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Title : Is a New York Property Insurer Obligated to Disclose Copies of Its Adjuster and Expert Reports Prior to Litigation?
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Is a New York Property Insurer Obligated to Disclose Copies of Its Adjuster and Expert Reports Prior to Litigation?

Client's Question:

Are we required to provide a copy of our expert’s report to an insured when we send formal denial or after if they request? We have one now that the NYS DFS is involved and was questioning why we did not provide a copy of our roofer’s report and our adjuster’s reports to the insured’s public adjuster when he asked for them.

My Answer:
Nothing in New York insurance laws or regulations requires an insurer to provide copies of its adjuster’s and/or expert’s report either with the insurer’s denial or upon the insured’s request. If the DFS is saying there is such a requirement, they’re wrong, and I would insist that they provide the legal authority for such a statement. Only copies of written estimates of damages prepared by or for the insurer must be provided to insureds upon request. New York Insurance Law § 3407-a provides:

No property/casualty insurance policy or contract shall be issued or issued for delivery on a risk located or resident in this state insuring against damage to the insured's real property unless it contains in substance the following provision or a provision which is equal or more favorable to the insured:  a provision that in the event of a pending claim for damage to real property, upon request, the insurer shall furnish to the insured's representative, designated in writing, or if none has been designated, to the insured, a copy of any written estimate or estimates of the cost of damages to real property resulting from the loss which the insurer has independently prepared for its own purposes, or had prepared on its behalf for its own purposes, specifying all appropriate deductions, within thirty days after the request or preparation, whichever is later, of such estimate or estimates.  An insurer shall not be required to provide an estimate on claims for damages to real property unless it has independently prepared one or had one prepared on its behalf for the insurer's own purposes.

Some public adjusters take the position that if the insurer’s or independent adjuster’s damages estimate is based, even in part, on an expert’s report, the insurer is obligated by extension under § 3407-a to disclose a copy of the expert’s report with the estimate. I disagree. I don’t think 3407-a, which is very clear in its reference to “any written estimate or estimates of the cost of damages to real property”, can be read to also include expert reports.

Of course, if the coverage denial is litigated, the insured will be entitled to discover any non-privileged materials the insurer relied upon to reach its coverage and indemnity decisions. Given that, some PAs, policyholder attorneys, and DFS examiners argue that if the insurer eventually will be required to disclose its adjuster and expert reports, it should disclose them prior to litigation. This is another argument I don’t agree with, and it certainly doesn’t find any support in statutory, regulatory, or case law.

Your Answer:
In the comments, please.

~~Editor's Note July 20, 2020 

LinkedIn Poll Results:
Here are the results of the LinkedIn poll I ran on this question:

Answer                             # Votes                %
YES.                                      5                   14%
NO.                                       16                  46%
IT DEPENDS.                       14                  40%

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