Real Stories from the Claims Trenches

For decades, experienced adjusters who understood construction had the confidence to write for concrete, framing, and other major structural repairs without waiting for an engineer's report. Advance payments were routine -- a seasoned adjuster could assess $200,000 of damage, request a $100,000 advance, and the policyholder would receive the check within days. That era has largely ended. Modern carriers have embraced any procedural hurdle that delays or blocks a payment.

The current model relies on desk adjusters who have never built anything, hold no contractor's license, lack proficiency in Xactimate, and have little experience writing proper estimates. These desk adjusters instruct field adjusters not to write what they observe, substituting internal guidelines for professional judgment. Field adjusters who comply become overly deferential to file examiners who may know almost nothing about construction.

Some catastrophe adjusters have internalized the low numbers to such a degree that they genuinely believe a $200,000 loss is worth $50,000. They have no awareness that contractors, attorneys, and Public Adjusters routinely obtain $150,000 supplements on those same claims afterward. The adjusters who fall into this pattern undercut their own income -- when the claim later increases by $100,000 or $200,000, the original catastrophe adjuster receives no additional commission on the supplement.

A common tactic in the preferred vendor system works as follows. The homeowner's own contractor estimates repairs at $70,000. The carrier's preferred vendor writes an estimate for $50,000, sometimes with open items or a disclaimer about potential "hidden damage." The homeowner, often encouraged by the adjuster, hires the cheaper preferred vendor. The adjuster may even refuse to include certain items -- such as a granite countertop -- while privately signaling to the preferred vendor that a supplement will be approved if the item breaks during repairs. The contractor fully expects to break it, and once it breaks, the supplement gets submitted.

The preferred vendor begins the job and then issues supplements for items that were either overlooked or deliberately omitted. The final cost frequently exceeds the homeowner's original contractor estimate -- in many cases reaching $82,000 or more. The adjuster approves the supplements from the preferred vendor without objection.

This pattern has been observed across multiple roles in the industry -- by independent adjusters, Public Adjusters, appraisers, and restoration contractors. Adjusters are consistently more willing to approve supplements from a preferred vendor they have an ongoing relationship with than to approve a legitimate estimate from the policyholder's chosen contractor in the first place.

Experienced restoration contractors have reported that preferred vendors will privately admit they could not profitably complete the job for the amount they originally estimated, and that their business model depends on getting supplements approved after work begins.

During Hurricane Katrina, one major national carrier put significant pressure on engineering firms to ensure claims were denied. Engineering reports were altered over the signatures of the engineers who wrote them -- a practice exposed by two whistleblowers whose qui tam lawsuit resulted in a jury verdict against the carrier, upheld unanimously by the U.S. Supreme Court in 2016, and ultimately a $100 million settlement with the federal government.

One elderly couple had insured two houses, several vehicles, and a business with the same carrier for more than 30 years. They experienced a sudden burst pipe in their dining area. The plumber determined it was a sudden leak, which was consistent with the physical evidence: there was no staining, mold, or discoloration -- nothing to suggest the pipe had been leaking for an extended period.

The adjuster reported that the plumber had told him it was a long-term leak. That account was not consistent with the other information in the file -- the plumber, an experienced professional, stated he had never spoken with the adjuster. The adjuster also stated it was "reasonable to assume" the leak was long-term. That reasoning was baseless -- the carrier bears the burden of proof when invoking an exclusion. A claim cannot be excluded based on an unsupported assumption, particularly one contradicted by all available evidence.

The couple's claim was denied despite decades of loyalty and an unblemished claims history. This type of denial is not an outlier. It represents an ordinary example of how carriers handle water loss claims when the adjuster decides to characterize a sudden event as long-term seepage.

A commercial electrical damage claim in California was estimated at approximately $100,000 for repairs. The carrier sent a local California-licensed commercial electrician to inspect the property, and that electrician privately confirmed in writing that the repair cost was indeed $100,000. However, an out-of-state company -- neither a licensed contractor nor a licensed adjuster -- took the electrician's photos and wrote an estimate for $30,000.

The company that produced the low estimate was unqualified in two distinct ways. First, it was not a licensed electrician and therefore could not legally perform the work it was estimating, particularly commercial electrical repairs. A bid from an entity that cannot legally execute the work carries no credibility. Second, the company lacked the technical experience and knowledge to produce a reliable estimate for that type of repair.

The carrier knew or should have known that relying on estimates from unlicensed, unqualified parties was improper. When a policyholder or their representative encounters this situation, they should formally object to the use of unlicensed estimators. A carrier cannot credibly characterize the resulting gap as a "genuine dispute" when its own number comes from a source that lacks the legal authority and professional qualifications to produce a reliable estimate.

An adjuster responded to a claim where a pickup truck spontaneously combusted in an automotive repair shop, destroying the entire facility. The shop owner had immigrated to the United States with almost nothing and had spent years building the business to the point where it serviced local police and city vehicles. The shop had eight or nine bays and at least $200,000 in smog equipment alone, with total equipment value estimated at $700,000 to $800,000.

The shop owner carried only $40,000 in business personal property coverage -- a limit that had been set 15 to 20 years earlier and never updated. His insurance agent was a friend from his school years. In two decades, the agent had never contacted the shop owner to review coverages.

A single phone call every few years would have benefited both parties. The shop owner would have had adequate coverage. The agent would have earned additional premium income. Agents who neglect coverage reviews for years at a time leave their clients exposed to catastrophic underinsurance -- and this case illustrated the consequences. The shop owner lost the work of a lifetime, and the insurance payout covered a fraction of the loss.

A video editor in Hollywood, California, reached out to an experienced claims professional for help. She had partnered with a former desk adjuster who wanted to transition to field adjusting on a Florida hurricane. Their arrangement was simple: he would perform inspections and she would write the estimates. Despite extensive coaching, the experienced adjuster could not help her produce even one usable estimate from her partner's documentation. The partner's hand-drawn floor plans were missing most measurements, and his roof photos were taken from roughly one foot above the gutter at the top of a ladder -- he had never actually climbed onto the roof. The partner was eventually terminated. He had been assigned ten claims and could not close a single one.

A well-known catastrophe adjuster and industry mentor -- widely respected for training generations of adjusters before his passing -- shared a related account. A husband-and-wife team with approximately 30 years of catastrophe adjusting experience had been handling mobile home claims with exceptional speed and quality. They traveled in an RV and were ready to deploy at a moment's notice. When a major hurricane struck the Florida Panhandle, the carrier told them to stand down. That same hurricane was the one where the inexperienced video editor's partner was receiving claim assignments.

The carriers had made a deliberate decision to hire the least experienced, lowest-cost adjusters and assign them small batches of claims while turning away seasoned professionals. This was a calculated cost-saving strategy. New adjusters were paid less. Their inspections satisfied regulatory requirements without producing accurate estimates. The resulting low dollar amounts reduced both claim payments and adjuster commissions. The carriers could then have low-salaried desk adjusters in other states correct the files months or even years later, earning interest on the withheld funds in the interim. This has become a standard business model for a significant number of carriers.

Experienced claims professionals employ strategic tactics that mirror principles from a classic military treatise written 2,500 years ago -- a book that has appeared on the United States Marine Corps reading list and that many attorneys study. The parallels to claims negotiation are striking.

Calling a different adjuster at the carrier to inquire about the one assigned to a claim. Submitting material identification requests without disclosing the carrier or claim number. Delegating a task to someone better suited for it. Studying the building code, policy language, or insurance regulations thoroughly -- then staying silent during discussions, waiting for the adjuster to make a documented mistake that can be leveraged later. Wanting to demand appraisal but holding off until the timing is more favorable. All of these are strategic decisions that experienced adjusters and Public Adjusters make routinely.

In one case, a Public Adjuster convinced the carrier to investigate electrical problems in a water loss. The carrier's own expert inadvertently started a fire during the investigation -- and the carrier did not yet know the Public Adjuster was even involved in the claim. In another instance, a Public Adjuster received a $90,000 check covering building permits and architectural fees. The check arrived because the Public Adjuster had deliberately not asked for it and had ignored the adjuster for weeks. The expected recovery had been significantly less.

A property suffered a water leak. The carrier paid a small initial amount, but it was inadequate. After the policyholder retained a Public Adjuster, a detailed and accurate professional estimate was submitted. The carrier declined to pay it and offered no legitimate basis for its refusal. Instead, the carrier sent its own general contractor, who produced an estimate lower than the Public Adjuster's but significantly higher than the carrier's original figure.

The carrier then sat on its own contractor's estimate for months without paying or denying it, in violation of California statutes that impose specific timelines for claim decisions. More than three adjusters were assigned to the file during this period -- triggering another statute requiring the carrier to provide a special status report upon the insured's request. Multiple statutory violations accumulated throughout the process.

When the carrier finally agreed to pay its own contractor's estimate, it applied 25% depreciation across the board. This blanket approach violated additional statutes and case law. In California, labor cannot be depreciated. Materials that do not normally wear out during the life of the structure cannot be depreciated. And depreciation must be based on the actual condition of the property at the time of the loss, not simply its age. Applying a flat percentage to every line item disregards all of these requirements.

California law imposes several restrictions on how carriers may apply depreciation -- restrictions that are routinely ignored. Labor cannot be depreciated. Materials that do not normally wear out during the life of the structure cannot be depreciated. Depreciation must be reasonable and applied on an item-by-item basis, not as a blanket percentage across the entire estimate.

One of the lesser-known Fair Claims Settlement Practices regulations prohibits applying depreciation to undamaged areas that are being replaced solely to achieve a uniform, reasonable appearance. In practice, this means a carrier may depreciate the damaged slope of a roof but may not depreciate the undamaged slope that must also be replaced to achieve a visual match.

For personal property, established case law holds that depreciation must be based on the actual condition of the item at the time of loss, not simply its age. Although the leading case addressed personal property specifically, the same reasoning applies logically to building materials -- a position that reflects the general consensus among experienced professionals on both sides of the claims process.

One of the most common depreciation abuses involves carriers applying blanket depreciation -- the same percentage to every single line item regardless of what it is. A 25% reduction across the entire estimate is typical.

In California, this approach violates established rules. Labor cannot be depreciated. Copper pipe that was in fine condition before the loss cannot be depreciated. A subfloor with decades of useful life remaining cannot be depreciated. Depreciation must be applied item by item, based on the actual condition of each component at the time of loss -- not as a flat percentage applied uniformly because it is easier for the desk adjuster.

When Public Adjusters challenge blanket depreciation, the assigned adjuster often admits to being inexperienced and unfamiliar with the applicable rules. But the carrier itself is not unfamiliar with those rules. Blanket depreciation consistently operates in one direction: it reduces the payment to the policyholder. The practice persists because it is efficient for the carrier and because most policyholders do not know enough to object.

A California regulation effectively requires carriers to pay for overhead and profit, though it does not use those exact words. The same regulation requires payment for matching materials -- grass cloth wallpaper if the property had grass cloth wallpaper -- and for necessary job-related costs such as temporary facilities for workers. The regulation does not itemize every possible expense. Instead, it establishes a broad principle.

The regulation reads: "When a loss requires repair or replacement of an item or part, any consequential physical damage incurred in making the repair or replacement not otherwise excluded by the policy shall be included in the loss. The insured shall not have to pay for depreciation nor any other cost except for the applicable deductible."

The operative phrase is "shall not have to pay...any other cost." Overhead and profit is a necessary and reasonable cost incorporated into any general contractor's total price, whether or not it appears as a separate line item. The policyholder should not have to absorb that cost out of pocket. The carrier generally owes the overhead and profit a general contractor would charge whenever a general contractor would be reasonably necessary for the scope of work. That determination is based on the nature and complexity of the project -- not on who actually performs the repairs. A homeowner who intends to do the work personally does not forfeit the right to overhead and profit if a general contractor would otherwise be reasonably necessary.

Improper scoping of damage is pervasive in the industry. Many adjusters lack construction backgrounds, and the gap in practical knowledge has widened significantly over the past two decades. Most modern adjusters have no experience with material identification, construction methods, or repair project management. When carriers send engineers to inspect properties, the purpose is often to create a pretext for reducing or denying the claim rather than to obtain a genuine expert opinion.

In one case, a carrier hired an engineering firm to inspect property damage. A junior employee of the firm -- not a licensed engineer -- wrote an Xactimate repair estimate as though he were a contractor. This individual determined that paint could be "blended in" on a long, flat wall with no corners, concluding that the wall did not need to be painted from corner to corner.

In more than 20 years of claims experience, no adjuster or Public Adjuster involved in the case had ever encountered a carrier that refused to paint an entire wall corner to corner. Some carriers attempt to limit painting to one wall instead of the full room, or to apply two coats on one wall and one coat on the others. But painting only a portion of a single flat wall was unprecedented.

The determination was entirely outside the engineer's area of expertise. Whether a wall requires full repainting is a cosmetic question -- properly within the skill set of an architect, painting contractor, or restoration professional. An engineer has no particular qualification to determine the cost and methods of cosmetic construction labor, and this individual was not even licensed as an engineer.

The claim ultimately went to appraisal. The carrier's own chosen appraiser agreed that the entire wall needed to be painted.

When a carrier sends a contractor to provide a comparative estimate, there are often red flags that indicate the process is not objective.

One common red flag occurs when the contractor tells the homeowner the estimate must be written low to satisfy the carrier, but promises to supplement it later -- provided the homeowner hires them first. Experienced Public Adjusters report encountering this scenario repeatedly, and it consistently signals that the estimate is being tailored to the carrier's interests rather than the actual scope of damage.

Another red flag arises when a contractor who normally writes estimates in Xactimate suddenly switches to Symbility at the carrier's request. This change in estimating platform is a significant warning sign, as the resulting estimate tends to come in roughly 30% lower than the amount ultimately determined months later in appraisal.

A third red flag involves the estimate itself appearing on the adjuster's letterhead rather than the contractor's. In many states, particularly California, a contractor is required by law to include their name and license number on any estimate they prepare. An estimate that omits this information may violate licensing regulations.

Perhaps the most troubling red flag occurs when the carrier's adjuster withholds critical information from their own vendors. In wildfire smoke damage claims, for example, a carrier's hygienist may be instructed to test only for lead and asbestos -- even when the policyholder has already obtained a report from a qualified hygienist identifying contaminants such as arsenic and mercury. When a Public Adjuster informs the vendor of what was actually found at the property, the vendor frequently backs off, recognizing they lack the qualifications or licensing to handle the contamination properly.

A pattern that has become increasingly common involves carriers claiming they overpaid one portion of a claim and then using that as justification to withhold payment on another portion, often additional living expenses (ALE).

In one such case, now in litigation, the carrier sent a contractor to reinspect the property. During the visit, the contractor told the homeowner directly that he intended to write the estimate low and would increase it by $30,000 through supplements -- but only if the homeowner hired him. The third adjuster assigned to the claim then informed the Public Adjuster that the contractor's low figure was the settlement number, and because it was less than what had already been paid, the carrier intended to withhold $8,000 in temporary housing benefits.

The Public Adjuster called the adjuster and relayed what the contractor had said during his visit. The adjuster refused to accept the account. However, the potential for bad faith arose not from the adjuster's initial skepticism, but from his complete failure to investigate the allegation. Skepticism is understandable; refusing to look into a credible report of contractor misconduct is a different matter entirely.

The same claim had earlier problems. The first field adjuster sent to inspect had instructed the water mitigation company not to remove drywall that was already marked for removal. A later field adjuster who came for a reinspection acknowledged to the PA that the original inspector had a reputation for overstepping and had already been terminated by the time the replacement arrived. When the Public Adjuster reported this to the desk adjuster, the desk adjuster again refused to believe it.

On one wildfire claim, the carrier paid approximately $250,000 for personal property and then notified the policyholder it intended to claw back $8,000 from her housing allowance, claiming it had overpaid on contents. This tactic -- offsetting one coverage category against another -- has become more frequent in recent years.

With AI-assisted contents inventories, the claim value can rise well above an initial settlement. AI tools identify and price items at a level of granularity that manual inventory cannot match. A travel toiletries bag caught on camera may yield a nail clipper, tweezers, and other small items the AI recognizes, identifies, and prices individually. Items like a half-used packet of paper clips, taken in aggregate across hundreds of line items, add up to significantly more than most policyholders expect -- and the resulting inventory is accurate and difficult for a carrier to dispute.

An interesting valuation question arises with partially consumed products. If a policyholder had half a pack of cotton swabs, the carrier arguably owes for a full pack, since half-packs cannot be purchased at retail. This principle applies across hundreds of common household consumables.

A stronger argument involves large quantities of lightly contaminated items. When 500 relatively inexpensive contents items have light smoke contamination that could theoretically be cleaned, the economics of cleaning often make replacement the only practical option. Packing, inventorying, transporting, loading, storing for months, returning, re-inventorying, and disposing of packing materials for 500 low-value items costs far more than simply replacing them.

Preferred vendor programs are a standard feature of the insurance industry, and some preferred vendors do excellent work. However, it is not uncommon for carrier-referred contractors to deliver substandard quality or skip items on the approved scope of work.

A related problem involves the timing and routing of payments. On a $230,000 repair job where the carrier has agreed to an initial $212,000, the check often includes the contractor's name as co-payee. In many cases, the homeowner turns over the entire check to the contractor before work has even begun. In worse scenarios, the adjuster mails the payment directly to the contractor, who may negotiate it without the homeowner's endorsement.

The fundamental conflict of interest is straightforward: many preferred vendors view the carrier as their primary customer, because the carrier is the source of their referral stream. The homeowner, who is the actual party with a contractual right to proper repairs, can end up treated as a secondary concern.

Public Adjusters are frequently retained to perform detailed post-completion inspections, documenting every item on the approved estimate that the contractor failed to execute. When homeowners bring these deficiencies to the carrier's attention, the carrier's typical response is to disclaim responsibility. Some carriers go so far as to deny having recommended the contractor in the first place, despite the referral originating from the carrier's own preferred vendor list.

In California, a contractor can face discipline from the Contractors State License Board for abandonment of a job. Contractors can protect themselves from false accusations of abandonment by responding in writing to any verbal termination of a contract.

When a preferred vendor abandons a repair project, mold growth often follows. The carrier may refuse to pay for the resulting mold damage, arguing that the policyholder failed to mitigate, or that the mold costs exceed a $10,000 mold sub-limit. In such cases, the contractor who abandoned the job and thereby caused the mold growth could be independently liable to the policyholder for costs that the insurance policy does not cover. If the policyholder develops health problems from breathing mold, those injuries would not be covered by the property insurance policy, but could become a liability of the contractor -- and potentially an extra-contractual liability of the carrier if negligent recommendation can be demonstrated.

Bad faith attorneys sometimes attempt to draw the carrier into liability by showing it has a pattern and practice of using preferred vendors who take shortcuts. However, it is difficult to hold a carrier liable merely for recommending a contractor unless the recommendation was itself negligent -- meaning the carrier knew or should have known the contractor was unlicensed or unqualified.

The strongest cases arise when there is direct evidence of carrier interference: an email from the adjuster instructing the mitigation company to stop drying after three days because "it should be dry already," or a communication where the mitigation contractor requests permission to pull cabinets to dry behind them and the adjuster refuses.

A common refrain in insurance discussions is that policyholders simply need to "read the policy." While understanding one's policy is certainly important, this advice reflects an incomplete grasp of how coverage disputes actually work. The policy alone does not explain what the case law says, nor does it reveal the claims culture of a particular carrier. Both of those factors are at least as important as the policy language itself.

Consider the example of an unattended death from natural causes. Some carriers interpret such a loss as not constituting an "accident" and deny coverage on the theory that it was not a sudden accidental physical loss. But this is not spelled out in the policy -- it is an interpretation. Whether that interpretation is correct depends on state case law, not on what the policyholder reads in the declarations page.

No insurance policy states that it will pay for the cleanup of body fluids from a person who died of natural causes. The policy language is simply not written at that level of specificity, which is precisely why telling someone to "read the policy" is insufficient guidance.

Another example involves suicide claims on named-peril policies, such as state FAIR plans. Under a strict named-peril reading, most such claims would be denied. However, if the death involved a firearm using gunpowder, the loss could potentially fall under the Peril of Explosion. One claims professional who handled FAIR Plan claims for approximately nine years reported that such losses were routinely covered under the explosion peril during that period. In later years, however, the carrier's defense counsel began advocating for denials based on the intentional-act exclusion. Case law may counter that theory, but the point remains: the policy language alone does not resolve the question.

Certain carriers are known for aggressively denying water leak claims regardless of the evidence. With slab leaks in particular, one major national carrier has been known to insist that homeowners jackhammer their slab even when the plumber has already rerouted around the leak. In a typical scenario, a homeowner with a slab leak in the bathroom follows the plumber's recommendation to reroute through the wall and ceiling rather than destroy the floor. The carrier then demands the policyholder jackhammer the undamaged concrete slab so the carrier can examine the actual leak -- despite no policy requirement to do so and no reasonable basis for asking a policyholder to destroy their own property to help the carrier gather evidence for a potential denial.

The carrier's objective is to find a pretext to attribute the leak to lack of maintenance or wear and tear. It is common for this carrier to characterize every leak as long-term seepage, even when there is no evidence of rot, odor, or discoloration, and even when the physical evidence clearly indicates a sudden burst.

In at least two documented instances, adjusters for this carrier reported having spoken with the plumber and stated that the plumber confirmed long-term seepage. Those accounts did not appear consistent with the other information in the file. When the Public Adjuster followed up with both plumbers -- experienced professionals -- each stated they had never spoken to the adjuster at all.

Another tactic involves characterizing pipes beneath the slab as "underground pipes" to trigger an exclusion. In reality, sub-slab pipes typically run through fill dirt well above grade, sometimes a foot or more above the natural ground level. The fill material is a structural element -- often imported, compacted, and shown on the building plans. When reasonable professionals disagree about whether a pipe at that elevation is truly "underground," the ambiguity should be resolved in favor of the policyholder under the contra proferentem rule.

In one case, a carrier claimed the pipe was below the slab. The Public Adjuster proved through ground-penetrating radar that the pipe was embedded within the slab itself. The carrier refused to accept the evidence and hired its own company to perform a second radar test. In other cases involving post-tension slabs, where jackhammering is considered dangerous, the carrier has nevertheless demanded the policyholder destroy their undamaged slab to facilitate the carrier's evidence-gathering.

In the slab leak case described previously, the 30-year customer had a burst pipe in the dining area. The plumber wrote a report confirming a sudden burst. The saturation pattern was consistent with a sudden event. There was no discoloration, mold, rot, or odor -- nothing to indicate long-term seepage.

Despite the absence of any supporting evidence, the adjuster stated that it was "reasonable to assume" the leak was long-term. This reasoning reflects a fundamental misunderstanding of how exclusions work. A carrier cannot deny a claim based on an assumption that an exclusion applies. When invoking an exclusion, the burden of proof rests with the carrier. The carrier must affirmatively demonstrate that the exclusion is applicable -- not merely assert that its applicability is "reasonable."

This type of denial, grounded in assumption rather than evidence, illustrates why certain carriers are considered among the most difficult to deal with on water damage claims, particularly slab leaks.

Many homeowners policies exclude damage to "the earth." If a vehicle drove across a dirt lot and left tire grooves, that damage typically would not be covered. But subsidence or earth movement is not the same type of loss as soil in a crawl space that has become contaminated by a covered event such as a sewage backup or water leak.

Carriers frequently resist paying for the removal of contaminated crawl space soil, arguing that dirt is not covered property. However, there are strong counter-arguments even if one accepts that soil in the abstract is excluded.

First, there is a practical necessity argument. Workers cannot safely enter a contaminated crawl space to dry the underside of the subfloor -- which is indisputably covered property. Removing the contaminated soil is a reasonable and necessary step to access and repair covered building components.

Second, crawl space soil often functions as a structural element. Concrete piers and cripple posts bear on that soil, supporting girders that in turn support the floor joists. The soil may have been imported from another location, compacted to engineering specifications, drawn on the building plans, and approved by a structural engineer or architect. In that context, the soil is arguably a building component and therefore part of the covered structure.

This line of reasoning raises a broader theoretical question that arises frequently in wildfire smoke claims: if contaminants are present in the air inside a home but have not yet penetrated into building materials, does the carrier owe for remediation? Carriers often argue that smoke entered the structure but caused no actual damage -- a position that policyholders and their representatives increasingly challenge.

A major national insurer was sued for reporting allegedly false information to the CLUE database -- the Comprehensive Loss Underwriting Exchange operated by LexisNexis.

Eight plaintiffs alleged the carrier submitted false and confidential information about their claims to the database after tornadoes swept through the state in 2013. In one instance, a couple was paid approximately $7,000 on their tornado claim, but the carrier reported to CLUE that it had paid nearly $3 million. Another couple received about $35,000, yet the carrier again reported payments exceeding $3 million. The same pattern occurred in six other cases.

According to the lawsuit, the carrier included litigation expenses, lawsuit settlements, and various other claim-related costs in the information submitted to CLUE. The plaintiffs alleged the false reporting defamed them and made it difficult -- perhaps impossible -- to obtain new homeowners insurance.

The plaintiffs' attorney described CLUE as a system most policyholders have never heard of, calling it a mechanism through which carriers share claims information with competitors to assess the risk level of potential insurance applicants. He argued that the carrier's pattern of submitting inflated figures was designed to justify rate increase requests. To obtain regulatory approval for rate increases, insurers must show justification based primarily on claim payments. By inflating reported payments with legal costs and settlement expenses, a carrier can artificially support a rate increase that is neither warranted nor based on actual claim payouts.

The attorney noted that the carrier had sought and received earthquake premium increases of 150% in less than two years while denying the vast majority of earthquake claims during that same period. When a subsequent rate increase was denied, the carrier withdrew earthquake coverage from the state entirely.

As the attorney summarized: rate increases should be based on need, not greed.

A carrier's decision to non-renew a policy can compound the harm of an already underpaid claim, potentially giving rise to additional extra-contractual and bad faith damages.

Consider a scenario where the carrier has known for months that its own expert assessed damages at $400,000 to an elderly policyholder's home. The policyholder is on a fixed income. The carrier has refused to pay its own expert's estimate and may have concealed that estimate from the insured entirely.

The carrier then non-renews the policy while the roof remains unrepaired. No other insurer will write a policy on a home with an open claim and an unrepaired roof, forcing the policyholder into a forced-placement policy at triple the normal premium.

In this scenario, the policyholder could potentially add the increased insurance costs and other consequential damages to an extra-contractual bad faith claim on top of the unpaid repair amount. A carrier may have the contractual right to non-renew, but exercising that right in the context of its own prolonged underpayment can create additional damages for which it may ultimately be held liable.

When a carrier's Special Investigations Unit (SIU) requests a recorded interview, experienced Public Adjusters generally advise cooperation. The alternative -- an examination under oath -- is typically worse for the policyholder. If a policyholder refuses to cooperate with an SIU investigation, the carrier's next step is usually to demand a formal examination under oath, which must be complied with or the claim may be denied. Examinations take longer to schedule, push the timeline further out, and normally require an attorney at a cost of roughly $2,500 or more in the Los Angeles area.

In cases where the SIU referral appears retaliatory or targets alleged wrongdoing by a third party rather than the policyholder, the Public Adjuster can sit in on the interview and ask whether it is acceptable to clarify or contribute information. In practice, SIU investigators rarely object. This creates an opportunity: while the SIU investigator is on record investigating alleged wrongdoing, the PA can direct attention to the carrier's own adjuster's failures -- an unpaid estimate that has not been reviewed, regulatory violations, or unreasonable delays. These issues are raised on the record, with the recorder running.

Many of these interviews are surprisingly cordial. SIU investigators frequently recognize that the referral lacks merit and may question why they were given the assignment. They understand that adjusters sometimes use SIU referrals for retaliatory purposes or simply to move a difficult file off their desk.

In one claim now in litigation involving more than $1 million, the Public Adjuster obtained a recording -- with the investigator's permission -- in which the SIU investigator stated directly that there was nothing suspicious about the claim. Despite that admission, the carrier's stated reason for withholding the undisputed amount for over a year was a "vague concern" it never substantiated.

One of the more troubling patterns in the insurance industry is the assumption by many adjusters that every policyholder is lying. In one deposition, a plaintiff's attorney questioned an SIU investigator with roughly 30 years of experience conducting examinations. The investigator testified that every single person he had ever examined was guilty. Thirty years. Not one innocent policyholder.

Consider a claim involving a couple whose vehicle — worth approximately $4,000 — was stolen. The carrier paid a modest amount for stolen personal property under the homeowners policy but then retained a questionable expert who opined that the car had been stolen using its ordinary key. The policyholders ultimately lost far more in business disruption and transportation costs than the vehicle was ever worth. The financial incentive to fabricate a theft of a $4,000 car simply did not exist.

What compounds the problem is that some carrier-retained engineers have actually been criminally prosecuted and imprisoned for defrauding policyholders — a matter of public record that many in the industry seem unaware of.

The quality of carrier-retained engineering reports is frequently indefensible. Reports identifying concrete tiles as clay, or describing solid hardwood flooring as engineered product — errors that a trainee with six months of experience should not make. When a Public Adjuster attempts to discuss these errors with the staff adjuster, the response is often silence. There is no institutional incentive to correct the record.

Meanwhile, these same carriers aggressively pursue examinations under oath of elderly policyholders — including 85-year-old individuals who had no involvement in managing the property that sustained damage. On the policyholder side of the table, claims professionals routinely see elderly people subjected to multiple rounds of examinations. The primary beneficiary of that process is often the insurance defense attorney billing hourly for the work.

Because a recorded statement is not a courtroom proceeding, there are no rules of evidence preventing leading questions. Adjusters can — and sometimes do — attempt to put words in a policyholder's mouth.

Consider a scenario involving an elderly homeowner reporting a water loss. The policyholder explains that the damage appeared sudden and recent. The adjuster, however, asks repeatedly whether there is any possibility the leak could have been long-term. The homeowner, unaware of the coverage implications, concedes that it is theoretically possible. Once that concession is on the recording, the adjuster presses further until the policyholder agrees that the damage was probably long-term — a characterization that may trigger an exclusion.

This tactic is particularly harmful when directed at elderly policyholders experiencing cognitive decline. A person with dementia may agree to almost any proposition when pressed repeatedly by an authority figure. The result is a recorded statement that contradicts the actual facts of the loss and provides the carrier with a basis for denial.

The practice does not occur in every claim, but experienced Public Adjusters confirm that it happens with enough regularity to constitute a systemic concern. Most consumers would find it difficult to believe, which is precisely what makes it so effective.

A policyholder filed a claim alleging that his estranged wife had vandalized his home — filling his convertible with a garden hose and breaking pipes beneath the kitchen sink to flood the residence. From the outset, something seemed off.

The adjuster inspected the property and noted several inconsistencies. The insured did not appear particularly sophisticated, yet the house was filled with corporate formation documents for various startups, luxury retail product packaging, and scattered receipts. The overall presentation did not add up.

The insured reported that a company had already performed water mitigation and submitted an invoice. The invoice came from a firm with a residential address in a remote desert area outside of Riverside. Despite these red flags, the carrier approved the claim and issued a check co-payable with the mortgage company.

Approximately a week later, the insured submitted a letter purportedly from the mortgage company authorizing release of funds. A claims manager decided to verify the letter and called the mortgage company directly. The employee whose signature appeared on the letter had no knowledge of it — and her name was misspelled. The carrier determined the claim was fraudulent and issued a denial.

Weeks later, the same insured filed a new claim alleging that a bail bondsman had damaged his security cameras while taking him into custody. When the adjuster contacted the bondsman, the bondsman was surprised to learn of the allegation and asked for the time of the upcoming inspection — he wanted to arrest the insured on an outstanding warrant. Unfortunately, the bondsman did not appear at the inspection, and the report was unremarkable.

The story took a final turn roughly a year later. The adjuster, returning home from catastrophe work following a Texas hurricane, stopped at a large boot warehouse outside of El Paso. Walking the aisles, he spotted a pair of black boots and noticed the brand name — the same name that had appeared on the fraudulent water mitigation invoice. The insured had apparently purchased a pair of boots, then altered the receipt to resemble a mitigation invoice. The adjuster bought the boots. He still has them.

Using an engineering firm to prepare a construction repair estimate with labor and material pricing is, in most jurisdictions, an unlicensed practice. Writing a repair estimate that includes scope, labor rates, and material costs is the function of a licensed adjuster, a licensed contractor qualified for the specific trade, or a licensed Public Adjuster. When an engineering firm performs that function, it is effectively adjusting the claim without a license.

A simple test illustrates the problem: could the engineering firm legally perform the repairs it estimated? In nearly every state, the answer is no — contracting that work without a contractor's license would be illegal. If the firm cannot legally do the work, the basis for its authority to price the work is questionable at best.

Despite this, the practice is widespread. Many staff adjusters defend it, unaware of or indifferent to the licensing implications. It is worth noting that the same industry that tolerates unlicensed estimate preparation also complains about stagnant adjuster wages. There may be a connection: when carriers outsource core adjusting functions to unlicensed parties, they reduce demand for the licensed professionals whose compensation depends on that demand.

The standard has shifted significantly over the past two decades. Practices that experienced adjusters would never have accepted a generation ago have become routine.

One of the most significant problems in the insurance claims industry is the widespread use of unlicensed individuals to perform adjusting functions. A licensed electrical contractor has the right to prepare an estimate and offer an opinion on electrical repairs. A licensed adjuster can do the same across the full scope of a claim. But when an unlicensed party prepares estimates or renders opinions on both scope and cost on behalf of a carrier — for compensation — the legal authority for that activity is questionable.

In many jurisdictions, this practice likely violates licensing statutes. Unfortunately, state Departments of Insurance often decline to investigate, either because they lack resources or because they do not view the issue as a priority. Some regulators may not recognize it as a problem at all.

A related issue involves contractor licensing fraud. It is not uncommon for a contractor listed on the state licensing board to report zero employees while actually employing ten or twenty workers. The purpose is to avoid paying workers' compensation insurance premiums. This practice is particularly common among carrier-preferred vendors — the very contractors insurance companies recommend to their policyholders. A contractor reporting no employees while running active crews is a significant red flag, both for licensing regulators and for policyholders relying on those vendors to perform quality work.

A vehicle repair expert inspected a truck that had sustained a lightning strike and determined it was a total loss, due in part to damaged electrical circuitry throughout the vehicle. The truck was physically repairable but the extent of the electrical damage made repair economically unreasonable. The carrier disagreed and insisted the expert connect a battery to test the circuits and prove they were actually damaged.

The expert warned the carrier multiple times that connecting a battery to the compromised wiring would likely cause a fire. The carrier maintained its position. So the expert set up a camera, connected the battery, and began running diagnostic codes through the OBD port. The truck caught fire. The passenger-side airbag deployed from the heat. What had been a repairable vehicle with a total-loss recommendation became an actual total loss — burned and undrivable — because the carrier refused to accept the expert's assessment.

The incident illustrates a principle that applies across all lines of insurance — medical, property, and auto. The specific subject matter differs, but the carrier tactics and the effective counter-strategies remain remarkably consistent.

This principle might be called the Pistachio Ice Cream Rule. If a carrier insists that a commercial EPDM roof can be repaired by rubbing pistachio ice cream on it, the most productive response is often to comply — on camera. Go up on the roof, follow their instructions to the letter, and document the result. Ask the adjuster in writing whether the product should be natural or artificial flavor. Keep the receipt. Request written confirmation from the retailer that the product purchased was, in fact, pistachio. Execute the method exactly as the carrier specified.

Refusing to attempt an obviously absurd repair method — because it is obviously absurd and will not work — creates an impasse with nothing on the record except a protest and the carrier's untested position. That argument can stall a file for weeks without progress.

Complying, documenting, and demonstrating failure on video changes the conversation entirely. There is now evidence that the carrier's proposed method was attempted per their own specifications and did not produce the promised result. That is a far stronger posture heading into negotiation, appraisal, or litigation. Sometimes the most persuasive rebuttal of a bad-faith repair theory is to perform the experiment on camera rather than refuse to run it.

Consider a windstorm that topples a large tree, causing three separate categories of damage: $10,000 to a detached garage, $10,000 for emergency board-up of doors and windows on the main residence, and $10,000 replacement cost for a freestanding children's play structure covered under contents.

The policyholder hires three separate contractors for the work. The adjuster processes the play structure invoice first and issues a payment of $9,000 — the $10,000 replacement cost value less the $1,000 deductible — under the contents coverage. A few hours later, the adjuster reviews the remaining two invoices and issues full $10,000 payments for the garage repair and the board-up.

The roofing contractor becomes upset and insists the homeowner still owes a $1,000 deductible on the roofing portion. But the policyholder has already satisfied the deductible through the play structure payment. There is no legal, contractual, or ethical requirement for the homeowner to pay the deductible on any particular line item — only that it be paid once per occurrence. The adjuster applied it to the contents payment, and that satisfies the policy.

What happens next is unfortunately predictable. The roofing contractor, confused about how deductibles work, calls the carrier and reports the homeowner for fraud. The play structure contractor does the same. Both contractors, drawing their understanding of insurance law from social media rather than from the policy language, become hostile when a homeowner does not comply with their demands. The policyholder, who did nothing wrong, now faces fraud allegations from two contractors who do not understand the contract they are working under.

When a neighboring property catches fire, the adjacent homeowner may have a liability claim against the neighbor if negligence caused the blaze. But timing matters. The best opportunity to learn what happened is within the first hour after the fire, when the neighbor is still in shock and more likely to speak candidly about the cause. Two days later, after consulting with family or an attorney, that same neighbor is far less likely to discuss the circumstances.

Beyond the liability question, the adjacent property owners have a first-party claim on their own policy. Fire damage from a neighboring structure is a legitimate covered peril — even on a named-peril policy. The fire does not need to originate in or on the insured structure. When flames or radiant heat from a neighboring property melt siding, warp windows, or deposit smoke residue, that constitutes a covered fire loss. This is commonly referred to in the industry as an "exposure fire."

For contractors and Public Adjusters prospecting for work, exposure fires represent a frequently overlooked opportunity. The properties on either side of a fire loss often sustain melted vinyl windows, warped siding, and smoke damage that can be significant. In many cases, those homeowners are never informed that they have a valid insurance claim.

Consider a carrier offering a $70,000 settlement in exchange for a mutual release on a policy with $100,000 in limits. A Public Adjuster advises the insured to accept, believing it to be a strong result. One month later, the insured consults an attorney and learns that the claim may have supported $220,000 in combined contractual and extra-contractual damages. The Public Adjuster now faces a potential malpractice claim based on the theory that the advice to accept foreclosed a significantly larger recovery.

The opposite scenario is equally dangerous. Suppose the Public Adjuster advises the insured to reject the $70,000 offer. The carrier then assigns a new manager who takes a hard line and issues a full denial. The insured shops the case to every contingency attorney in the area, but none will accept a fully denied claim of that size. The policyholder ends up with nothing — and the Public Adjuster advised them to turn down $70,000.

A third scenario demonstrates the most serious risk. A highly experienced Public Adjuster evaluates a $500,000 settlement offer and concludes it is a strong result. On that advice, the insured accepts and signs a release. Two months later, the insured develops a long-term partial lung disability from contaminants introduced by the carrier's preferred vendor during the restoration. The extra-contractual damages — including bodily injury — could reach $2 million. But the signed release bars the claim.

These scenarios illustrate why Public Adjusters should not advise policyholders to accept or reject settlement offers, and should never counsel an insured to sign a release. That guidance falls squarely within the practice of law.

In the securities industry, a professor once identified that bid and ask prices on over-the-counter stocks did not follow a normal random distribution. Market makers had used social and business pressure to prevent competitors from splitting the traditional 1/8th-point spread. The deviation from the expected pattern revealed coordinated manipulation.

A similar analytical approach applies to insurance claims. If a catastrophe adjuster's fee structure includes a bonus threshold — for example, an additional $1,000 for claims exceeding $110,000 versus those settling just above $100,000 — a spreadsheet or graph plotting claim values across a large dataset should reveal whether settlements cluster unnaturally around those thresholds.

In any sufficiently large pool of claims spanning multiple disasters, the distribution of settlement amounts should approach a normal bell curve. The dataset includes a wide variety of property values, construction types, building ages, damage patterns, and materials. If the distribution deviates from that expected pattern — if certain dollar amounts are overrepresented or underrepresented — that anomaly suggests human intervention, whether through rounding, threshold avoidance, or systematic cap enforcement.

This type of statistical analysis has been used to detect fraud in financial markets and election results. The same methodology can be applied to insurance claims data to identify systemic patterns of underpayment or manipulation at scale.

A persistent trend across the insurance industry is the steady decline in adjuster compensation, for both catastrophe and daily claims adjusters. Carriers increasingly prefer inexpensive, less experienced adjusters who follow internal payment guidelines over seasoned professionals who understand actual construction costs.

A decade ago and earlier, catastrophe adjusters earned commissions on estimates that typically reflected 80% to 90% of fair repair costs. Those claims settled without dispute, were paid, and closed. Today, initial estimates are frequently paid at 50% or less of fair value, which means the catastrophe adjuster's commission is effectively halved. Many catastrophe adjusters report writing estimates that were rejected by file examiners, only to see those same amounts paid later after the policyholder pushed back — without the original adjuster ever receiving commission on the revised payment.

The downstream effect on policyholders is direct. It is not unusual for carrier adjusters to issue claim payments that fall below a reasonable contractor's actual costs — and in some cases, below material costs alone. When the industry systematically underpays the professionals responsible for evaluating damage, it creates a workforce with neither the experience nor the incentive to pay claims fairly. The policyholder absorbs the difference.