Hail Claim Delay and the Montana Unfair Claims Statute
On June 3, a Billings homeowner reports hail damage to a roof, siding, and skylight. The policy is an HO-3 with $250,000 dwelling coverage, a $1,000 deductible, and replacement cost. The assigned staff adjuster inspects on June 12, photographs six cracked shingles and dented downspouts, and tells the insured it 'looks covered.' The insured mentions a ceiling stain that appeared after a May windstorm. The adjuster requests an engineer's report but does not follow up. No written status update is sent. On August 5, 63 days after the report, the insurer denies the entire claim, citing wear and tear and long-term leakage in a one-page letter with no policy excerpt, no engineer report, and no photos. The insured has already paid $4,800 to a roofer to stop a leak. The claim file contains the inspection photos and a note that the engineer was never retained.
1. What Montana unfair claim settlement practice issues does this file present, and what should the adjuster have done differently from first notice through denial?
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Montana's unfair claims settlement practices statute, Mont. Code Ann. § 33-18-201, does not create a fixed stopwatch for every claim, but it does require prompt acknowledgment, reasonable investigation, a timely affirm-or-deny decision, and a reasonable explanation for denial. This file has several red flags: (1) no written acknowledgment or status update after June 3; (2) the adjuster told the insured it 'looks covered' before completing the investigation; (3) the engineer was requested but never retained, so the denial rests on an incomplete record; (4) 63 days passed before any decision; and (5) the denial letter cited wear and tear and long-term leakage but did not quote the policy, attach the inspection evidence, or explain why the May windstorm and hail were not covered perils. The adjuster should have opened a claim log, sent written acknowledgment, documented the recorded statement, ordered the engineer, separated the two storm dates, and issued a reservation of rights if coverage was uncertain. A denial must connect specific policy language to specific facts. If the insurer cannot do that, it should not deny; it should continue investigating or pay the covered portion.
2. The insurer later agrees the roof is covered but disputes the $4,800 emergency repair and wants to pay actual cash value first. How should the adjuster handle payment, deductible, and documentation?
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The $4,800 roofer payment is a mitigation question, not automatically a coverage forfeiture. If the repair was reasonably necessary to prevent further damage after a covered hail or wind event, the invoice, photos, and roofer's scope should be evaluated as an emergency expense. The adjuster should confirm the date and cause of the leak, whether the roofer repaired only the damaged area or performed betterment, and whether the work overlapped with the later replacement. The deductible applies once per loss, not once per invoice. If the policy is replacement cost, the insurer may pay actual cash value first and hold back depreciation, but it must explain the holdback and the conditions for recovering it. The adjuster should also avoid paying twice for the same shingles. A written payment explanation should show replacement cost value, depreciation, deductible, prior payments, and the amount withheld. If the insurer delays payment after agreeing coverage, the file should document why and whether Montana prompt-payment or interest rules apply.