Public adjusters, has AAA denied any of your clients’ basement or floor drain overflow claims? Do you believe AAA misclassified the claim as a “back up” without investigating the true cause of the loss?
According to a federal lawsuit now pending in the U.S. District Court for the Eastern District of Michigan, many thousands of AAA policyholders in nine different states have been denied full coverage for basement and floor drain overflows based on misclassification of those events as excluded backups.
The attorneys of Sommers Schwartz, P.C. and Fabian, Sklar & King, P.C. have filed a complaint alleging that AAA has been wrongfully denying full coverage for these claims in violation of the plain language of their homeowners, renters, and condominium insurance policies. According to the complaint, AAA has begun to classify all water damage claims related to basement and floor drains as “back ups.” Back ups typically involve municipal sewage entering the home, and are excluded from coverage under the base policy; they are only afforded limited coverage if the policyholder purchased an optional rider. In contrast, property damage caused by an overflow, which originates from a plumbing condition or failure inside the home, is supposed to be covered up to the policy limit. Industry standards, case law, AAA’s own policy language, and AAA’s past practices all make this distinction between back ups and overflows.
Treating all basement and floor drain overflows as back ups allows AAA to handle these common claims without investigating the true cause of the loss. AAA simply denies the claim if the policyholder did not purchase an optional back up rider, or it issues a check for the limited amount of back up coverage under the optional rider (usually $5,000 or $10,000). This practice has saved AAA many millions of dollars, but policyholders are left to suffer. Because most public adjusters get paid a percentage of their client’s recovery, adjusters may lose money on their fees for these claims as well.
If your client’s home is insured through AAA, and his or her overflow claim was denied or treated as a back up, please contact the attorneys at Sommers Schwartz today at (248) 355-0300.