted and inspected by either the inspector or the design professional who certified the job? Yes—at least for the duration of the warranty period. And if the qualified installer is sued by a disgruntled owner, who do you think the installer’s attorneys are going after—the building department having jurisdiction who could have messed up the entire process review? No, they likely will go after the design professional and eventually the designer’s errors and omissions insurance.
How many design professionals have been asked to look the other way? I was once offered a free lunch to certify, sight unseen, 100 roofing squares of multi-layered insulation, which were deficiently installed for a residential condominium re-roofing project worth millions of dollars.
Large Catastrophe Losses
How many of you have come across a genuine catastrophe loss, but you could not bring enough evidence through standardized testing, scientific principles, data, history, literature and modeling during a two-day court hearing? Subsequently the owner did not get paid on his loss—even though the judge acknowledged your extensive experience in hurricane damage to roofs.
I had a large commercial roof claim get paid only on the sloped portion of the roof because it had visible and undoubtable physical damage and blown off covering down to decking, while the adjoining gravel topped flat portion of the roof was not covered because I could not prove that there was any physical damage to it and that all the water intrusion from the sloped section draining toward it could have entered the lightweight insulating concrete (LWIC) of the flat roof. As a result, the loss was acknowledged but not fully accounted for because the gravel-topped roof conceals almost perfectly any physical damage to it.
How much does an owner get paid on a hurricane loss when the defendant’s expert discovers through forensic destructive testing that there were not enough split-shank fasteners per roofing square or other experts insist that said fasteners are installed just to keep the base sheet in place and not to attach it to the underlying substrate? All this, even when the carrier insured the risk continuously for numerous years exactly the way it was and their due diligence risk assessment inspection cleared the structure and its roof yearly at the renewal with passing notes. Wasn’t the roof properly installed to meet the code in effect when it was approved?
Personally, I have come to realize after so many years of being involved in every aspect of the legal process surrounding a claim, that depositions, expert witness testimonies, and court hearings are (almost) educational.
Does this Uniform Mitigation Verification Inspection that is widely embraced by most insurers work? This can be hard to tell. I know that Uniform Mitigation Verification Inspection sets a timeline and the condition of the risk at that time based upon existing records. It establishes and records the weakest link for a given risk, whether is the roof to wall connection or a glazed opening above the front entry door or a non-rated protection for an opening.
All inspectors are trained to find the weakest link and rightly so. The insurer is right to search for it, and later in the claim denial process, if need be, bring it to the table, shove it under the nose of the owner and proudly say, “We knew about it. You did nothing to mitigate it, so you are not covered.” What does it take for an owner to bring an old risk up to code? Lots of money. Is it worth enhancing all the weak spots and strengthening an asset? Think of it this way: If the roof over your head is gone or if a bathroom window is gone, everything else may be gone before you know it, and if preexisting problems caused later damage not to be covered, you’ll wish you would have done mitigation to your structure after the need was discovered.
What happens with all these flawed structures? They will partially or entirely fail should another major event occur. What are the odds of that happening? Yes, you bet, very high.
Interpreting Policy Language
How much does the insurance policy cover? As I tell everybody, read the insurance policy when it is instated or renewed. Do not only leaf it or measure its thickness, read it. Begin at the end where it says “Exclusions” and work your way back to the beginning—and always read the fine print and the policy definitions. You will learn a lot, like how a basic AA-battery-operated smoke detector could save your house—and maybe your life earnings—but only if you install it before a fire occurs. If you are not reading it, you may be buying a very expensive binder with printed paper for which you paid thousands of dollars for many years, as a dear friend of mine loves to say. If you don’t know your responsibilities and what’s covered by your policy, not even a brilliant policyholder attorney will be able to save the case.
The building codes, American Association of Civil Engineers (ASCE) guidelines, and Facilities Management (FM) Standards evolve and change at such a pace that we forget what edition of the code to reference sometimes, especially when the date of occurrence is different than the date when the claim is introduced to the insurer.
Can we keep up with this? I genuinely believe we can. The gap is closing, starting with the law and statute of limitations guidelines, continuing to building code, design, enforcement and execution—at least in Florida. Does it happen everywhere? Definitely not.
It is all about the type of insurance (from homeowners’ insurance to contractors general liability, to the design professional’s errors and omissions coverage) and how much money people collect out of it. Some say it is a race for the green. Everyone believes that because we paid a certain number years into premium insurance that we deserve to get paid back on a loss. Consumers believe that that if they drag the claim to the legal system, the jury will hate the big insurance company—or that a good attorney will solve all their problems. Consumers had better think twice.
As the rat race continues, people on all sides of these issues are getting smarter—including insurance carriers, claims adjusters, policyholders and their representatives, and underwriters.