After devastating the Bahamas, Hurricane Dorian has moved up the Atlantic Coast and is now affecting the Canadian Maritimes. Dorian was the fifth Atlantic hurricane to reach Category Five status in four years and has already broken records with sustained wind speeds exceeding 185 miles per hour. Many are attributing Dorian’s strength and fury to climate change. Although Dorian was ultimately downgraded - it is now a Category 1 after impacting the Carolinas as a Category 2/3 - it has had wide-reaching impacts along the Eastern Seaboard, and early estimates suggest the cleanup and repairs will cost tens of billions of dollars.
As in the Bahamas, affected communities in the United States will look for assistance from sources such as the government, private philanthropic organizations, and property insurers. In assessing incoming claims, property insurers are likely to rely upon independent insurance adjusters (“IA”s). IAs assist with claims by performing site inspections, communicating with insureds, requesting documents, and analyzing all aspects of a claim. In many cases, IAs will act as the primary liaison between the insurers and the insured. Given this involved role, it is no surprise that the conduct of IAs is routinely scrutinized by insureds and their representatives.
Given the extent of the damage, Dorian-related litigation against property insurers is inevitable. On the other hand, whether a dissatisfied insured can sue the IA depends entirely on the law of the applicable jurisdiction. Presently, a majority of the United States jurisdictions which have weighed in on the issue of IA liability recognize that allegations of improper claim handling arise from the insurance contract, and because the IA is not party to the contract the IA owes no independent duty to the insured. In those jurisdictions, while the IA cannot be named as a party to the litigation, they may still play a factual, non-party role in any litigation. In contrast, a minority of jurisdictions including Alaska, Mississippi, and New Hampshire, none of which have been directly damaged by Dorian, permit lawsuits against the IA directly. Many jurisdictions remain silent on the issue.
Florida, South Carolina, North Carolina, and Virginia courts have ruled in favor of IAs’ immunity on this issue. Charleston Dry Cleaners & Laundry, Inc. v. Zurich American Ins. Co., 355 S.E.2d 586 (S.C. 2003) (lack of contractual privity between IA and insured means there is no duty); DeFeo et al. v. Blackboard Ins. Co., 2019 WL 3206133 (D.S.C. July 16, 2019) (contractual privity only exists between the insured and insurer, not the IA); Koch v. Bell, Lewis & Associates, Inc., 627 S.E.2d 636 (N.C. App. 2006); King v. National Security Fire and Cas. Co., 656 So.2d 1338 (Fla. App. 1995), Evans v. Geico Gen. Ins. Co., 2015 WL 137269 (E.D.Va. 2015). Georgia allows for liability only where the IA is acting fraudulently. Blackwell v. American Southern Ins. Co., 121 Ga. App. 671 (1970); see also MacIntyre & Edwards, Inc. v. Rich, 267 Ga. App. 78 (2004) (IA’s negligent misrepresentation was not cognizable). Of the states that remain silent on the issue, some were in Dorian’s path: Massachusetts, Maryland, Delaware, and New Jersey.
Hurricane and storm-related coverage litigation is not a new body of law in the United States. As such, much of the law on the topic is well settled. The issue of the IA’s potential liability in this type of litigation, however, has flown under the radar in many states. This developing issue merits further attention.
Posted by Alexander Cogbill