I worked as a property adjuster for 15 years. 10 for State Farm and 5 as an Independent. In all those years, I never encountered an exclusion for asbestos abatement. I can tell you with absolute certainty that the current HO-3 (ISO form most HO policies are written on) does NOT contain exclusionary language for “asbestos” or “asbestos abatement” in its _Losses Not Insured Section.
Before I comment further, I wish to emphasize I am not a licensed Public Adjuster. My comments on this matter are strictly from my personal experience. I’m basically suggesting what I’d do if I were in your shoes.
My initial concern is that the Field Adjuster made a verbal confirmation of coverage to you. I hope you still have that person’s name and contact information. If you do, I’d start pressing the matter from there. In certain states, this is considered detrimental reliance. Basically, you acted with good faith on the instructions provided by an agent of the insurance company.
Did the Field Adjuster make the same verbal coverage confirmation to the homeowner? If yes, your corroborating information could be very important in swaying a claims supervisor to change the coverage decision. Insurers are estopped from pressing exclusions if they’ve already committed to coverage and somebody acted on that decision (as you did).
There’s a possibility the homeowners policy might contain an endorsement which amends the Losses Not Insured section and thus writes out coverage for asbestos and abatement. If that’s the case, you may find yourself in a difficult situation.
Also, repairability is a big factor in this matter. If they extended coverage for hail damage, how do they expect you to restore the property to its pre-loss condition without lawfully addressing contaminated material?
I think you have a strong hand here. Educate your customer on what’s taking place and involve them in the process. Reach out to the agent as well. If the agent is reasonable, they can be an influential ally in this matter. And I’ll echo what someone else previously mentioned - what does the denial letter say? It’s critical to find this out. They cannot deny a claim without providing a written explanation.