News 5 Investigates: Couple still fighting USAA for insurance money after 2016 hail storm

Posted at 2:15 AM, Jan 12, 2018
and last updated 2018-08-09 00:19:12-04

News 5 Investigates has learned some people are still struggling to get insurance money for repairs after the second largest hail storm wiped through El Paso County back in 2016.

Jeffrey and Karen Starr say they paid every month for homeowners insurance, but they haven’t been able to get their money even after their claim was approved.

Chief Investigative Reporter Eric Ross uncovered USAA made mistakes which the company isn’t denying. However, public relations representatives for USAA say there is nothing they can do to help the Starr’s, even though they had a good policy.

According to its website, USAA is the 5th largest homeowners insurer in the nation with a net worth topping $27 billion.

The company says it’s proud to serve veterans, but the Starr’s feel USAA has only served them with excuses.

In the summer of 2016, a major hail storm ripped through El Paso County and caused damage to the Starr’s home.

“You can see over there where it’s torn off,” Karen said as she showed News 5 Investigates damage to her roof.

“If we don’t fix the roof, siding or windows, it’s going to have further damage and I’ve explained that to them (USAA),” Karen said.

The Starr’s say holes in the siding allow water to seep in. They now fear mold could be growing inside.

An insurance adjuster approved their claim and sent them a check, but the Starr’s can’t cash it because it is not only addressed to the Starr’s and the mortgage company, but also to a man named David Atwood.

Who is David Atwood? 

News 5 Investigates learned Atwood sold the home to the Starr’s and is nowhere to be found. Without his signature, the check is essentially useless.

Unfortunately, because the Starr’s purchased the home through a “deed of contract” agreement, the seller’s name has to be listed as an insured party on the policy–that’s according to USAA.

Differences between traditional mortgages and deed of contract agreements:

Under a traditional mortgage, a home buyer will secure their own financing and the deed belongs to them. Once the seller in a traditional mortgage transaction vacates the home, they have no legal rights to the deed or occupancy.

Under a deed of contract, the seller retains the legal title to the house, but the home buyer takes over the mortgage payments. When the remaining balance is paid, the deed will transfer to the buyer from the seller.

Benefits with a deed of contract agreement: 

A deed of sale agreement allows home buyers to purchase a home they might otherwise not qualify for under a tradition mortgage.

This agreement could also be beneficial to a seller if he/she is in financial trouble. They can still keep the title to their home and can avoid having to file for bankruptcy or losing their property to foreclosure. Essentially, they are legally allowed to retain their “homeowner” status, but will be required to transfer the deed and lose rights to the house once the new home buyers pay off the mortgage.

This type of deal could be a win-win situation for some home buyers and sellers, but it can also cause problems if you have to file an insurance claim and can’t find the seller.

“Mr. Atwood has a legal interest in the home,” Rebekah Nelson, a spokesperson for USAA said. “As the legal owner, Mr. Atwood is required to be on the insurance policy and included on the insurance payment for any covered damage to the home.”

Nelson also added that this is an “industry standard process” for insurance companies.

Richard Johnson, a senior communications manager for USAA also told News 5 Investigates in an email that Mr. Atwood “was always part of the policy” which the Starr’s dispute.

News 5 Investigates found evidence USAA made mistakes in this case.

Remember—USAA said Mr. Atwood, the home seller, was always part of the policy per industry standards, yet in 2016, Starr’s insurance policy renewal makes no mention of Mr. Atwood.

Also–USAA issued an initial check related to the hail damage claim which did not include Atwood’s name—another issue according to USAA’s own policy.

Furthermore, News 5 Investigates found in February 2017, USAA created an “amended declaration” to the Starr’s insurance policy—removing Jeffrey and Karen Starr from the policy, and replacing their names with David Atwood.

USAA did not explain why Mr. Atwood was “added” to the policy. However, a spokesperson sent us the Starr’s original 2015 insurance policy declarations page showing “Atwood” listed as an additional insurer from 2015-2016.

News 5 Investigates wanted to independently verify the authenticity of the declarations page USAA sent us, so we had the Starr’s log on to their USAA account and give us access to review their policy documents. Surprisingly, the 2015-2016 policy we were told to “look at” had vanished on USAA’s website.

Now it’s not uncommon for electronic financial records and contracts to expire online after so many years, but News 5 Investigates raised concerns after it appeared every other document from 2015 was still uploaded and available for the Starr’s to review.

Chief Investigative Reporter Eric Ross also noticed the majority of documents uploaded on the Starr’s account expire after 7 years. 4 out of the 5 “2015” financial documents on the Starr’s account show they will no longer be visible after 2022—so where did the original policy go? We may never know.

Bottom Line: 

The Starr’s are unable to make repairs as they wait for the $36,000 they are owed. USAA says it will re-issue the check, but reiterates Mr. Atwood must sign it. To-date, no one has been able to find where Atwood is living.

“We understand the Starr’s are having difficulties reaching Mr. Atwood,” Nelson said. “We are attempting to locate Mr. Atwood and hope to resolve this as quickly as possible.”

News 5 Investigates asked USAA how many times it tried to reach Atwood, but they would not disclose that information.

“We strive to provide best in class service to our members, and will continue to assist the Starr family to resolve this matter,” Nelson said.

However, the Starr’s say after informing USAA they couldn’t reach Mr. Atwood, a claims representative told them to tarp their house.

“They are not treating us well at all, especially as veterans,” Karen said. “They’ve given other people their checks with this storm to get their houses repaired.”

The Starr’s are on a fixed income and they are disappointed with the position USAA has taken.

“We’re not trying to get rich off USAA,” Karen said. “We’re not trying to pocket any money. We just want the things repaired that got damaged during that storm.”

The Starr’s continued paying USAA for homeowners insurance for an entire year after they filed a claim—hoping USAA would revisit their situation and offer a solution.

In September 2017, USAA canceled their policy.

News 5 Investigates asked USAA why their policy was canceled, but we were not given a specific reason.

Because this issue is a civil matter, the Starr’s would have to take their complaint to court.

Avoiding insurance issues: 

We live in a world where most policies and documents are sent to us electronically. You should always keep an electronic copy of statements and files on your computer, but it never hurts to print them out and keep them in a safe place, just in case those electronic files vanish.

Read over your policy and ask questions. Don’t just assume the policy you have is the right policy. Get everything in writing and document any changes made to your policy year-to-year.

If you notice unauthorized changes to your policy, you should notify the insurance company first to address the matter. If a resolution can’t be reached, you can contact the Division of Insurance Department under the Colorado Department of Regulatory Agencies in Denver.