This article from the Houston Chronicle brings to light yet another negative result of IKE, this time an insurance company makes the wrong call on shingles.
A Houston lawmaker on Friday called for an investigation of State Farm after homeowners alleged in a lawsuit that the insurer wrongfully denied more than 100,000 roof-related Hurricane Ike claims.
In allegations similar to ones in an earlier lawsuit against the state’s insurers of last resort, the home-owners allege that State Farm denied many claims involving lifted shingles and told policyholders that the roof material would reseal itself.
State Farm spokesman Kevin Davis declined to comment on specific allegations.
“Should the court allow this case to move forward, and we do not believe that is appropriate, we are confident and prepared to make our case appropriately in a court of law,” Davis said.
The lawsuit, filed earlier this week in Galveston, alleges State Farm considered lifted shingles that weren’t creased and had no debris beneath them as undamaged.
In some instances, the lawsuit alleges, State Farm flatly told consumers that lifted shingles wouldn’t be taken into account when estimating damages – despite a bulletin from at least one shingle manufacturer that shingles would not reseal after being lifted.
In March 2009, State Farm determined that it would cost $50 per square foot to repair lifted shingles, according to the lawsuit, but didn’t contact policyholders whose claims already had been closed.
Those customers didn’t get compensation for lifted shingles unless they called back and were able to get claims reopened that initially were denied.
Steve Mostyn, the lawyer representing the homeowners, estimated that 80 percent of the allegedly mishandled claims were in Harris County.
Earlier this year, the Texas Windstorm Insurance Association and Texas Fair Access to Insurance Requirements Plan, which sell coverage to those who can’t find it in the private market, agreed to settle similar allegations brought by the Texas Department of Insurance.
Mostyn said State Farm’s efforts to avoid shingles claims were more egregious than those because – unlike the state-created insurers of last resort – State Farm actively advertises for customers.
“State Farm advertises that they’re the cream of the crop, the best,” he said, and “part of that persona that is developed is what consumers relied on and convinced them they were being told the truth.”
As part of the FAIR and TWIA settlement, the two insurers agreed that in assessing claims, they would treat roof shingles unsealed by hurricane winds as damaged. Policyholders had complained that Ike winds blew their shingles back, breaking the seals that keep them adhered to each other and prevent water from leaking through.
The settlement required the insurers to give homeowners premium credits for roof claims that were denied when they should have been paid.
Jerry Hagins, a spokesman for the state Department of Insurance, said the agency received a handful of complaints about other insurers and roof claims. It found insufficient evidence to support those complaints, he said.
But state Sen. Rodney Ellis, D-Houston, said he plans to send the Insurance Department a letter urging it to investigate State Farm.
“I think we have had so many problems with TWIA, and initially when I raised the flag with many of my colleagues, they were leery of it, but so far history has proven those complaints that my constituents sent in were legitimate,” he said. “I’m seeing a similar pattern here and think it’s appropriate to ask the department to do a comprehensive investigation and these improprieties be brought to light.”
Hagins declined comment on Ellis’ request for an investigation.
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