A Missouri jury discovered that State Farm Fireplace and Casualty Firm acted in breach of its insurance coverage coverage and engaged in vexatious refusal to pay, awarding The Progress Challenge, LLC substantial damages. 1 The case centered on a industrial property loss that occurred on July 22, 2022, following a extreme rainstorm that brought on water infiltration and injury to the roof and inside of the insured premises. The jury awarded $796,931.80 in compensatory damages for breach of contract, $79,993.18 in statutory penalties below Missouri’s vexatious refusal statute, and $92,209.80 in attorneys’ charges.
This case highlights that Missouri regulation protects policyholders from unreasonable declare denials and delays via a reason behind motion referred to as the Vexatious Refusal to Pay. I’ve beforehand famous Missouri’s view on unhealthy religion actions in Missouri Unhealthy Religion Regulation—Understanding Missouri’s Vexatious Refusal to Pay Regulation. Drew Houghton wrote a wonderful put up on the subject, Unhealthy Religion and Vexatious Refusal in Missouri.
In response to the Grievance, State Farm didn’t correctly examine and regulate the declare in a well timed and honest method. The insurer’s adjuster initially inspected the property on August 10, 2022, practically three weeks after the loss. Though he reportedly instructed the insured that State Farm would put together an estimate of damages, no such estimate was ever supplied. As a substitute, State Farm issued a denial letter on August 22, 2022, citing an exclusion associated to clogged roof drains and improper upkeep. Nevertheless, The Progress Challenge had employed consultants, together with an engineer from the Metropolitan St. Louis Sewer District and an impartial forensic roofing skilled, who concluded there was no proof of clogs, backups, or maintenance-related points that may bar protection.
The Grievance detailed how State Farm repeatedly modified its rationale for the denial. At totally different occasions, State Farm relied on totally different coverage exclusions to justify its refusal to pay, together with claims of preexisting injury, put on and tear, and, later, exclusion for injury from standing water on account of drainage points. The insured argued that these shifting justifications have been proof of a pretextual denial quite than a legit investigation, particularly provided that State Farm by no means ready an estimate of the damages and as a substitute summarily concluded that nothing was owed.
Considerably, the Grievance highlighted that State Farm’s personal declare consultant failed to stick to the coverage’s requirement to find out the quantity of loss. Beneath the phrases of the coverage, State Farm had an obligation to both pay the worth of the loss or in any other case decide it primarily based on precise money worth. But the insurer allegedly didn’t carry out this evaluation and denied the declare outright. The insured’s personal skilled finally ready an in depth valuation utilizing Xactimate, the identical industry-standard software program utilized by insurers. The jury accepted the policyholder’s estimate as the suitable measure of the loss.
Missouri regulation offers a robust treatment for policyholders when insurers fail to behave fairly. The statute governing vexatious refusal to pay permits restoration of not solely coverage advantages but additionally statutory penalties and attorneys’ charges when an insurer refuses to pay a declare with out affordable trigger or excuse. On this case, the jury discovered that State Farm’s conduct met that threshold. The award of practically $80,000 in statutory penalties and over $92,000 in attorneys’ charges displays the jury’s conclusion that State Farm’s denial was not merely a breach of contract however a calculated and unjustified refusal to pay what was owed.
This verdict serves to remind everybody within the property claims {industry} that below Missouri regulation, insurance coverage firms have a authorized responsibility to promptly and pretty regulate claims. After they fail to take action, and particularly when their conduct seems designed to delay or keep away from cost with out affordable justification, they could be held accountable not just for the contract advantages but additionally for extra damages designed to punish and deter unhealthy religion conduct. The Progress Challenge’s victory towards State Farm demonstrates the significance of those protections and the necessity for insurers to honor their contractual and statutory obligations quite than interact in what others could deem to be outcome-oriented investigations.
Thought The Day
“The primary precept is that you need to not idiot your self—and you’re the best particular person to idiot.”
— Richard Feynman
1 The Progress Challenge v. State Farm Fireplace & Cas. Co., No. 4:23-cv-00710 (Mo. Cir. Ct.).
