News - Insurance

Thursday, Nov. 05, 2009

State Farm manager notes: ‘Just say no’

GULFPORT — Two independent adjusters for State Farm testified in a Hurricane Katrina insurance trial Thursday that an 8-foot tidal surge destroyed the home of Reginald “Ed” and Katie Bossier on Back Bay, but both adjusters also said they could cover only visible wind damage.

Biloxi policyholder Reginald “Ed” Bossier is trying to prove State Farm failed to meet its obligation to adequately investigate his claim and cover losses unless proof established that floodwater caused them. He is seeking policy limits of $650,000 during the U.S. District Court trial that began Monday.

Bossier had tried in late September 2005 to line up an inspection, his State Farm claim log showed, but was told no appointment could be made. Pilot Catastrophe Services adjuster Lee Ann Johnson, who was assigned to State Farm, said she was juggling 100 claims from the Aug. 29 hurricane.

On cross examination, Bossier attorney Judy Guice indicated to the jury that State Farm delayed adjustment of wind losses where water also was involved. She produced notes State Farm team manager Steve Burke took during an Oct. 4 manager’s meeting. “Denials, start doing now,” he wrote. The same day, Johnson scheduled an inspection of Bossier’s property.

On Oct 7, the day of the inspection, Guice told the jury that Burke wrote during another meeting: “Just say no. Pay on the back side if wind.”

Johnson responded: “That was not a directive I had received at all from State Farm to begin denials. State Farm doesn’t operate that way.”

Johnson said she recommended to her team manager, who agreed, that Bossier’s losses above the 8-foot water line should be covered.

Johnson and Shellie Leverett, a Pilot adjuster who reviewed the file for State Farm in April 2008, both told the jury that tattered shingles on the roof eaves indicated wave action. They said a roof with most shingles and gutters intact showed the wind was not strong enough to cause structural damage and debris in the trees also indicated an 8-foot water line.

They were unable to rule out the possibility that wind broke some of the many windows in the house before the tide surged ashore. Leverett said she did not know how strong the wind would have to be to cause broken glass.

“I was able to determine the winds were not strong enough to support structural damage,” Leverett told State Farm attorney John Banahan.

Witnesses for Bossier have testified that the water line inside the house was 3 1/2 inches and the wind up to 135 mph. Bossier also produced photographs of trees with broken limbs or twisted tops, indicating high wind.

Both adjusters testified on cross-examination that they did not review State Farm-ordered reports on nearby properties where engineers found wind damage. No engineering report was ordered for the Bossier house.

Based on Johnson’s inspection, State Farm initially paid Bossier $2,300 for roof and siding damage. Leverett issued a second check for $13,000 because the wrong material had been used to calculate the amount owed. She said she was unable to locate an eyewitness who claimed a tornado destroyed Bossier’s outbuilding.

The first entry on the Bossier’s file said, “8 feet of water came — all personal property was washed out.” Johnson said that information would have come from the policyholder, but other entries in the claims log indicated Bossier relatives first contacted the insurance company. The date of the loss was incorrect, as was some other information in the claims log.

The trial resumes at 9:30 this morning. Judge L.T. Senter Jr. is expected to rule on how extensive testimony will be from two State Farm experts, an oceanographer and Florida university professor with a doctorate in engineering.

The witnesses are not licensed engineers, so Senter must decide if they can dispute a damage report, ordered by Bossier, in which a licensed engineer concluded that wind effectively destroyed the house.