Category: Bad Faith

MS Amlin insurance company sued the policyholders of a Florida hotel, stating that Hurricane Irma did not cause the more than $1 million in damages claimed. Instead, they argued that the majority of the building’s issues already existed before the September 2017 storm, and were mostly the result of shoddy construction work.

The lawsuit

The insurance company, MS Amlin Corporate Member Ltd., sued policyholders SoHo Realty LLC and Yahav Enterprises LLC in federal court in Florida on October 18, claiming the following: that MS Amblin does not have to cover the damage, that its appraisal is correct, and that the property owners’ appraisal is not impartial.

In a letter to the insureds, MS Amlin’s attorney wrote, “Underwriters’ investigation has concluded that the vast majority of the observed damage at the property showed no signs of being caused by Hurricane Irma and in fact predated the storm.”

The property is part of the Alexander Hotel in Miami Beach and includes a two-story ballroom, restaurant space, kitchen, gym, office, and outdoor tiki bar. It’s also in the midst of a $40 million restoration project, according to MS Amlin.

Hurricane Irma hit the Miami area around September 10, 2017, and the insureds filed an insurance claim a little over a week later. Their adjuster, Hernan C. Dominguez Jr., first estimated the damage at approximately $978,000 but later revised that amount to slightly over $1.1 million.

The appraisals

Dominguez reported that all of the damage to the property was a result of wind and rain from Irma. MS Amlin’s appraiser, however, reported that only about $58,000 of damages were a result of the hurricane. Further, according to the policy, coverage is limited to $2.8 million for improvements, $1 million for business income and $300,000 for the tiki bar. Each of those numbers comes with a five percent deductible for windstorms.

Using MS Amlin’s number of $58,000, the repair costs don’t exceed the deductibles, so the insurer claims they’re not required to pay out anything to the defendants. The insurer’s appraiser reports that the other damage appears to have been caused by leaks in walls, ceilings, pipes and air conditioning units, as well as mold and mildew, which is not covered by the current policy.

SoHo and Yahav are challenging MS Amlin’s appraisal, but the insurance company wants an impartial appraiser. The property owners’ choice, Dominguez, was hired on the contingency that his fee be linked to the amount of money recovered. “It is clear that Mr. Dominguez’s personal financial interests would be tied to the insureds’ in any appraisal,” MS Amlin claimed.

This is set to be an interesting case and gives some good insight to the world of appraisals and commercial claims. It also reminds us why it is so important to understand your policy contract before you sign it, so that you do not lose out if you ever need to make a claim.

The Gilbert Firm is highly experienced and respected in insurance disputes. Our Tennessee attorneys work to protect you when your insurer fails to pay out a claim or continually delays your payment. Brandon McWherter, Clint Scott, and Jonathan Bobbitt provide skilled, professional representation. Call us today at 888.996.9731, or fill out our contact form. We maintain offices in Nashville, Chattanooga, Memphis, Jackson and Knoxville.

A class-action lawsuit filed recently in Philadelphia state court claims that Travelers is selling rot insurance to homeowners while concealing the actual terms of the proposed coverage. According to the lawsuit, Travelers Home and Marine Insurance Co. allegedly markets and sells add-on homeowners’ insurance to consumers that is supposed to provide coverage for rot and fungus damage. However, the insurance policy fails to explain that certain causes of rot damage are not included in the coverage.

Rose vs. Travelers

Sean and Jamie Rose – plaintiffs in the lawsuit – purchased a homeowners’ insurance policy from Travelers that included supplemental coverage for rot damage, fungus, and microbes, which added to the cost of the policy.

The add-on coverage apparently included “limited ‘fungi,’ other microbes or rot remediation coverage,” in addition to rot removal and replacement of damaged property. The conditions making the coverage effective included the rot occurring as a result of a covered cause and the damage promptly reported by the homeowners.

In August 2018, when a water pipe broke in their master bathroom and kitchen, the Roses expected to have the damage covered by their homeowners’ insurance. However, the insurance company reportedly sent a representative who claimed that the damaged pipe had been leaking for a prolonged period of time – weeks, months, or years – disqualifying the damage for coverage under the policy.

The specific letter sent by Travelers to the family in October 2018 included the following statement: “Rot is indicative of an ongoing presence of moisture for weeks, months and years. Since water damages that occur for a period of weeks, months or years are excluded, your policy does not provide coverage.”

Travelers would not pay rot coverage

Travelers allegedly sent company representative Janene Harlieb to the Rose’s home to obtain a statement from the homeowners in the aftermath of the water damage. As Ms. Harlieb investigated the damage, she allegedly told the couple that she did not see how Travelers would provide compensation for the damage despite the insurance add-on purchased by the couple.

In the lawsuit, the Roses claim that “Ms. Harlieb indicated that she was not aware of why there was rot coverage as there was no situation for which Travelers would pay for rot.” In the lawsuit, the Roses claim bad faith insurance practices, breach of contract, and violation of Pennsylvania’s consumer protection laws by Travelers, stating: “Defendant, despite demand for benefits under the policy, has refused without legal justification or cause, and continues to refuse to pay to plaintiff monies owed for the damages.”

In the class-action suit, the Roses’ claim that Travelers manipulated its customers into buying additional rot coverage without ever intending to pay out claims under the coverage:

“The practice of Travelers in interpreting the portion of the policy, advertised as ‘additional coverages,’ despite the intention to never provide this additional coverage which is otherwise provided in this policy and was provided in previous policies, has been perpetrated by Travelers maliciously and in conscious disregard for the rights of its policyholders solely for the financial advantage of Travelers.”

The Roses, representing a Class of Pennsylvania residents who paid Travelers extra for rot coverage but were denied that coverage when issuing claims, are seeking compensatory damages, additional damages, attorney’s fees, and court costs.

At the Gilbert Firm, we offer proactive legal counsel to victims of bad faith insurance practices in Tennessee. If you have been subjected to bad faith or breach of contract by an insurance company, our experienced Tennessee bad faith and insurance dispute attorneys can help. Call Jonathan Bobbitt, Clint Scott or Brandon McWherter today today at 888.996.9731 or use our contact form to set up a free consultation about your case.

The only way to know what coverages you have are to read your policy. If you’re like me, nobody wants to actually sit down and read an insurance policy. I wouldn’t if it was my own personal home, but because I know about all of the problems that my clients have had – hundreds and hundreds of thousands have had because they didn’t – I actually am one of the few people in the world that take the time to do that.

Part of the services that we offer to our clients, at the very front end, is to sit down with them and go through the policy page by page, and identify any coverages that they have in their policy that might enable them to recover more, to recover better, just to make sure that they’re getting the full benefit of the premiums that they’ve paid. How much coverage do you have? Do you have extra coverage for code upgrades that might be required during the rebuilding process? How much contents coverage do you have? Do you get paid on a replacement cost basis or an actual cash value basis? What other coverages are out there that might enable you to become whole, because you’ve had a fire and you’ve had a loss, you’ve had a hailstorm, or you’ve had … There’s so many things that can happen, and life goes on, and people don’t have time to sit down and read a policy; and we help them make sure that they’re getting the full benefit of their insurance coverage.

The Gilbert Firm protects policyholders throughout Tennessee. If your insurer has denied your claim, or acted in bad faith, we can help. Please call 888.996.9731, or complete our contact form to schedule an appointment with a Tennessee insurance dispute lawyer.

The whole point of homeowners’ insurance is to protect you in the event of damage to your home. Whether there was a fire, or a flood, or wind damage, etc. – you call your agent, he or she helps you make a claim, and then you get paid out so you can fix your home. Should be easy enough.

But there are times when things do not move so smoothly, and that is when you might need an insurance dispute attorney to help you. When the insurance company is playing fast and loose with your contract, or attempting to deny your claim for unjust or suspicious reasons, that is when you should call a lawyer and ask for help. If you are unsure whether or not you have a right to act, call us anyway; it is better to be safe than sorry.

Good reasons to call

1. Your insurance company is trying to get out of paying for damages that are covered under your policy.
2. Your property has been assessed below its value, so your carrier can pay you less for your losses.
3. Your claim has been flagged for “causation,” as in, they claim the damage was caused by something not covered by your policy (like “wear and tear”) when, in fact, it was caused by something covered under your policy.
4. Your agent sold you the wrong policy, failed to properly explain what you were getting, did not pass along your claim to the underwriter, or committed some other act of negligence which led to the delay or denial of your claim.
5. The insurance company or its employees acted in bad faith to avoid paying your claim.

In our experience, we have worked with a lot of people who were reluctant to call an attorney – even when their carriers had offered them an unfair pay out, or tried to “bully” them into accepting less or nothing at all – because they assumed their agents were telling the truth, or because they had difficulties parsing all the legal language in their contracts. Even a small sum is better than no money, they might have thought.

But you pay for your insurance policy month after month, year after year. And you have a right to fair and just compensation for structural and property damages to your home when something happens that is covered under your policy. If you believe your carrier is trying to pull the wool over your eyes, so to speak, the best thing you can do is call a Tennessee insurance dispute attorney. You could be entitled to far more than your insurance company is offering to pay.

The Gilbert Firm provides comprehensive, proactive counsel to victims of bad faith and agent negligence in Tennessee. To schedule a consultation with Clint Scott or Brandon McWherter, please call 888.996.9731. You can also use our contact form to reach a Tennessee insurance dispute lawyer from our firm. The Firm has offices in Nashville, Chattanooga, Memphis, Jackson and Knoxville for your convenience.

When you purchase an insurance policy – homeowners, auto, commercial, etc. – you do so assuming that your insurance company will act in good faith and honor the claims you make, provided that claim is covered by the policies you have bought. When an insurer deliberately denies a claim for unjust reasons, you may be able to pursue a bad faith action.

We have discussed types of bad faith actions before, so now we would like to break down what the law says. You can read the statute in its entirety here, but this is what you need to know:

1. The insurer has 60 days from when you, as the policyholder, have made a demand for payment on your covered loss to pay that claim. Unless the insurer refuses to pay the claim within that time, you cannot file a lawsuit for bad faith before that 60 days has passed.
2. There must be a formal demand for payment. There has been a ton of litigation over the years concerning what constitutes “formal demand.” The best practice is to simply advise the insurer, in writing, of your intent to pursue a claim for bad faith if the claim is not appropriately and timely paid. Documenting this demand will help avoid future problems.
3. The reason for the denial of payment must have occurred in bad faith. If your claim is denied because of a valid reason – like lack of coverage, for example – then you cannot pursue a bad faith action. However, an insurer’s unreasonable coverage denial can be bad faith if its interpretation of the policy is clearly flawed.

As insurance dispute lawyers, we handle bad faith actions regularly. We review claims weekly to help our clients determine if their claim has been denied or underpaid in bad faith. We also handle formal demands, to ensure that they are done correctly and in a timely fashion.

Compensation for a bad faith claim

Generally speaking, a successful bad faith action will allow a policyholder to recoup his or her losses, as well as compensation worth up to 25% “on the liability for the loss; provided, that it is made to appear to the court or jury trying the case that the refusal to pay the loss was not in good faith, and that the failure to pay inflicted additional expense, loss, or injury including attorney fees upon the holder of the policy or fidelity bond; and provided, further, that the additional liability, within the limit prescribed, shall, in the discretion of the court or jury trying the case, be measured by the additional expense, loss, and injury including attorney fees thus entailed.”

Policyholders in Tennessee may have additional recourse for punitive damages in some instances. Specifically, if an insurance company’s breach of its obligations under an insurance policy are “intentional, malicious, reckless, or malicious,” then the jury may award punitive damages. Importantly, punitive damages are not limited to 25% of the claim like the bad faith statute. See Carroll v. Nationwide Property & Casualty Company, 2015 U.S. Dist. LEXIS 73674 (W.D. Tenn. June 8, 2015).

If you are unsure whether your insurance company has acted in bad faith, it is time to turn to the Gilbert Firm. Brandon McWherter and Clint Scott help Tennessee policyholders recover what is theirs when the insurance company unfairly denies their claims. To speak with a skilled insurance dispute attorney about your case, please call 888.996.9731 or fill out our contact form. We maintain offices in Nashville, Chattanooga, Memphis, Jackson and Knoxville for the convenience of our clients throughout the state.

In our piece about homeowners’ policy exclusions, we listed “intentional acts” as one of the more common exclusions. Arson – the deliberate act of setting fire to a property – will normally fall under “intentional acts.” Insurance policies almost always cover fire, but there’s a huge difference between a grease fire in the kitchen and deliberately setting your own home aflame.

Under normal circumstances, if you set fire to your house, pay someone else to set fire to your house, or are in any way involved with the intentional burning down of your house, your claim will be denied. However, if someone sets fire to your home and you have no knowledge of the act, your insurance carrier should pay out on that claim.

Proving arson

Generally speaking, an insured is the party who must prove that the loss falls within the parameters of the policy, but the insurance company is responsible for proving arson. In other words, a policyholder must only show that a fire loss occurred during the term of the policy, and then the burden shifts to the insurance company to prove it doesn’t owe for the claim, i.e., arson. This can make it more complicated for policyholders to obtain a payout when their property has been deliberately burned by someone else.

In 2013, Brandon McWherter and Clint Scott represented clients whose insurance company denied their fire damage claim under a policy that insured against “accidental” direct physical loss. The insurance company claimed that the clients had committed arson and that the clients had the burden of proving the fire was “accidental” pursuant to the terms of the insurance policy. Proving a negative (that they didn’t burn it) can be different, but fortunately the Judge disagreed and ruled that policyholders only have to prove a fire occurred, and then the burden shifts to the insurance company to prove arson. When the case went to the United States Court of Appeals for the Sixth Circuit, the Court pointed out that it is presumed in Tennessee that “the burning of a property is the result of an accidental cause,” and that because someone else set fire to their home, they “accidentally” suffered a loss. This decision upheld the long-standing rule that insurance companies must prove arson occurred.

Additional complications

A story of California from 2012 highlights a particular type of complication that can arise out of an arson claim. A couple is on the verge of divorce and the wife wanted to remain in the family home. The husband set fire to that home, completely destroying it. The wife submitted a claim, which traditionally would have been denied; you cannot collect on a claim if the act was intentional, after all. But in this case, the wife was deemed an “innocent co-insured” and she was able to collect on her claim because of the wording of her policy.

This is one reason why more and more insurance companies are changing the language of their policies, to ensure that they will not have to pay out a claim if the intentional act was committed by “any” or “an” insured (as opposed the “the” insured, which can be interpreted differently).

The vast majority of homeowners do not expect someone to set fire to their property, intentionally or otherwise. Still, it is an excellent idea to review your policies with your agent and a skilled Tennessee insurance disputes attorney before you sign anything. At the Gilbert Firm, we uphold the rights of policyholders throughout the state and assist clients whose claims have been denied for unfair or unjust reasons. To work with an experienced Tennessee bad faith attorney from our firm, please call 888.996.9731, contact Brandon McWherter or Clint Scott, or use this contact form to schedule a consultation at one of our office locations in Nashville, Chattanooga, Memphis, Jackson or Knoxville.