Valuation expertise not a prerequisite to assess flood damage

Introduction

In the case of Cori Rigsby v State Farm Fire & Casualty Company [2015 U.S. App. LEXIS 12060], the plaintiffs had filed a case against State Farm alleging that State Farm had filed incorrect claims in its role as an assessor in wake of the insurance claims after Hurricane Katrina. The plaintiffs had succeeded in their suit in the district court by relying on the testimony of an expert. This expert verified that the damage caused to the property in question was caused primarily by wind and not by flooding. The case of the defendants depended upon the argument wherein they asked the court to hold the testimony of the expert as inadmissible. The court held that an expert need not specifically be an expert on valuation but even a combination of adjuster’s report and testimony of the insured individual would suffice as testimony for damage.

Background

Most of the damage caused by Hurricane Katrina to homes was damage which was insured against by homeowners. This insurance was a combination of two insurance policies, one for damage caused by flooding and another for damage caused by wind. These two policies were self-exclusionary but were often offered by the same insurance company. State Farm, the defendant company was one such insurance company. The critical point here was that the government funds (through the National Flood Insurance Programme) were used to subsidize the payments made for flood damage. As expected, this led to a moral hazard for the private insurers who were classifying the claims based on the damage caused by wind or flooding. In the present case, the Plaintiff depended on the expert evidence provided by one Dr. Ralph Sinno who concluded that the property in question was destroyed by winds before the subsequent flooding. This evidence was contested by the Defendants as not being evidence which could be called expert testimony as Dr. Sinno was not an expert on valuation matters.

Discussion

The Court of Appeals upheld the decision reached by the Fifth Circuit Court in Bayle v All State Insurance Co. [615 F.3d 350, 360, 363 (5th Cir. 2010)] In that the ratio was that the question of valuing damage caused was indeed one that required an expert opinion but not necessarily only that of a valuation expert. It also held that the witnesses who testified to the value of the property need not be especially skilled in the field of valuation. In this case, the expert, Dr. Sinno, was a professor in structural civil engineering and the Court held that this sufficient expertise to give an opinion on the source of the damage. Thus the Court upheld the logic of the lower court in holding that expertise in structural engineering was sufficient to decide whether structural damage had been caused by flooding or by winds.