As a result of the numerous tornados that have passed through Tennessee over the past decade, I have become acutely aware of the fact that insurance companies use the same engineering firms over and over again in their investigation of whether a claim constitutes a covered loss. The obvious problem with insurance companies’ repeated use of the same engineering firm is the fact that the engineering firm’s opinions are clearly going to be biased. After years and years of repeat business, the engineers rely on the income generated by the insurance claim inspections in order keep their lights on. If an engineer finds in favor of the policyholder too often, he or she could soon feel the pain of a drop in referrals, and a corresponding drop in cash in his or her pocket.
I believe that an insurance company’s reliance on biased expert opinions can constitute bad faith, especially when combined with other aggravating factors. If an insurance company is going to use the same engineer over and over again, it should certainly make sure the expert is qualified, that the engineer considers all possibilities, and that the expert utilizes accepted methodologies in determining the cause or scope of a loss. Unfortunately, many experts hired by insurance companies go into the investigation looking for a reason that the claim should be denied rather than giving an independent assessment. So for those policyholders out there who have recently been told by their adjuster that an engineer will be sent out to inspect the loss, you should consider hiring your own as well. Although it can be expensive, it sure beats a denial. You might even consider having your own expert present when the insurance company’s engineer is conducting his site visit to make sure all appropriate factors are considered.
For a discussion on this same topic with references to a recent case out of Texas, click here for a post by Chip Merlin on his blog, Property Insurance Coverage Law Blog.