Roof Damage To Be or Not To Be

I’ve been in the chat rooms today where the conversation remains active regarding State Farm Insurance being investigated in Texas. What has amazed me is the number of adjuster who adamantly state that roof shingles that have been lifted by wind but are otherwise physically fit are not considered to be wind damaged … in their humble opinion. As you might imagine, I adamantly disagree. The crux of their argument, if I understand it correctly is that because the shingles have no other blemishes or observable defects aside from being lifted by wind, that they are not considered as damaged.  

Of course if you are a homeowner, this means you’re not going to get paid.

I believe this type of analysis is flawed and here’s the reason why.  As I’ve stated on many occasions property insurance policies do not insure property: they insure people. They insure people against risk of direct physical loss, but nowhere in the policy does it define what is meant by direct physical loss. So in my not so humble opinion you (the insured) are entitled to the broadest possible interpretation of what constitutes direct physical loss. To restrict the investigation and subsequent observation to the shingles in these situations is myopic at best and wholly disingenuous. Roofs are a system. They are put together in a systematic fashion and each part of that system is dependent upon the other parts to ensure it fully functions as it is supposed to.  When one part of the system fails, as is the case of wind lifted shingles the entire system is impaired. That impairment is direct physical damage.

I used the analogy of a piece of tape being pulled up. When put back into place it never seems to have the strength of bond equivalent to the original bond. Shingles are no different.  The system is broken when the shingle are lifted and no amount of pressing them back into place will restore the system to its’ pre-loss condition. In my not so humble opinion.

Bill

One Thing In Common

Every one of us has one thing in common: we all leave our homes expecting to find them in the same or similar condition when we return….ok maybe if you have kids I might be mistaken. The point here is that no one expects to have a loss and fewer still are actually prepared for loss. Why am I raising this subject?

Well it seems like the world is going to hell in a hand basket. Every time I turn on the weather channel there is a new line of severe thunderstorms hitting some city in the mid-west, what is now Nadine in the Atlantic won’t go away, rivers seem to be overflowing at an ever increasing rate: maybe Dr. Hanson and Al Gore are onto something.

But let’s face it, disaster is going to happen. Maybe not to you but it is going to happen. And the chances are they are not going to be prepared. You should be, because you never know it could be your brother Bob that is hit and you’ll need to come to the rescue. So what’s the one action that you could take to begin to prepare for loss? Save some money. In a disaster cash is king: actually it’s king all the time but particularly in a disaster. Not I know you probably don’t have thousands or even hundreds of dollars you can squirrel away, neither do I. Most of us however can save $10 or $20 a month. Here’s how I do it. I signed up with a program with my back where every time I use my debit card they take $1 from my checking account and move it to my savings account. Believe me it adds up. More to the point, you don’t miss it. They also have the option of automatically transferring as little as $5 per month from your checking into your savings. It’s a great way to prepare financially. It’s not going to save the day if disaster strikes tomorrow, but disaster planning is after all taking steps that prepare you for disaster, even if those steps are baby steps. So start walking and enjoy the stroll.

 

Bill

More On Mortgages

I talked to my friend Steven and he talked to an attorney about what folks could do in Florida if they were behind on their mortgage and had an insurance claim. The answer: not much. If the mortgage documents allow the mortgage company to use insurance funds to either catch up on the past due payments or to apply those funds to the unpaid balance of the mortgage, then apparently the State of Florida will support whatever the mortgage company wants to do in that regard. Steven is up in arms and you should be too. 

This raises another question; can the mortgage company use these funds to pay down the principal if the loan is in good standing? I don’t know, but I would be interested in finding out.

In the meantime, Steven’s question deserves an answer: what’s the point of paying insurance if you’re behind on your payments and won’t be able to use the insurance money to affect repairs?

Stevens’s conversation with the attorney did raise an interesting point that you’ll want to keep in mind if you’re in this situation and may be an answer to the question. In a word: contents. The mortgage company does not have the right to insurance proceeds for contents or additional living expense and with one big proviso. The proviso is provided the insurance company does not commingle dwelling, contents and ALE funds into a single check. If they do the mortgage company will presume all the funds go to the dwelling. So if you have a claim and are in this situation, insist the insurance company break out these payments into separate checks. It will save you lots more heartache down the road.

Also, in case your thinking like I was, why not stop paying the homeowner's premium, let the bank put forced place coverage on your house and buy a contents policy on your personal property, that would do the trick and maybe save some moola. Right? Wrong. I spoke with a insurance agent friend of mine. It turns out that you can't buy a contents only policy to cover property in a house you own and occupy.

Bill

Website Building

I’ve been working on Benefit Bill™ or should I say the videos for Benefit Bill™ earnestly over the past week or so. I got so caught up in adding workbooks that video production fell behind. That’s what happens when you don’t have staff to help you out J Anyway, I am pleased with the progress, so if you haven’t visited www.BenefitBill.com in a while, please do and let me know what you think. I anticipate adding new topics in the near future and am going to continue catching up on the vids. Thanks for your patience everyone.

Bill

Mortgage Upside Down Prepare For Insurance Problems When You Make A Claim

I was talking to my friend Steven today. He was up in arms because a potential client of his had their house foreclosed and it knocked him out of a deal. Seems this person had an insurance claim and was paid by their insurer. The mortgagee’s name was included on the insurance check, which by the way is standard procedure. The homeowner then forwarded the check to their mortgage company for endorsement: more standard procedure. The homeowner was behind on their payments and when the mortgage company got the check, they cashed it, used the proceeds to pay down the overdue payments and then promptly foreclosed: unfortunately more standard procedure still.

 

Let this be a warning to everyone who is behind on their mortgage and is unfortunate enough to have an insurance claim. The chances are you will not get your mortgage company to release the insurance monies to you. They will instead use the funds to pay down the what you owe them leaving you with an impaired property. You may very well find yourself in a double bind because your insurance company can demand proof of repairs as a precondition to renewing your property insurance. OMG!

You might be asking yourself: “what’s the point in paying insurance if I can’t use the proceeds to repair my home?” Steven would be asking that question right along with you and it’s a good question, particularly in South Florida where premiums are sky high. What’s the unfortunate homeowner to do? I’m not an attorney, so my first bit of advice is to talk to one. Find out what your rights are.

Also, find out if you hire a contractor whether the bank is required to release funds to the contractor in lieu of applying funds to the balance of the mortgage.Or any other method of getting access to your money. And yes it is your money and your house...at least until the bank takes it over.

Let me know what you find out.

Bill

Roof Damage

ABC News reported on September 7, 2012 that State Farm Insurance was under investigation in Texas for the way it handled thousands of hurricane Ike claims. Apparently winds from Ike cause shingles to become unsealed. State Farm Insurance’ opinion in this matter was that an unsealed shingle does not constitute damage.  The opinion is not isolated to State Farm Insurance however. Other carriers take the same position. That position however is unfair to policyholders making claims for damages to their roof.

I stated in a workbook I prepared several weeks ago that because the insurance company does not define what it considers damage, that the policyholder is entitled to the broadest interpretation of that phrase. I also indicated that something is damaged when there is a change in the condition of the property between that time immediately before the event and anytime following the event.

So let’s look at the unsealed shingle position as not constituting damages. The insurance companies (and presumably their engineers) opine that roofing shingles unsealed by wind will re-seal themselves after a period of time. What they fail to mention is how well the re-sealing occurs. If I pull a piece of tape off a plastic package and re-stick it back on that package the tape will re-seal, but it’s not the same. Once the seal on the tape is broken, it never seals back to the same degree and I believe the same holds true for shingles. As a former company insurance adjuster I’ve been up on roofs where the wind has broken the seal, the shingles easily lift up. I’ve also been on roofs weeks after wind has come through an area and lifted shingles. I’ve found the shingles on these roofs to have re-sealed, but the seals were weak and easily re-broken. I’ve paid for those roofs: why? Because the roofs were damaged by wind, that’s why.

A policyholder pays good money for insurance and should not be faced with a re-interpretation of policy language after the loss. A policy whose language is broad should afford coverage….period. Otherwise the policyholder should be informed beforehand that the company arbitrarily denies coverage for covered damages. That way they can make an informed decision whether to buy that insurance or go to a company that pays for damage when damage occurs. Of course the insurance industry can’t tell them that: they’d sell no insurance if they did.

Bill

p.s. I don’t know how long the link will stay active but here it is if you want to read the article for yourself http://abcnews.go.com/US/state-farm-faces-criminal-investigation-hurricane-claims/story?id=17167218#.UEytMVFSTW5