the new york property damage claim lawyers | bad faith insurance claim lawyers in New York



Insurance Litigation Attorney


By Scott E. Agulnick, Esq.

            In my years of practice in the insurance field, I have been repeatedly faced with handling insurance claims where the problems started the moment the insured picked up the phone to notify the insurance carrier of a loss. In essence, the claim was doomed from the moment the insured first opened their mouth. Of course, it is logical that a homeowner would be in a state of panic and confusion which can set the stage for a denial.

            When an insurance claim is reported to an insurance company, the representative on the end of the line usually will assign a claim number and take information from the insured regarding the loss itself. Unfortunately, that initial information provided to the insurance company is often incorrect or speculative or oversimplified. This is where it is crucial to think before you speak.  Once that initial information is entered into the system, that determines the track the claim will follow and most importantly, it forms the insurance carrier’s theory of the loss.

            Let’s start with an example. A homeowner walks down to his finished basement on a typical May afternoon. To his surprise, as he gets to the bottom of the stairs he can see his belongings floating in what appears to be about eight inches of water. In a panic, the homeowner runs upstairs and tells his wife that the basement is flooded. Within minutes of retrieving his insurance carrier’s number, he calls and tells them that “it looks like water came through the walls because the basement is flooded!” The insurance representative tells the insured not to worry, and that they have opened up a claim.

            The next call, after reporting the claim, is to a local handyman and friend of the family. The handyman treks through the water and discovers that a valve in the boiler was stuck open, and that was what actually caused the water to flood the basement. Once the valve was jimmied loose, it closed again and the water stopped. The problem here is that the claim had already been opened and the cause of the loss was noted as “water through the foundation” because of the first call, and not noted accurately as one caused by water escaping from a plumbing system.

            After the water is removed from the basement, the insurance carrier sends an “expert” to the location who confirms that there was a lot of rain in the month of May and that the water came through the foundation into the basement. All of the rain must have caused the water table to rise and caused the flood. For the insurance company, it is the perfect scenario. The insured reported that water was coming through the walls, the carrier’s expert will of course corroborate that, and the end result is a denied claim. Most people simply do not have flood coverage which would cover water coming through the foundation. In contrast, water escaping from a plumbing system is typically covered.

            Once the insured gets notice of the denied claim, the insured speaks up and says that it wasn’t caused by water through the foundation, but from the faulty boiler valve. At this stage though, such cries fall upon deaf ears because there is nothing which makes an insurance carrier more suspicious than an insured changing their story about the cause of loss. Poof! Now there is no insurance coverage for the loss and you have to litigate.

            Had the initial reporting been accurate, the claim would have gone in an entirely different direction. There are dozens of similar examples but the lesson is clear with all of them. Take some time to determine precisely what the cause of the loss is before you report it. Be calm and relax; and if you are not sure, then speak to a professional such as an attorney or a public adjuster before reporting the claim. You should know what you are covered for before you make that phone call. And yes, your parents were correct… First impressions can make all the difference! 


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