Bad faith and coverage for looting were at issue in Spears v. State Farm Ins. Co., No. 08-3183, 2009 U.S. Dist. LEXIS 49554 (E. D. La. June 12, 2009). The insureds' home was damaged by Hurricane Katrina on August 29, 2005. A homeowner's policy issued by State Farm provided coverage of up to $179,700 for dwelling and up to $134,775 for contents and loss of use.
In September 2005, State Farm opened a claims file and advanced $2500. In November 2005, State Farm inspected the property. On November 25, 2005, State Farm paid $55,205,87 for dwelling loss and $21,096 for contents and loss of use. State Farm also opened a separate claims file for the alleged looting, but the claim was never paid.
The insureds filed suit in 2008, arguing State Farm had not paid full benefits. Insureds included a claim for bad faith. After suit was filed, State Farm made an unsolicited tender of $18,960 after an expert evaluation found additional uncompensated damages.
State Farm moved for partial summary judgment on the bad faith and looting claims. The Louisiana statues did not penalize insurance companies for failing to pay claims, but for failing to pay claims in a manner that was arbitrary, capricious, or without probable cause. If the insurer had a reasonable basis to defend the claim and acted in good-faith reliance on that defense, the statutory penalties for bad faith were inappropriate. Here, the insureds offered no evidence to suggest that State Farm acted in bad faith. The basis of the claim appeared to be that State Farm was not sufficiently concerned about the insureds' family's welfare after the hurricane. While there was a dispute about coverage, the insurer had not acted in bad faith.
State Farm also moved for summary judgment to dismiss the looting claim because the insureds had not pled the claim in the complaint. The insureds had moved to amend their complaint to add a claim for damage from failure to pay the looting claim, but the motion had been denied. State Farm further argued the statutory extension of the prescription period for Katrina claims did not apply. Because there was no looting claim in the suit, State Farm's motion for summary judgment was denied as moot. It would be inappropriate for the court to address the applicability of the statute extending the prescription period for Katrina claims when the looting claim was not properly before the court. The parties were free to file motions in limine on the relevance of evidence of looting in regard to State Farm's alleged liability for underpayment of the claim.
