Adjusters Say the Darnedest Things

I’ve often said that it’s inexcusable when a claim is denied for no other reason than “It’s not covered.” The insured is owed a reason for a claim denial, by contract or law. However, sometimes when I hear the reason, I think perhaps that it’s better I didn’t know because, to paraphrase Art Linkletter, “Adjusters sometimes say the darnedest things!”

Some years ago, I jointly developed a seminar with faculty member John Eubank called “How to Battle an Adjuster…and Win Every Time!” (Without boring you with the specifics, or elaborating on the death threats, we later renamed the seminar “How to Win Friends…and Influence Adjusters.”The seminar focuses on policy gray areas and, through dozens of case studies (actual claims and court cases), applies a methodology to convince the adjuster that the insured’s/agent’s interpretation for coverage is just as valid as the adjuster’s initial basis for claim denial.

However, sometimes a claim denial arises that defies logic and reason. So, now John is suggesting that we develop a seminar called “Adjusters Say the Darnedest Things” (being wary of more death threats, I’m currently balking on this challenge). To illustrate this premise, below is a claims case covered in our “Battling/Influencing” seminar. It also illustrates a claims resolution technique that often works when logic and reason fail. Here’s the claim:

The insured cement contractor was pouring a concrete driveway at a home in a new subdivision. As nightfall approached he inadvertently caused cement to be splattered on a nearby garage door, necessitating its replacement at a cost of $827.69. The owner of the home made a claim for his negligence. The insured received a letter from his CGL carrier’s Senior Claim Representative denying coverage, citing Exclusions 2.j.(5) and 2.j.(6). Upon receiving a response from the agent to this letter, the claim rep sent another letter citing Exclusions 2.j.(4) and 2.a.

Here’s the policy in effect at the time of this claim if you’d like to follow along with our arguments below (the PDF form will open in a new window):

1996 ISO CGL Policy

Here are the points we made to in an attempt to convince the adjuster to pay the claim:Exclusion 2.j.(5)—”That particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the “property damage” arises out of those operations….” [emphasis added]. The insured was not working on the door.

Exclusion 2.j.(6)—”That particular part of any property that must be restored, repaired or replaced because “your work” was incorrectly performed on it….” [emphasis added]. The insured was not working on the door, dadgummit!

Exclusion 2.j.(4)—”Personal property in the care, custody or control of the insured….” The door was neither personal property (ISO added this wording in 1986 and separated it from the “real property” exclusion), nor was it in the insured’s care, custody or control.

Exclusion 2.a.—”‘Bodily injury’ or ‘property damage’ expected or intended from the standpoint of the insured. This exclusion does not apply to ‘bodily injury’ resulting from the use of reasonable force to protect persons or property.” Yes, believe it or not, the adjuster actually cited the intentional loss exclusion as a basis for denying the claim!

The adjuster admitted that the insured probably didn’t do this on purpose, but he should have “expected” that the loss could happen! This is a brilliant interpretation…a company would never have to pay a negligence claim with this exclusion in the policy, and insureds’ premiums would plummet by at least two-thirds! Everybody wins! We argued that the insured foresaw that the door could fall on him, so it was an act of self-defense, triggering the exception. 🙂 We also cited the state’s bad faith settlement provision that is triggered when a claim is not paid even though “…liability has become reasonably clear.”Although we provided 39 pages of authoritative documentation to support coverage, the carrier still refused to pay this $827.69 claim. At that point, the agent turned our file over to the insurance department and their investigator telephoned the company on April 11. In a letter from the company dated April 12, their claims manager stated, “In the spirit of compromise we will send our insured a check in the amount of $827.69.”Yes, indeed, adjusters do sometimes say the darnedest things.

Related Article:If you’d like to read a personal lines case on this premise, CLICK HERE.