From the Desk of Kyle Riley: This case discusses how an insurer’s reasonable investigation can prevent a bad faith claim.
Claims Pointer: When reasonable minds could not differ as to the reasonableness of an insurer’s investigation, the investigation was reasonable and the insurer did not engage in bad faith.
Allen, et al. vs. State Farm Fire & Casualty Co., in the Court of Appeal for the State of Washington, Division I, No. 67505-9-I, — P3d —- (October 8, 2012) (unpublished).
Lightning hit a tree in Dorothea Marshall and Ethan Allen’s (the plaintiffs) backyard causing damage to their home. The plaintiffs’ home was insured by State Farm Fire and Casualty. Both the plaintiffs and the insurer agree that the insurer was obligated to pay for damage to the home that resulted from the lightning strike. The insurer assigned an adjuster to inspect the home and she determined that the lightning strike “shift[ed] the house” and caused “structural damage” to the home and as a result, a structural engineer would need to inspect the nature and extent of the damage. The insurer hired an engineer to conduct the inspection. As part of his inspection, he determined there was no evidence of lightning-related damage to the chimney.
Marshall was not satisfied with the inspection because the engineer did not look inside the chimney. She requested the insurer send a different engineer to inspect the chimney and the insurer sent another engineer to conduct a follow-up inspection. The second inspector also found no evidence of lightning damage to the chimney. The insurer received an estimate for the repair of items identified as lightning related damages and issued a check to the plaintiffs in the full amount. Marshall continued to think that the insurer should be responsible for repairing the chimney and hired independent inspectors and appraisers to assess the chimney damage. Marshall’s appraiser requested that the insurer hire a specific engineer experienced in lightning damage to determine whether the chimney damage was caused by the lightning strike. The insurer complied with the request and that engineer determined that there was no evidence of additional lightning damage beyond what the insurer’s inspectors and engineers identified. The plaintiffs were dissatisfied with the engineer’s inspection and findings.
The plaintiffs sued the insurer alleging the insurer breached the insurance contract. The plaintiffs claimed that the insurer interfered in the appraisal process by directing its appointed appraiser to only appraise that portion of the plaintiffs’ loss that the insurer’s adjusters agreed was caused by the lightning strike. The complaint also alleged an extra-contractual bad faith claim: that the insurer neglected or refused to adequately investigate and pay the plaintiffs’ losses resulting from the lightning strike in violation of WAC 284-30-330 thru 380. Both parties filed motions for summary judgment and the trial court granted the insurer’s motion and dismissed the case. The insurer pointed to an absence of evidence showing that the unpaid damage to the home was caused by the covered event; thereby providing, undisputed evidence confirming the reasonableness of its investigation. The plaintiffs appealed.
On appeal, the court rejected the plaintiffs’ argument that the trial court erred in dismissing the bad faith claim because reasonable minds could not differ as to the reasonableness of the insurer’s investigation. In fact, the court stated that the insurer had complied with every request by the plaintiffs to investigate the claim. The court further held that the breach of contract claim was properly dismissed because there was no evidence in the record demonstrating that the claimed damage was caused by the lightning strike. In addition, the plaintiffs’ claim that the insurer interfered with the appraisal provisions was properly dismissed because the plaintiffs failed to submit the appraisal provisions of the contract as part of the record.
NOTE: This opinion has not been published. It is provided to demonstrate how the court approaches the issues involved in the case. It cannot be cited as authority to a court of law.
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