Florida Insurers Slashes Payouts Far Below Adjusters' Estimates

A Washington Post investigation has found that some policyholders had their claims, as provided by licensed insurance adjusters, cut by more than 80 percent. Full article appears at https://www.washingtonpost.com/climate-environment/2023/03/11/florida-insurance-claims-hurricane-ian/. Excerpts:

When insurance adjuster Jordan Lee entered the cream-colored house battered by Hurricane Ian, the smell from the rain-soaked carpet made it hard to breathe. Piles of pink insulation covered the worn, white couches, he recalled, and poured from the collapsed ceiling, left gaping from the storm’s 150 mph winds. He photographed debris flecked on the carpet and walls, chunks of roof in the yard, and broken screens and gutters around a pool filled with palm fronds.

The home, which belongs to retired couple Terry and Mary Sebastian, sits on a canal in Rotonda West, Fla., a coastal community that bore the brunt of Ian when the storm made landfall on Sept. 28. The entire place would need to be dehumidified, the roof completely replaced, the insulation torn out and the tattered pool enclosure rebuilt. It would be about $200,000 to repair the damage, the licensed adjuster calculated in his estimate for Heritage Property & Casualty Insurance Co.

But when Lee checked in on his report about 10 days later, his stomach dropped, he said. It had been drastically whittled down, with entire portions, such as the one detailing issues in the primary bedroom, removed. The amount of insulation that needed to be redone was cut by half, and his estimate now said one-third of the roof should be fixed, instead of it being fully replaced. The homeowners were slated to receive a total of $27,000. The changes were made without Lee’s knowledge or consent, he said, but his name was still on the final report, according to documents seen by The Washington Post.

After major disasters like Ian, insurance companies often bring on third-party firms like Tristar Claim Solutions, an independent adjusting company that Lee worked for as a contractor, to help with the hundreds of thousands of claims.
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[ ] Lee and other adjusters contracted by regional insurance carriers say that managers have been changing their work by lowering totals, rewriting descriptions of damage and deleting accompanying photos without their approval. These actions to devalue damage are the latest example of the insurance crisis in Florida.
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The Post’s examination included interviews with dozens of policyholder advocates, attorneys and Hurricane Ian survivors as well as five insurance adjusters, who oversaw more than 100 claims for Heritage and Florida Peninsula Insurance Co., another regional carrier. The Post also reviewed 13 original and modified claims, which included hundreds of pages of estimates, photos and general loss reports, as well as internal records, final payment letters, emails and carrier guidelines.

The documents show that a dozen policyholders and their families had their Hurricane Ian claims reduced by 45 to 97 percent.

In one claim reviewed by The Post, a nearly $500,000 damage estimate on a house with a mostly tarped roof was reduced to about $13,000. In another, the desk adjusters blamed roof storm damage on past wear and tear, meaning it would not be covered.
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Florida’s insurance market has been teetering toward collapse for years. After destructive storms in 2005, several big carriers including State Farm pulled back coverage in the state, and newer, more thinly financed, smaller companies swooped in and began to operate. Then came 2017, one of the costliest hurricane seasons ever. Hurricane Michael battered Florida the following year.

Adjusters said they started to see carriers greatly reduce damage estimates, fully deny roof replacements more often and force claims of a certain value into litigation. Payouts started to get delayed or not come at all, adjusters and attorneys said.

At the same time, rates kept rising, and fast. Florida homeowners paid an average of $4,231 for home insurance in 2022, nearly three times the price in any other state — and rates are expected to increase again this year. Ten property insurers that operated in Florida have gone insolvent since January 2021. About 125 property insurers remain in the state, but experts said many are either not taking on new business or are greatly limiting policies because of the volatile market.
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“I wrote 44 reports for Heritage Property & Casualty, and 100 percent of them were altered to where I did not recognize them. Every single one,” Lee said in an interview. “They manipulated our estimates without actually collaborating. I didn’t get a phone call from someone saying, ‘Hey, Jordan, can we go over this estimate?’ I didn’t get a text. I didn’t get an email. Nothing. I can get in trouble for that. It’s my name going on these reports, no one else’s.”
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As Lee walked through an essentially totaled home in Venice, Fla., in early October, water from the still-mushy carpet splashed onto his calves, he recalled. Like in the Sebastians’ house, insulation hung from the exposed ceiling. The drywall would need to be removed, rooms deeply sanitized and the entire roof replaced, as it “was blow[n] off,” he wrote in a loss report for Heritage obtained by The Post, “causing significant damage to the interior of the home.”

Repairing it would cost nearly $200,000, he estimated. But in the final report for the homeowners, Daniel and Amy Van Sickle, entire sections of his work such as “tear out and bag wet insulation” and “water damage dry out” were removed, and the final amount lowered to $24,619.

[The article also discusses a Florida Legislator's (non-?)response and Florida government agencies' (non-?)response.]

From Washington Post subscriber comments (4300+ so far):

"My homeowners insurance company went bankrupt last year, one of several. Protecting the profitability of the industry and it's executive comp was the sole result of the special legislative session on homeowners insurance. AND the lame-stream and main stream media didn't cover it. No homeowners insurance, no mortgages. No mortgages, no developers. No developers, no Florida.
Let's just sit back and watch the train wreck."
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"We left Florida last May because we are smart[. We watched] our homeowners insurance be cancelled three times in a year due to the bankruptcies of the small companies mentioned in the article led us to study the issue. The state was forced to let us use their bailout funds while we negotiated for coverage- each time our costs went up and up. ... [B]efore Ian hit Florida. We sold our home when the market was roaring to a young couple who nearly folded the offer because... you guessed it they couldn’t get homeowner’s coverage. They probably also failed to learn that the tile roof whose life expectancy has 3-5 more years will cost an estimated $45,000 to replace ( a pre-Ian estimate……)."
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"If you look at the letter to the Van Sickles, you can see that one of the "adjustments" to their claim amount is a subtraction of the deductible. Ok, but the deductible is over $21,000! Is that right? Are Floridians paying over $4,000 a year on average for homeowner's coverage with deductibles of over $20,000? Who in their right mind would buy a house in that state?"
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"My parents bought a small place a few miles inland [in Florida], worth about $200k, 900 sf, Every resident just got assessed $10k to pay for IAN damages including new roofs for every home, plus community damage. The roofs were about 10 years old, handfuls of shingles missing on some. The community damages were minor too. Each resident pays monthly condo fees, part of which is supposed to fund the condo association's master policy. The master policy covers the roofs, exteriors so why is the association assessing $3 million from residents?!"
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"I’m reading this article while visiting my parents in Fort Myers Beach, Florida. Many families here have owned houses and/or condos for decades. Most are modest, small homes that survived numerous past hurricanes. My parents’ neighbors are retired truck drivers, teachers and accountants. Seven months after the hurricane the island is still a federal disaster area with almost everything remaining closed and a nightly curfew in place. "

follow-up comment:
"Well said. My condo there still does not have power. Workers are sleeping in their cars and it is getting hot."
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"After 3 1/2 more yrs of this, there will not be a Florida. I have sold all but one home. I had rentals, for years. [political comments snipped]My home started at $1,800 3 years ago. Then within 3 years went to $9,200 and that was after I put a new $34,000 tile roof on. Now today I received a notice from the insurance co. that I need to have flood insurance. All who have Citizens have to have flood insurance by 2025, no matter where you live, flood zone or not."
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"Until today I didn't know the deductible for hurricane damage in FL was 10% the appraised value of your home.

So if your home is appraised at $350,000 your deductible for hurricane damage is $35,000. Yikes!"
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"My sister in Florida put in a claim for water damage to her floors. It was estimated to be $85,000. She received $10,300. She hired a public adjuster to help her to get the amount increased with a reassessment. The adjuster just informed us that for the first time in her 15 years experience the insurer denied her one. She found out through colleagues at the insurer that they are denying all reassessment requests insisting on just going to mediation. Our adjuster says that at mediation they will only offer an adjustment of $2000 or so! Now my sister must take legal action at great expense."
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"It isn't just not paying damage owed. There is something strange going on here in Florida. I know people who lost insurance because their perfectly running AC was 20 years old. A neighbor on Social Security lost her insurance when the company shutdown. Having a mortgage she is required to carry insurance. Her perfectly good roof was over 15 years old so she could not get any coverage until it was replaced. Even the contractor told her it was perfectly good but nothing he could do about it. I keep hearing stories like this."

Follow-up comments:
"Our Insurance Co dropped its Florida insurees and moved out of state. We tried to get new insurance and as a prior letter noted, complaints about the age of the roof, house siding, etc. followed. We could not get house insurance. Fortunately we had no mortgage, so we have no insurance."

"I’m a realtor in Florida. It’s all true."
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I think your first thoughts are held by many and are a natural response. I also think they represent the seeds of full-fledged denial, on a societal level.

Regarding blaming politicians: The WaPo article is full of political comments not unlike yours. However I do not think any political party could have altered the reality of changing weather patterns there. In the United States, goverment's raison d'etre is to promote economic development, and this means build and build more. I think there's no politics in this widely-accepted general principle. The problem is, the premise is flawed: When buildings get destroyed every few years, the costs are so great that building and building more simply destroys the economy.

One has to be wealthier and wealthier to live in Florida. But who is going to clean the houses and pick up the trash?

Blight is taking over parts of Florida and I figure is likely to spread.

You have a right to your opinion. I do not have any objection to your assigning much of the blame to one party here. In general terms on a national level, your opinion is not all that much different from mine. One party is more the "me" party than it is the "let's look to the greater good" party.

But for Florida, I tend to think that, fact: Repeat hurricanes are causing massive damage. Fact: Someone has to pay. Fact(?): Regardless of who has to pay, there does not seem to be enough money (from insurers, owners of homes, or the governments (state or federal)) to continually re-build in Florida.

You wrote of improving standards for building construction. I do see anecdotal reports here and there of Floridians who spent the extra money for xyz construction feature and how their housing is withstanding these storms much better. Maybe this will end up being a large part of the solution.

If I were Queen, I would favor converting the entire state to a massive collection of seasonal RV communities for at least a few years.

I agree. If insurers in Florida did not do what is described in the article, there might be no Florida insurers left.

I am not clear on whether the Florida insurance policies had the sort of wiggle room to legally allow what happened (and I guess continues to happen), with insurers refusing to pay claims in such-and-such amount. Either way, the insurers may have had no choice.

I call the situation chaotic but headed towards some steady state of the markets. Granted this may be years away.

I expect the federal government will offer more dollars to help people re-locate.

Someone's going to be paying big bills for taxes at some point to pay for all this. (I am trying not to be political. I want to be realistic.)

Thank you. A lot of the comments at the WaPo site pointed out that the fraud has been perpetrated by all sides here, and as you say, for many years.All I saw at the WaPo site about public adjusters was this one comment:

"My sister in Florida put in a claim for water damage to her floors. It was estimated to be $85,000. She received $10,300. She hired a public adjuster to help her to get the amount increased with a reassessment. The adjuster just informed us that for the first time in her 15 years experience the insurer denied her one. She found out through colleagues at the insurer that they are denying all reassessment requests insisting on just going to mediation. Our adjuster says that at mediation they will only offer an adjustment of $2000 or so! Now my sister must take legal action at great expense."

Can you elaborate a bit on what a "public adjuster" does? What purpose do they serve?

A public adjuster is a licensed "insurance expert" who you sign a contract with and hire to look at your damages and give you their opinion on what your claim should be. So if you have roof damage and your insurance company says your damage is only worth $20,000 and you don't think it's enough, then you can either hire an attorney and sue your insurance company (usually goes to mediation first) or you can hire a public adjuster. The public adjuster will come in, assess the damage and write a report to the insurance company. They get payed out of the claim. There is a normal limit of 10% of the claim but after a disaster they can only make 10% for a year.

Needless to say, they have an incentive to inflate your claim. It may or may not help. There are no guarantees with a public adjustor.