Insured’s Failure to Cooperate Dooms Claim
The court granted the insurer's motion for summary judgment based upon the insured's failure to allow the insurer to inspect damaged personal property . Ansah v Nationwide Prop. and Cas. Ins. Co., 2024 U.S. Dist. LEXIS 151472 (S. D. Texas Aug. 23, 2024).
The insureds purchased a property policy from Nationwide. The policy imposed duties on the insureds after a covered loss. These included protecting the property from further damage, cooperating with the insured in the investigation of a claim, preparing an inventory of damaged property, and showing the damaged property to the insurer.
The insureds submitted a claim for damages to their dwelling and personal property caused by a freeze event. Nationwide contacted the insureds to discuss their claim and the claims process. Nationwide began investigating the claim and paid $87,122.07 for dwelling damage and at least $35,984.83 for personal property damage.
The insureds disputed the amount of the loss and invoked the policy's appraisal provision. The appraisers determined that the actual cash value of the dwelling damage was $78,936.05 – less than what Nationwide had paid. Appraisal of the damaged personal property was not completed. Nationwide requested documents be provided to its appraiser regarding the personal property in order to address the remaining items. The insured's appraiser responded that all personal property had been disposed of and was not available for inspection. Nor did the insureds have a photos or documentation for the items. The insured's counsel wrote to Nationwide arguing that the request for receipts was unwarranted and was not required under the policy.
The insureds filed suit alleging, among other things, breach of contract and bad faith for underpaying the claim and failing to properly investigate. Nationwide filed a motion for summary judgment arguing that the breach of contract claim failed because Nationwide paid more that the appraisal award for dwelling damage and because the insureds violated the policy by not cooperating in the investigation and not showing the damaged personal property, thereby preventing an appraisal. Further, the bad faith claim failed due to lack of evidence, inadequate pleading, and the absence of an injury independent of the alleged underpayment of the claim. The insureds argued that they provided a list of items that were damaged along with replacement and cash values. The insureds further argued that the bad faith claim survived regardless of the validity of their contract claim and that there was evidence to support their claim.
The court found that the insureds stated without evidence that they made the damaged personal property available for inspection. The insureds only provided a list of items that they claimed were damaged. The list did not satisfy the policy requirements that the insured cooperate with the insurer's investigation, that an inventory supported by bills and receipts be provided, or the duty to show the insurer the damaged property. The insureds failed to provide evidence that would allow an appraiser to verify the items or the extent of damage.
Therefore, the insureds failed to comply with the policy. This prejudiced Nationwide by hindering its ability to verify the insureds' personal property valuation through appraisal. Nationwide had no duty to make further payment for the damaged personal property. The motion was granted as to the insureds' breach of contract claim.
Under limited circumstance, a bad faith claim could survive even if no benefits were due. If an insurer's bad faith caused an injury independent of the loss of policy benefits, the insured could recover damages for that injury even if the policy did not grant the insured a right to benefits. Here, because Nationwide satisfied its obligations under the policy and because the insureds cited no evidence of an independent injury, Nationwide's motion was also granted on the bad faith claim.
