The court refused to dismiss the insured’s claim for hail damage based on late notice because the insurer failed to demonstrate it had suffered prejudice. Borene UMC v. Church Mut. Ins. Co., 2025 U.S. Dist. LEXIS 210767 (W.D. Texas Oct. 27, 2025).

Boerne UMC owned multiple buildings that were allegedly damaged during a hailstorm that occurred in May 2021. In August 2022, Boerne hired a contractor to inspect the roofs . The contractor found damage to several roofs and HVAC units and prepared an estimate for repair of over $700,000. Boerne submitted a claim to its insurer, Church Mutual on November 17, 2022.

An inspector hired by Church Mutual found signs of storm damage but did not determine when the observed damage occurred or whether the observed damage was covered under the policy. Church Mutual then hired an engineering consultant who determined most of the observed damage was cosmetic only. Church Mutual then decided that the actual cash value (ACV) of the covered damaged was below the policy deductible. Church Mutual sent a partial denial letter to Boerne advising that because the ACV of the covered damage fell below its deductible, no benefits would issue.

Boerne sued alleging breach of contract, violation of the Texas Insurance Code for unfair settlement practices, and common law breach of the duty of good faith and fair dealing. Church Mutual moved for summary judgment on all claims.

Church Mutual first argued that an insured’s compliance with a prompt-notice provision was a condition precedent to coverage, the breach of which voided coverage. Church Mutual argued that the delay and failure to comply with the notice provision of the policy created prejudice because the delay prevented Church Mutual from fully investigating the circumstances of the alleged cause of damage. Because Church Mutual investigated the property and determined the amount of loss by differentiating between hail damage needing repair and cosmetic damage, Church Mutual did not provide specific evidence that conclusively showed prejudice. Church Mutual did not satisfy its summary judgment burden to demonstrate no genuine dispute existed whether Boerne’s 18-month delay in reporting the hail damage caused prejudice to Church Mutual.

Church Mutual next argued there was no genuine dispute of material fact on coverage, The court disagreed. Boerne’s adjuster and engineer identified hail penetration as the cause of the observed damages. They both concluded the damages to the roofing systems were damaged solely from the May 2021 hailstorm. This raised a genuine dispute of material fact whether the damage observed was caused by the hailstorm and whether the cost of repair of the damage was below the deductible.

Church’s argument for summary judgment on all the extra-contractual cause of action was defendant upon finding Church Mutual was entitled to summary judgment on the breach of contract claim. The court, however, concluded that Church Mutual did not satisfy its summary judgment burden to establish entitlement to summary judgment on the breach of contract cause of action. Therefore, the argument failed.

Regarding the bad faith claim, the court looked to the chronological factual history. It showed conflicting investigation reports, and conflicting repair cost estimates by representatives of both parties. The chronology revealed that Church Mutual promptly investigated Boerne’s claim before denying it and presented a bona fide dispute regarding Church Mutual’s liability position regarding the extent of damage and cost of repair. At the time it reviewed, investigated, and ultimately assessed the cost of its liability on Boerne’s claim, Church Mutual had a reasonable basis for denying coverage and payment to Boerne. Consequently, Church Mutual’s motion was granted as it pertained to the bad faith cause of action.