Order Out of Chaos

Adjusting claims and litigating weather-related catastrophes

February 21, 2022 Photo

Insurance claims resulting from catastrophic weather are at an all-time high. Events such as wildfires, hurricanes, and floods caused 39% of home insurance claims in 2020.

In 2021, the trend continued. Hurricane Ida impacted 19 states, with predicted damage of around $95 billion, making Ida the seventh costliest hurricane since 2000. Winter Storm Uri resulted in more than 450,000 claims and nearly $20 billion in losses in Texas. The number of catastrophes and resulting claims creates challenges for the insurance industry.

Intake and Initial Contact

The key to a successful response to any catastrophe is a well-established, carefully mapped out response plan that is developed before the catastrophe strikes. The plan should clearly set forth claim intake methods, response protocols, inspection protocols, investigation expectations, supplemental claims processing, and diary response.

Handling a catastrophe claim is not substantially different from handling a non-catastrophe claim. The key difference is the volume. Claims will rapidly come in via multiple avenues: phone, email, application notification, and agents. Be prepared to recognize the notifications regardless of how they are made. Respond to the insured and start the investigation as quickly as possible. A 2014 J. D. Power study showed that quicker communication from the insurance adjuster to the insured resulted in a reduced number of escalated claims. Fewer escalated claims ultimately result in fewer litigation claims. 

Once you have initial contact with the insured, obtain as much information as possible regarding the damage. Keep in mind that individuals and business owners making claims for personal and commercial damage have usually experienced a devastating loss to their important possessions and inventory, so, when you make initial contact, have empathy. Showing empathy to the insured during the claim typically results in a peaceful and amicable resolution. It is also imperative to make the next steps clear to the insured so they have a sense of what to expect from the outset and the work process can flow uninterrupted.

The sheer volume of claims can be overwhelming for field and desk adjusters, especially as the industry continues to experience repeated weather-related catastrophes. During a voluminous intake of claims, stay on top of each claim and act quickly when prompted.    


The investigation begins when you speak with the insured and collect information regarding the damage. Ensure that an adjuster with the correct experience is assigned to the claim. For example, if the loss is large, a large-loss adjuster should be assigned.

Instruct all field adjusters to do the following while inspecting the claim:

1.    Photograph all reported damage.

2.    Photograph the entirety of the building and contents, regardless of whether damage is claimed.

3.   Inspect every single room in the building.

4.    Obtain an agreement with respect to scope with the insured during the inspection.

5.    If the insured refuses to allow inspection, have them sign a document stating that the room(s) at issue is/are not damaged and do not require inspection/photos.

Photos are invaluable during the litigation phase of a claim, so have as many photos as possible from the initial inspection in the file—even where no damage is claimed.

Once you receive the report from the field adjuster, review it in detail to determine if additional information is needed. If a supplemental inspection is required, follow up to be sure that it takes place and that a supplemental report is created. Field adjusters are inundated with claims during a catastrophe, which can result in missed appointments or assignments. A multilevel system of checks and balances ensures that inspections take place, reports are generated, and the insureds stay informed. If an expert is needed to aid in the adjustment, secure that individual as quickly as possible. Most importantly, keep the insured updated regarding the status of the claim and review.

Catastrophe claims are not immune to fraud. Review inspection reports for fraud indicators, but do not get “lost in the weeds.” That can slow down the adjusting process and create a backlog in claims. For example, it is probably not worth it to fight over a $25 widget replacement.

Appraisal during the claim process may be a great tool for early resolution in cases where scope is agreed and values are similar. Appraisal is typically not effective when valuations by the insured and the insurers are substantially different, when the scope varies, or when coverage issues exist.

Late reported claims are common in the catastrophe context. When you are responding in writing to late reported claims, ensure you reserve all rights and conditions under the applicable policy.

Litigating Claims After a Mass Catastrophe

Create a clear plan within the insurance company for efficient and effective handling of a mass catastrophe litigation response. That includes identifying common coverage and claims-handling issues prior to filing the first case. Everyone involved—adjusters, inside counsel, and outside counsel—should be made aware of the plan, with expectations clearly communicated.  

The insurer and outside counsel should develop a unified approach to assignment and handling of claims. They should develop case tracking that is helpful to the insurer and handling attorneys, hold regular team status calls, and streamline the discovery process, including developing standard questions in advance. Communication between outside counsel and the insurer is key during representation.

An initial detailed review is of utmost importance. If additional investigation is needed—by either a field adjuster or expert—make those decisions immediately because, by the time litigation has been filed, many repairs have started or have been completed. Identify which cases should be tried and move forward with preparation for trial from the outset. For the cases that can likely be resolved, consider informal settlement, early mediation, and appraisal.

In most catastrophe litigation, a court will adopt a case management order (CMO) or create a multi-district litigation (MDL). Most CMOs and MDLs mandate early exchange of documents and early mediation. Many states also allow for the statutory invocation of early mediation in insurance claims litigation. Depending on the claim, early inspection with experts may be pivotal to resolution in cases selected for early mediation. Appraisal in litigation is an effective tool when the parties’ values are not substantially different, when a scope is agreed upon, and when no coverage issues exist. 

In sum, the themes for preparing for a catastrophe during claims handling carry over to litigation: streamline the process, have empathy with the insured, communicate, be proactive, investigate, document the file, and be prepared. 

About The Authors
Multiple Contributors
William A. Walsh

William A. Walsh is an assistant vice president with Alliant Insurance Services, Community Association Underwriters of America, Inc. wwalsh@cauinsure.com

Mary-Ellen King

Mary-Ellen King is a partner in the Austin, Texas office of Thompson, Coe, Cousins, and Irons LLP.  mking@thompsoncoe.com

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