The insurer prevailed in summary judgment, disposing of the insured's bad faith claim based upon the investigation of the loss. Nino v. State Farm Lloyds, 2014 U.S. Dist. LEXIS 163993 (S.D. Tex. Nov. 24, 2014).
The insured filed a claim with State Farm for damage resulting from a hailstorm on March 29, 2012. An independent adjuster, Charles Crump, conducted an investigation on behalf of State Farm. Crump inspected the roof, where he noted prior repair to the roof, and found no covered damage to the roof as the result of the 2012 hailstorm. Crump found minimal damage to other parts of the house, totaling $2,311.75, which resulted in no payment after the deduction. Crump provided the insured with a printed copy of his damage estimate.
The insured then hired a public adjuster who found damage totaling $31,991.72, including $10,051.22 in roof repairs.
The insured requested State Farm to conduct another inspection. State Farm assigned the second inspection to Richard Wallis. Like Crump, Wallis inspected the roof, noted previous repairs, and found no covered damage to the roof. He did find damage in the master-bedroom, which totaled $3,540.10, resulting in a post-deductible payment of $1,209.10. Wallis also gave the insured a copy of his estimate, as well as a denial letter.
The insured sued. State Farm filed a motion for partial summary judgment on the insured's bad faith claims, including common law breach of the duty of good faith and fair dealing and for statutory violation of the Texas Insurance Code.
In opposing State Farm's motion, the insured argued there were genuine issues of material fact regarding the reasonableness of the two State Farm inspections. The insured argued that the inspections were inadequate and results-oriented. The court disagreed. The insured did not offer any evidence showing that State Farm knowingly and repeatedly ignored evidence presented to the insured. Instead, State Farm sent two adjusters to inspect the property. The two inspectors, based on their expertise and inspection of the property, determined the property damage was not caused by hail, contrary to the findings of the public adjuster. A finding of hail damage by one expert did not prove another expert's contrary findings were based on an inadequate inspection.
The insured did not provide any expert testimony, proof of standard industry practices, or legal authority that State Farm's adjusters relied on inadequate testing and information.
The insured also argued that State Farm violated the Texas Insurance Code because Crump did not send her an acceptance or denial letter of coverage. Similar to Haw. Rev. Stat. sec. 431:10-103 (11) (B), the Texas Insurance Code required the insurer to "notify a claimant in writing of the acceptance or rejection of a claim no later than the 15th day after the date the insurer receives all items, statements, and forms required by the insurer to secure final proof of loss." Further, if the insurer rejected the claim, it had to state the reasons for the rejection. The insured argued that Crump's estimate did not comply with the statute because it did not discuss coverage.
The court held, however, that Crump's estimate was a timely written document presented to the insured that discussed the basis of denial of her claim. Therefore, there was no statutory violation.
Consequently, State Farm was granted its motion for partial summary judgment.