Many insurance companies that adjust hail damage have a checklist of points that each adjuster must answer before paying a claim. One of the items at the top of the list is whether there has previously been hailstorms at the loss site. From a policyholder’s perspective, most people do not go up on a roof, nor do they call a roofer unless there is a leak or obvious damage.
For many policyholders, the typical answer after calling the insurer to look at a loss is that “the hail damage is not so bad from the recent storm, and much of the damage occurred from a previous hailstorm.” The truth is that insurance companies can be correct with this position. In some cases, a lot of damage can be due to an already existing hailstorm that the policyholder never knew existed because no one looked at the roof until a subsequent storm occurred. However, the problem complicates the adjustment and resolution of hailstorm claims, and it is a common response from many operators.
A classic example of this is a recently appealed decision in Texas that involves several claims for damages.1 A hailstorm in March 2017 was reported to the insurance company. A dispute arose about the size of the damage and demands for assessment were made for that particular hailstorm. Unfortunately, the award for March 2017 was not great.
The problem was that the policyholder also claimed that much of the damage was from a hailstorm in March 2016. The insurance company claimed that the report of the damage in March 2016 was delayed and contested the claim. It also refused to go to an assessment of the hailstorm claim in March 2016. The insurance company also claimed that the award for evaluation of hailstorm in March 2017 excluded coverage for the loss in March 2016.
The Court of Appeal ruled against the insurance company and noted:
We begin with the most important consideration when interpreting a contract: the clear meaning of the Appraisal Award’s functional language …. The Appraisal Award states that the reported date of the loss is March 26, 2017, states that the cause is “Hail and wind” and lists the 2017 insurance number. The assessors certified that they “performed the tasks assigned to us in accordance with the assessment provision in the policy.” … The only policy referred to in the Appraisal Award is the 2017 policy. In the clarifying paragraph, it is stated in the relevant part: ‘The above scope of work and dollar amounts represent the entire loss as a result of the current hailstorm. . . The above amounts are the total dollar amounts of the claim and are subject to all terms and conditions of the current policy. ‘
The Appraisal Award reflects the loss caused by a single hailstorm, the “subject hailstorm”, and subject to an individual policy, the listed 2017 policy. loss caused by that storm as opposed to the amount of loss caused by everything else, including previous hailstorms.
The Court of Appeals returned the case to the trial court to determine the timing of the alleged late notice and whether the alleged late notice caused any damage to the insurer required by Texas law:
‘[A]n the insured’s failure to notify its insurer in time of a claim or action does not counteract the coverage if the insurer was not affected by the delay. ‘ PAJ, Inc. v. Hanover Ins. Co., 243 SW3d 630 … (Tex. 2008). ‘[A]n intangible breach does not deprive the insurer of the benefit of the purchase and thus can not release the insurer from the contractual coverage obligation. “… (quotes). Hernandez vs. Gulf Group Lloyds, 875 SW2d 691, 692 (Tex. 1994)); see also Prodigy Communications Corp. v. Agric. Surplus and surplus Ins. Co.288 SW3d 374 … (Tex. 2009).
The policy for 2016 contains a provision on urgent notification. The 2016 policy requires Richland Trace to provide “prompt notice of loss or damage”, including a description of the property involved, to Landmark and “[a]s as soon as possible, give [Landmark] a description of how, when and where the loss or damage occurred. ‘ Although the complainant claims that Richland Trace did not report in time, the document does not contain evidence of when Richland Trace reported the alleged loss or damage caused by the storm in March 2016. Although for this question we assume that the evidence shows that Richland Trace did not report in right time, there is also no evidence in the document that Landmark was damaged by any delay.
If you get caught on a golf course during a storm and are afraid of lightning, hold up a 1-iron. Not even God can beat a 1-iron.
– Lee Trevino
1 Richland Trace Owners Association v. Landmark American Ins. Co.No. 05-20-00944-CV (Tex. App. 11 April 2022).