My Antenna Is Up

I was speaking to a client the other day when something hit me. She was telling me that since the insurer she had in 2005 had cancelled her; the “new and improved” insurer has inspected her home with each renewal. Several other people have expressed the same observation. It seems that insurance companies are inspecting houses on a regular basis here in South Florida.

Now my curiosity is piqued. I am inherently suspicious of insurance company motives. Rarely if ever, to they operate in an altruistic manner, so the question arises, why inspect the risk yearly?

Here is one possible explanation. Many times in the claims environment insurance companies will inspect a loss and assert a position that this damage or that damage is caused by wear and tear or long term water leakage or some other gradual cause of loss. In effect the insurance adjuster examines the damage and pronounces a pre-loss condition to a post-loss inspection. A counter argument to these pronouncements can be made: that the company is engaged in post loss underwriting in order to limit claims otherwise payable. Proving this argument may involve obtaining a copy of the underwriting file, prior claims files and the hiring of expensive experts to establish the condition of the property pre-loss. It certainly adds a level of complexity not contemplated by an insured who simply wants to get their house repaired.

The question that arises is this: Are pre-loss inspections an attempt by the insurance company to limit claim payments in the next hurricane or catastrophe? Consider this: by conducting pre-loss inspections and uncovering loose or missing tiles, an insurance company may try to assert that wind damage to a roof is wear and tear or demand that an insured affirmatively state which tiles were missing or loose before the storm. A failure to correctly answer might then result in a denial based upon insurance fraud.

Only time will tell.