BY: Lance C. Young | IN: Class Action & Commercial Litigation
Public adjusters, if your client is insured by Farmers Insurance Group and has suffered a basement or floor drain overflow claim, read on.
The attorneys of Sommers Schwartz, P.C., and Fabian, Sklar & King, P.C., are investigating allegations that Farmers may be wrongfully denying full coverage for basement and floor drain overflows, instead misclassifying them as “back ups.” According to industry standards and case law, back ups typically involve municipal sewage entering the home. Back ups are excluded from coverage by the base policy and are only afforded limited coverage if the policyholder purchases 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.
In recent years, certain insurance companies have begun to treat overflows as back ups if a basement or floor drain is involved. Treating all basement and floor drain overflows as back ups allows insurance companies to handle these common claims without investigating the true cause of the loss. They simply deny the claim if the policyholder did not purchase an optional back up rider, or they issue a check for the limited amount of back up coverage under the optional rider (usually $5,000 or $10,000). This practice saves the companies 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.
A lawsuit based on similar allegations has been filed in the U.S. District Court for the Eastern District of Michigan against the AAA family of insurance companies. If your client has had the same experience with Farmers – or any other insurance company – the attorneys at Sommers Schwartz want to know. Please give us a call today at (248) 355-0300!
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