by Jeffrey C. Pellet
featured in the August 2003 edition Claims Magazine, an insurance industry publication


Hurricanes Should Not Include Battering by Adjusters

The four hurricanes that devastated much of Florida last year were well covered by the news media, but the storm of controversy that followed has been largely ignored. Thousands of property owners, who learned months later that their insurance carriers had not adequately estimated their damages, are turning to professionals like me for support.

My role is to represent them in their quests to force their insurance companies to cover the real damages from these storms, not just the obvious ones. Judging by the way that my phone has been ringing, dissatisfaction with these carriers is widespread. There are many and varied reasons why insurance company appraisers provide property owners with “low” damage estimates. It happens all the time with average, everyday losses, but with an event as cataclysmic as a hurricane – or two or three or four – the sins of company appraisers seem to increase exponentially.

In their defense, I can say that appraisers who come to the state following catastrophes are presented with significant workloads. They try to handle them under difficult circumstances, working out of hotel rooms, and so on. They may view a number of sites in a typical day, shoot some digital photos, and take lots of notes. Then, they go back to their rooms and begin to cobble together appraisals based on superficial observations. Sadly, they often overlook more than they record. For example, did they consider that material and labor will, without question, be far higher than usual? It is called supply and demand.

If an appraiser is working with a software program that lists a 4x8 piece of water resistant drywall at $__, chances are that is way too low. Average homeowners working on small projects already know what experienced appraisers certainly should: construction prices are rising. Appraiser who rely on outdated databases almost certainly will underestimate any job after a disaster. What’s more, prices of labor fluctuate seasonally, and appraisers should anticipate this and plug in the real number, not the lowball one that even apprentice laborers would not charge.

Last year, months before the hurricanes, The St. Petersburg Times ran a story headlined “Costs Go Through The Roof,” with the subhead, “Contractors are scrambling to make up for the escalating prices of nearly everything: steel, iron, drywall, concrete.”
Common sense tells us that, if prices are rising in normal times, they are going to soar in “abnormal” times. After a hurricane, everyone needs the same building materials and the same installers. Gasoline prices have been rising steadily too, so everything costs more to bring into the state.

To be sure, some price gouging probably goes on after an event such as a hurricane. It is human nature to chase the quick buck, but do not be too ready to blame high prices on greed. Think instead about supply and demand and the increased workload of everyone in the construction and related businesses.

Gun for Hire

Annually, I do about 200 appraisals for plaintiffs. Many of them spring from situations such as this one: an adjuster tells a homeowner that only the ceilings got wet. Long experience with gravity should have told the adjuster, as it did the homeowner, that water flows downhill. In this case, downhill meant down the walls. The same adjuster told the homeowner that the insulation soaked up the water, but not to worry because it would dry out.

The homeowner was not only worried, he was, shall we say, irritated. He called me for help and so did more than 100 others in the first two months after the hurricane claims began to be settled. The best way for adjusters to avoid getting to know people like me better is to treat each claim as if it were their very own. Experienced adjusters simply should not be missing damages.

One of the central tenets of any business is to avoid unnecessary costs. Translated, this often means redoing work because it had not been done right the first time. As has been demonstrated in the aftermath of the Florida hurricanes, the failure of so many adjusters to properly scope damages on Day One led to repeated demands for appraisals.

With all the modern business aids that we have today — digital photography, laptops, cell phones, and estimating programs, to name a few — there is no excuse for not doing a good job for home and business owners in the first instance.

Dollars spent trying to do end runs around guys like me could be better spent satisfying claims. It is counterproductive for adjusters to create situations in which a wide gap exists between their estimates of damages and the actual damages. It is one thing to fine-tune claims to find appropriate dollar figures, but quite another to have situations in which many thousands of dollars are in dispute. Adjusters should ask themselves a simple question, “If this were your claim, would you be satisfied?”

Far too often, I see the need for a complete readjustment. Homes valued in the hundreds of thousands of dollars have only $10,000 in damages? I saw damage estimates for homes like these, some of them on a private island where barge charges alone can come to $8,000.

The hurricanes also led to a dispute between the Federal Emergency Management Agency and insurance companies. There were many cases in which debris left in streets was supposed to have been cleaned up by FEMA, but was not. After a reasonable period of time, the policyholder has a right to expect that the carrier is going to pay for this cleanup but, as you might expect, many balked at the thought.

Inappropriate adjustments have no place anywhere, especially in any disaster. Insurance companies that send in storm troopers after hurricanes are not doing themselves or their policyholders any favors by writing quick, lowball appraisals and then leaving the state.
My clients told me remarkably similar stories about their experiences with claim handlers after the hurricanes. They complained almost uniformly about how little time adjusters took to look for damages, listen to their concerns, and truly evaluate damages in an impartial way.

The examples go on and on, but here are just a couple. In many instances, water damages to kitchen cabinets meant that they needed to be replaced. Inevitably, replacement causes some damage to floor tiles or finished wood floors. Did adjusters typically include floor tile replacement or repair in their estimates? You can guess the answer.

Or, did adjusters who told their policyholders that wet insulation would dry tell them the whole story? Did they tell them that wet insulation also can produce mold? What about lights and ceiling fans that were exposed to water? Yes, they may work after drying out, but what about the rust that forms on exposed metal, rust that has a way of spreading?

My advice to adjusters is to bear in mind the Golden Rule and be thorough in estimating. The industry has enough image problems without adjusters’ coming into the state after disasters and demonstrating all too clearly that ethics do not have much of a role in this business.

Jeffrey C. Pellet is an independent adjuster with Professional Appraisal & Estimating in Fort Lauderdale, Fla. He can be reached at

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