I recently deposed corporate representatives from American Family, Auto Owners, State Farm and Allstate Insurance Companies and received the following admissions from some of those corporate representatives:

  1. the independent adjuster (often catastrophe adjusters) failed to follow key aspects of the insurers’ own claims handling guidelines;
     
  2. the independent adjuster failed to properly document the claims file, including failure to enter log notes regarding investigation of the claim;
     
  3. refusal by the independent adjuster to consider additional evidence submitted by the homeowner regarding the property damage claim;
     
  4. there was zero oversight the by insurer’s claim file manager, including no supervision of the independent adjuster;
     
  5. the claims manager failed to have any meaningful participation in the claim and failed to ensure the claims file was properly documented.
     
  6. the independent adjuster made an on site coverage determination and informed the homeowner in-person of the denial of coverage– without prior review of the claim or any supervision by the insurer’s claims manager.

Despite all of the above, some of these insurers continue to hire the same independent adjusters over and over again. By pushing the investigation of claims onto independent adjusters who do not follow proper claims handling practices, insurers evade responsibility for proper claims handling.

This pattern and practice will be the subject of a Colorado Consumer Protection Act claim. For policyholders to prevail on a Colorado Consumer Protection Act claim, the insured must prove: (1) that the defendant engaged in an unfair or deceptive trade practice; (2) that the challenged practice occurred in the course of defendant’s business, vocation, or occupation; (3) that it significantly impacts the public as actual or potential consumers of the defendant’s goods, services, or property; (4) that the plaintiff suffered injury in fact to a legally protected interest; and (5) that the challenged practice caused the plaintiff’s injury.1 

If you have information about this practice, please contact Erin Kristofco at Merlin Law Group.

1 Rhino Linings USA, Inc. v. Rocky Mountain Rhino Lining, Inc., 62 P.3d 142, 146 (Colo. 2003). (For more information, see my post from March 20, 2012, Policyholders Are Entitled To Discover Insurance Company’s "Widespread Pattern Or Practice" In Order To Establish Claim Under Colorado Consumer Protection Act, about Colorado’s case law regarding discovery of an insurer’s pattern or practice).