Has your insurance company abandoned your claim?

On Behalf of | May 6, 2019 | Insurance Bad Faith

The Shawnee Tabernacle Church in Pennsylvania shared a building with its affiliated day care center and an empty space that had been leased to a charter school. In 2015, the property sustained damage from a water leak, and the church called its GuideOne insurance agent within a day.

Because the part of the building used by the charter school was empty, their insurance adjuster said a “vacancy” clause in their policy might keep the building from being covered. The church said the entire building was still being used, with the charter school’s area being used as a reception area, for Bible study and prayer meetings, and as a nursery. In any case, the building was at most partially occupied, not vacant.

The church and daycare, which together had a $6-million policy, had fallen behind on their mortgage payments. It wanted to lease out the old charter school area in order to make up the arrears, but the water damage kept them from doing so.

Months went by with no insurance check — for an estimated $1.8-million damage claim. The mortgage holder eventually foreclosed and the church lost the building. When the church asked for a copy of the damage estimate, GuideOne refused, saying that it had not yet determined that the loss was covered. The adjuster ordered the church leaders to be deposed on the issue of whether the building had been vacant, but never bothered to review those depositions.

The claims adjuster’s supervisor told him to settle the claim, and the church was desperate for a settlement. Nevertheless, the adjuster made no effort to reach a settlement. Ultimately, the claim was transferred to a new adjuster, who acknowledged that the claim hadn’t been handled properly. Yet two more months went by with no action.

In the end, the church filed a lawsuit against GuideOne, claiming that the insurance company had acted in bad faith in delaying the claim. It sought damages for:

  • The $2.8 million in mortgage payments lost
  • $1.2 million in lost equity
  • Lost rent during the time the building could not be occupied due to the water damage
  • Attorney’s fees
  • Punitive damages, which are meant to punish wrongdoing

Judge rules that GuideOne acted recklessly

In a highly unusual move, the judge in the case ruled for the church in what is called a summary judgment motion. Basically, the judge ruled that, based on the pleadings by each party, there was no need for a trial. Even considering the issue from the point of view most favorable to the defendant, the facts were so strongly in the plaintiffs’ favor that no trial was even necessary.

“[The first claims adjuster] did not mistakenly think the delay was appropriate or neglect part of his responsibilities with respect to the claim,” the opinion reads. “He stopped working on it altogether, despite knowing what needed to be done, and then defied his supervisor’s instructions to resolve the claim. Even after [he] was removed from the claim, GuideOne then delayed two additional months before establishing coverage — a delay that can only be viewed as reckless given the age of the claim by that point, the jeopardy faced by the insured, and the company’s possession of all the information needed to resolve the coverage question.”

Has your insurance company acted in bad faith?

Do you suspect your insurer has wrongly delayed, denied or lowballed your legitimate claim? This may be bad faith, and it happens far too often. If you suspect bad faith on the part of your insurance company, an attorney may be able to help you.