Natalia Migal told a U.S. Senate subcommittee Tuesday that Allstate originally offered $46,000 to fix her Georgia house that was extensively damaged by Hurricane Helene on Sept. 27, an offer more than $350,000 lower than what an independent adjuster later estimated. 

Two adjusters who worked on Migal’s claim for Allstate also testified they faced pressure to lower their initial estimates, a practice that was a pattern for the insurance company. 

The testimony was part of a two-hour-plus hearing before the Homeland Security & Governmental Affairs Subcommittee on Disaster Management, District of Columbia, and Census. 

Chair Sen. Josh Hawley (R-Missouri) said it is the first hearing to examine the insurance industry’s claims practices following recent natural disasters. 

“In the last year alone, disasters have devastated communities across our country,” Hawley said at the start of the hearing. 

He mentioned tornadoes in his state of Missouri, Hurricanes Milton and Helene in the Southeast, and the California wildfires. 

“These disasters have done more than cause property damage, though that is quite significant; they have done more than cause inconvenience, though that can be harrowing; they have destroyed the lives of people,” Hawley said. “We’re talking about moms who’ve had to haul 5-gallon buckets of water because the pipes are gone. We’re talking about grandparents who’ve had to sleep in their cars because there’s no roof over their heads. We’re talking about families who are maxing out their credit cards because their insurance companies won’t pay out any damage claims, and that’s what brings us to today’s hearing. 

“Where do Americans turn after catastrophes like the ones we’ve experienced just in the last calendar year? The answer is they turn to their insurance companies, and they don’t turn to their insurance companies for a handout. This isn’t charity that we’re talking about. They turn to their insurance companies because they pay premiums to those insurance companies. It’s a contract, and by the way, it’s required in law.” 

Hawley said every state requires insurance, and homeowners pay their premiums dutifully. 

“Unfortunately, time after time, they find when disaster strikes in their moment of utmost need, the insurance companies come back to them and they delay and they deny and they offer excuses,” he said. “And they send out two adjusters and three adjusters and 15 adjusters and 25 adjusters, and they constantly change the estimates. At the end of the day, they just won’t pay what is due, what is required, what is just, and it’s not a one-off situation; it’s not like it’s happened to just one family. It is a deliberate strategy to maximize profits.” 

Often, third-party adjusters write a report in good faith only to have an insurance company intervene and ask that they change their estimate, Hawley said. He said oftentimes, the policyholder is never aware of the changes in their estimate. 

“The policyholder gets no say in the process and the policyholder is left to try and put back together their life as these insurance companies make billions and billions of dollars in profits,” Hawley said. 

Migal testified that her family, including her 11-year-old and 9-year-old children, was abruptly awoken on Sept. 27 when a 70-foot oak tree fell onto their home. The family immediately called Allstate, their insurance provider. 

The home sustained structural damage as well as damage to the roof, electrical systems, brickwork, gutters, lighting, doors, and more, she said. 

It took about three weeks for the first adjuster to arrive, she said. She said the first adjuster, Nick Schroeder, with Pilot Catastrophe Services, was thorough. 

Schroeder was removed from the file before he could complete his report, and his access was revoked, Migal said. 

A new inspection was completed by a second adjuster who was less thorough, Miqal said. More than two months after the claim was filed, Allstate’s initial valuation was $46,000. 

“We were stunned,” Migal said. “This amount did not begin to reflect the real-world cost of the repairs and estimates from contractors. It was perfectly clear that working with Allstate will be increasingly difficult, and there was no resolution in sight.” 

Migal said her family contracted Matthew Hunter of Hunter Public Adjusting for an independent estimate. A sworn proof of loss of $497,548 was submitted to Allstate on March 14. 

A third adjuster from Allstate agreed with Hunter’s estimate on site, Migal said. However, Allstate later submitted a final estimate at just under $100,000. 

She told the subcommittee that, as of early May, no repairs have been made to the home.

“We are homeowners, not lawyers, not engineers, and not insurance experts,” Migal said. “We have lived up to our end of the contract. We have been Allstate homeowners insurance customers for six years, since October 2019. During that time, we have paid our bills on time and in full. But when we needed Allstate most, they failed us.”

Schroeder, the first adjuster sent by Allstate, told the subcommittee he’s been a licensed adjuster for about six years and has inspected damage and prepared estimates on behalf of more than 17 insurance carriers, including Allstate and State Farm. 

He told the committee that Migal’s claim was one of the more significant claims he handled in Georgia following Hurricane Helene. 

“In general, my experience handling Allstate claims was marked by repeated frustration,” Schroeder said. “My estimates were frequently rejected or returned with requests for modifications that often reduced coverage. These changes typically involved reclassifying line items to minimize costs, such as coding a job for an electrician to a roofer when other roof work is present, as in replacing an electrically-powered roof vent, to prevent the estimating software from prompting a labor minimum charge for an electrician to safely disconnect and reconnect the hard-wired vent.” 

Schroeder said that while working on Migal’s claim, Allstate instructed him to change the estimate from a full replacement of the breezeway on Migal’s home to a partial replacement. 

After pushing back against Allstate’s attempts to lower the claim, Schroeder told the committee he was removed from the case. He was told it was because he was taking too much time to complete the estimate. 

When questioned by Hawley, Schroeder said he believed he was removed because it would be more cost-effective to assign the claim to another adjuster who would listen better. 

Hawley asked Schroeder, “Have you ever been told to change estimates to reduce payouts?” 

Schroeder responded, “Frequently.” 

When asked if this was a pattern by Allstate, Schroeder responded, “This was definitely a pattern.” 

Clifford Millikan, another adjuster with Pilot Catastrophe and the third adjuster assigned to Migal’s claim, testified that he also observed extensive damage to the home. 

He told the committee his estimate also was rejected by Allstate, which instructed him to lower it. 

When asked if this was consistent with other Allstate cases, he responded, “Absolutely.” 

Prior to questioning, Millikan testified that he’s seen significant changes in Allstate’s claims practices since 2020. This includes the use of pictures to identify damage. 

“Adjusters now act as picture takers and estimate writers, submitting their work to reviewers who approve or deny claims and dictate revisions,” Millikan said. “These revisions often force adjusters to use materials not of like kind and quality, delete damages known to be covered, and even to issue denial letters, even when the adjuster disagrees with the decision. There is no room for discussion. If an adjuster resists, the claim is reassigned to someone who complies.”

Millikan calls the new practice unethical, not fair, and inaccurate. He said some adjusters have quit their positions because of the practices. 

Hawley asked if Millikan was concerned that Allstate would retaliate against him for testifying. 

“I got a phone call from Pilot management indicating that they were aware of it [testimony] and they got word from people in the office that I was going to be on a cutoff list,” Millikan said. 

He said the call came a day before the hearing. 

“I had no idea that the company I work for would hold a grudge about speaking the truth,” Millikan said. 

Another homeowner, Jacob Vertel, told the subcommittee that his family, including his 2-year-old child and pregnant wife, woke up in the early morning of Sept. 27 to a tree crashing through the roof of their North Carolina home. 

After finding a safe place for his family to ride out the storm and before losing power, Vertel filed an insurance claim with State Farm. 

Before the night was over, four trees fell on his home. 

State Farm’s first inspection was on Oct. 7, 10 days after the storm. He said the inspection seemed to go well.  

However, the next day, Vertel says he received a voicemail that his home was considered habitable by State Farm. 

“A home where I watched water pour through the outlets; where the sky is visible from our 2-year-old’s bedroom, our nursery-to-be, our living room, and our bathroom,” Vertel said. 

Vertel said that early on, basic commitments in the State Farm policy were being aggressively denied. He decided to hire a public adjuster. 

“Not long after, our decision to hire a public adjuster was reaffirmed when we received our first estimate of the damage from State Farm,” Vertel said. “The sum we were to receive would not even cover fixing the roof, let alone repairing our entire home. From there, we watched as our case was handled with little communication from State Farm. Emails went unanswered for weeks at a time. We were told that State Farm had issued a payment on our claim on Oct. 24. That check did not show up.” 

Three months after no movement, State Farm assigned a new adjuster to the case, he said. Yet, the entire process started from scratch. 

“At that point, we sought legal assistance and were ultimately forced to file a suit against State Farm,” Vertel said. “After 157 days, only after we took legal action, the structural engineer we had been requesting for months was finally sent by State Farm. Now, 228 days after the storm, our home remains untouched, with no progress being made. My wife, who was three months pregnant at the time of the storm, gave birth to our daughter two-and-a-half months ago. Our son turned three in April. What could have been just a blip in his childhood has become a major event in his life as he repeatedly asks to go back home. We need State Farm to give us our life back.”

Hawley said his staff is working to investigate insurance companies’ responses to the disasters and will continue to do so. 

“This is a system that promises homeowners that they are ‘in good hands,’” Hawley said. “That they will watch over them ‘like a good neighbor,’ and after billions and billions of dollars in premiums are collected and pocketed by these insurance companies, the people who are left holding the bag are the policyholders. American citizens, at their moment of maximum despair, there’s something wrong with that system. There needs to be some accountability.”

IMAGE

Photo of Sen. Josh Hawley (R-Missouri)  during hearing to examine the insurance industry’s claims practices following recent natural disasters May 13/screenshot