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This information is derived from a Nov. 29, 1997 article in the Globe and Mail as well as extracts from the judgement of Madam Justice Sandra Chapnik in the matter of
Marino Rodriguez
vs
Allstate Insurance Company
United Insurance Brokers Inc.
Victor Hugo Forlieni
Ramon Hernandez
Counsel for the insured in this matter was A.M.Kwinter
Counsel for Allstate was T.C.Wright, Q.C.
The Globe and Mail reports that the Ontario Court Of Appeal upheld Justice Chapnik's judgement against Allstate for its handling of an insurance claim following a fire in January 1990, in Toronto.
Justice Chapnik is reported to have said that Allstate's handling of this claim "reflected a shameful exercise of power and ineptitude."
The policy included a Guaranteed Replacement Clause.
The Justice agreed with Albert Kwinter lawyer for the insured that Allstate used unfounded and very flimsy evidence "as a barganing tool against its own insured to achieve a more favourable settlement."
The real and underlying issue in this case is reported to reflect what is described as a battle between public and private insurance adjusters. In this case the public adjusters National Fire Adjusters Inc. (NFA) for the insured and Angelo Luongo, Allstate's adjuster.
According to evidence presented at the trial over 90 per cent of insured persons accept Allstate's estimates of claim damage without question. Given the findings of Justice Chapnik it is possible that this 90 percent are receiving less that their fair entitlement and could explain Allstate's fight to maintain its status quo.
This is consistent with the fact that only approximately 6 per cent of the estimated 10.5 million customers victimized by the deceptive sales practices of Prudential Insurance Co. of America took the opportunity to seek compensation.
According to Justice Chapnik "this situation may reflect general frustration, malaise, or lack of understanding and knowledge on the part of many insured persons as to their rights. Property owners may feel that they have little choice but to accept the estimates presented to them by the insurer.
These days, public adjusting companies are increasingly moving in to fill the gap in order to protect the rights of the policy holder. So long as they continue to take a methodical, knowledgeable, reasonable, and flexible approach to cost replacement, not only the companies, but the public, will benifit."
As part of its fee of seven per cent of the amount recovered by the insured NFA provided an estiimate of the damage to the property based on Hanscomb's 1990 Yardsticks for Costing. It was this estimate that Justice Chapnik found most reasonably consistent with both the policy and statutory provisions
Delta Insurance Restorations Inc and Task Restoration Ltd provided estimates for Allstate. Walters Consulting Corporation also provided evaluations and costing for Allstate. Justice Chapnik found that both contractors were highly motivated to confer with Allatate's adjuster, Mr. Luongo and to work towards delineating and producing a very narrow scope. The Justice found NFA's scope and estimates more credible.
The Justice also found that estimates from Royal Court Contracting and Steve's Board to Board Drywall Construction Company on behalf of the insured to be more credible and genuine that those supplied by Allstates representatives.
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