By PURVA PATEL
 Houston Chronicle

Ask Mohammed Khan why he's willing to drag out an already two-year battle with his insurance company, and he'll tell you he's got nothing to lose.

His Sugar Land home is uninhabitable. While he lived there, he claims, his wife and children experienced breathing problems, skin rashes and fatigue caused by exposure to the mold.

Khan's taking his insurer and adjuster to court, alleging fraud, deceptive trade practices and conspiracy -- claims that stem from a mold report allegedly doctored to make the damage to Khan's home appear less severe than it really was and set Khan up for a lowball settlement.

"They thought I was stupid," Khan says. "They really thought I was stupid, but I'm not backing down."

Officials at the insurance company, Safeco Insurance Co., and the claims management company, Atlanta-based Crawford and Co., declined comment on the pending litigation but denied all of the allegations in court records.

Hundreds of homeowners complain to the Texas Department of Insurance each year about unfair settlement practices and offers. In the past five years alone, the department has received more than 2,500 complaints. Short of catching your insurance company in the act, consumer groups and plaintiffs attorneys say there are a few steps consumers can take, from documenting everything to shopping around, to negotiating a favorable claims settlement.

But there is a huge bargaining disparity between policyholders with a claim and the insurance company, which has everyone's premiums, says Phil Maxwell, a plaintiff's attorney in Austin and a former chief of the consumer protection division of the Attorney General's Office.

"You're under pressure to get paid, and they hold all the cards, so getting low-balled is almost part of the deal," he said. "It just depends on how much in good faith the insurance company is acting."

Do your homework One of the most important steps is to know how much a claim is worth. Knowing that figure will help you keep in mind how high or low you're willing to go.

Homeowners can hire a public insurance adjuster from a private firm to represent them in negotiations with insurance companies. But the cost comes out of the policyholder's pocket and may not be worthwhile on a small claim.

Hiring a contractor or some other expert to inspect damage can also help you make sure you know the value of the claim, said Dan Lambe, executive director of consumer group Texas Watch.

"We encourage people to be persistent in getting second and third opinions. Just like you shop around for a product, shop around to make sure you're getting the right treatment for the right price," Lambe said. "Unfortunately, many people are forced to turn to the courts, and that's the last place they should have to go."

Melinda Ballard, a homeowner who started a consumer advocacy group after her claim went through the court system, suggested getting three bids from qualified contractors for any repairs that may need be made.

Others also said that when the insurance company makes the first offer, decide if it's reasonable. If it is, make a counteroffer that's slightly lower than your original demand and the company will know you're willing to compromise as well.

If the offer is too low, make the insurer justify it. Then respond to every point.

If the homeowner and insurance company can't agree on a settlement, most policies allow for an appraisal process.
The homeowner and insurer each pick an independent appraiser. The two appraisers then pick an umpire to rule on any differences between the amounts the appraisers come up with. Usually, two out of three agree on a binding settlement amount.

Settling disputes The process can be expensive, with the cost of the umpire split between the policyholder and the insurance company.

Homeowners can file lawsuits if they suspect wrongdoing or unfair practices, but that can also be expensive and show little return.

Punitive damages have become harder to recover in insurance bad-faith cases since tort reform legislation in the 1990s in Texas. Instead of just proving bad faith, policyholders usually have to show some type of personal injury that resulted from the insurer's actions, said Richard Alderman, director of the Center of Consumer Law at the University of Houston Law Center.

"When all the insurance company does is deny you money, and your damages are not that much more than the money they should have paid you in the first place, it becomes a business decision," he said. "It's economical for the insurance company to delay payment and take what it can get."

Getting to the bottom of it Khan is intent on getting his day in court.

"I don't care about the money," he said.

"But they thought they could get away with this, and they can't."

When he returned from vacation to a flooded home, he filed a claim and awaited the results of a mold test conducted by Crawford on behalf of Safeco.

At first Crawford said there was no mold, according to court documents. A few days later the company said parts of the house were contaminated and "recommended" an evacuation.

But when Khan got the test results about a month later, he says he took them to another expert who was shocked Crawford would take so long to tell him to get out of the house.

It turns out the expert hired by Crawford, Abdolreza Marvdashti, saw only a summary of Crawford's mold report that had toned down the severity of the contamination, according to a signed affidavit. Marvdashti could not be reached for comment.

The summary said mold was "detected" in certain rooms but didn't always say how much.

Had he seen the whole report, he would have inspected the house himself and likely recommended the family move out and professionally decontaminate everything in the home, he said in the affidavit.

Khan says Marvdashti has said he signed off on up to 40 such summaries, and court documents suggest Khan's lawyer is trying to find out if Crawford regularly had consultants sign off on reports they didn't see in entirety or if Crawford was simply carrying out Safeco's directives.
 
 

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