Residential Property Damage Lawyers Beware: Court Excludes Expert’s Estimate Finding an Estimate Is Not an Adjustment

Hurricane claims attorneys know that the estimate of damages caused by a storm is the foundation of every favorable judgment and jury verdict. Recently, in a Hurricane Laura case, the United States Fifth Circuit Court of Appeal affirmed the district court’s exclusion of the Defendant-Insurer’s engineer’s estimate based upon the finding that he was not a licensed adjuster, was not qualified to address policy and coverage, and the estimate could not constitute an adjustment by the Defendant-Insurer. 1 Residential property damage lawyers representing both Policyholders and Defendant-Insurers should be aware of this important distinction.

On August 27, 2020, Hurricane Laura caused considerable damage to First Baptist Church of Iowa. At trial, Church Mutual presented its engineer’s Xactimate estimate that the total damage to all three buildings was $352,455.85. Church Mutual’s engineer was a construction consultant, but he was not a licensed adjuster, nor was he authorized to perform loss adjustments in Louisiana. Church Mutual’s engineer was retained to inspect the property, scope and photograph the damages, and generate an estimated cost of repairs to return the buildings to their pre-loss condition. At trial, the engineer denied that he was functioning as an adjuster when generating the estimates because he does not deal in matters of policy or coverage.

First Baptist’s retained expert was licensed in Louisiana as an independent adjuster, and the court accepted him as an expert in insurance claims handling and construction. First Baptist’s expert measured the buildings, photographed the damage, reviewed pre-demolition pictures, and used Xactimate to prepare an estimate of the cost to return the buildings to their pre-loss condition, totaling $1,178,739.53.

Residential property damage lawyers and hurricane claims attorneys need to be aware that the district court in this case found that the “only credible adjustment made by a Louisiana licensed adjuster” was First Baptist’s estimate. The district court discredited Church Mutual’s engineer’s estimate because, unlike First Baptist’s expert, he was not a licensed adjuster and did not include damages identified in Church Mutual’s reports and First Baptist’s expert’s estimate. The Fifth Circuit noted:

The significance of this distinction was recognized by one of CM Insurance’s witnesses at trial: Executive Adjuster testified that an estimate and adjustment ‘are two separate things.’

The Fifth Circuit Court of Appeals affirmed the district court’s decision to disregard Church Mutual’s estimate of loss, award First Baptist Church additional damages based on First Baptist Church’s expert’s estimate, and award statutory penalties and attorney’s fees on the total loss amount. Residential property damage lawyers and hurricane claims attorneys representing policyholders against an insurance company should be aware of the significance of this holding and scrutinize the licensure of the expert presenting the estimate.

1 First Baptist Church of Iowa, Louisiana v. Church Mut. Ins. Co., S.I., 105 F.4th 775, 782 (5th Cir. 2024).