The insured's property was damaged during Hurricane Katrina by wind, wind driven rain, flooding, storm surge and water in Jupiter v. Automobile Club Inter-Insurance Exchange, No. 07-1689, 2009 U.S. Dist. LEXIS 44083 May 26, 2009). Plaintiff recovered $225,500 from Allstate, its flood insurance carrier. The insured also held a homeowner's policy with Automobile Club, who paid a total of $106,079.47. The insured argued this was insufficient because its property was a total loss. Auto Club submitted the wind and rain damage was not substantial. Further, Auto Club contended water damage, a flood exclusion, power failure exclusions, and neglect exclusions precluded further liability under the policy.
Auto Club moved for summary judgment on the issues of bad faith and whether the insured had been fully compensated. On the bad faith issue, the insured contended a factual issue existed regarding Auto Club's failure to timely pay the claim despite evidence of damage being provided.
The Court granted Auto Club's motion on the bad faith issue. Louisiana law provided statutory penalties against insurers for failure to timely resolve claims or pay settlement awards. But the insured had to prove that the insurer knowingly committed actions which were completely unjustified, without reasonable or probable cause or excuse.
Here, Auto Club did not act arbitrarily, capriciously, or without probable cause in resolving the insured's claims. Although the insured asserted there was a factual dispute as to the timeliness of payments, there was no evidence that the payments were not timely made. Further, the contents list provided by the insured did not include receipts, and there remained a dispute as to the extent to which the insured's property was damaged by wind as opposed to flood. The parties dispute over the total coast of repairs caused by a covered peril did not warrant the imposition of statutory penalties for bad faith.
The court denied Auto Club's motion regarding whether the insured had been fully compensated, however, because a factual issue was presented.
