The Contractor Supplement and the 35-Day Engineer Delay
An Alabama homeowners claim involves a kitchen fire. The carrier’s field adjuster wrote an estimate of $38,000. The insured’s contractor submits a supplement of $22,000, including $9,000 for code-required cabinet anchoring and electrical upgrades. The policy has an ordinance-or-law limit of $10,000. The adjuster requests a structural engineer’s report on the cabinet wall and waits 35 days before following up. The insured calls daily, saying the family cannot use the kitchen and threatening to report unfair claim practices. The file contains the estimate, the contractor’s supplement, and one note: 'waiting on engineer.' No reservation letter has been sent. The policy requires a proof of loss within 60 days after request; the carrier has not requested one. The insured has not submitted a signed sworn proof of loss.
1. What are the adjuster’s immediate obligations?
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Act now; the file is not defensible as written. The adjuster should acknowledge the contractor's supplement in writing, confirm receipt of the $22,000 demand, and explain what is undisputed and what is under review. The carrier should not wait for the engineer before paying the undisputed $38,000 estimate, less any deductible, if coverage and damages are clear. It should send a status letter with a specific decision date, request any missing documentation, and document each call. The 'waiting on engineer' note is not enough. Alabama's unfair-claims-practices framework requires a reasonable investigation and prompt, good-faith handling; a 35-day silence after requesting an engineer invites a bad-faith allegation. The adjuster should also determine whether a sworn proof of loss is needed and, if so, request it in writing with a clear deadline.
2. How should the ordinance-or-law and engineer issues be handled?
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The ordinance-or-law issue is a coverage question, not a reason to delay the entire claim. The $9,000 code-upgrade portion is subject to the $10,000 ordinance-or-law limit, so it may be payable up to that limit if the upgrades are required by code and triggered by the covered loss. The adjuster should obtain the code citation and the contractor's breakdown, then pay the undisputed non-code repairs. The engineer's report should be limited to a specific structural question-whether the cabinet wall requires repair beyond the fire damage. Set a deadline for the report, follow up in writing, and consider a provisional payment. If coverage for code upgrades is uncertain, send a reservation-of-rights letter rather than holding the whole file.
3. Draft the file documentation for the next 10 days.
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Next 10 days: (1) Day 1-call insured, confirm receipt of supplement, state what is being reviewed and the next update date. (2) Day 1-send written status letter and request any missing proof of loss or code citations. (3) Day 2-review the $38,000 estimate and release undisputed payment if coverage is clear. (4) Day 3-contact engineer, confirm scope and deadline; document the call. (5) Day 5-obtain contractor's breakdown separating code items from fire repairs. (6) Day 7-send reservation letter on ordinance-or-law and any causation issues. (7) Day 10-status letter to insured with payment update and remaining issues. Every entry should include date, time, person contacted, and next action.