If an insurer pays for repairs to a building based on the insured's preliminary estimate of damage, does the insured have further obligations to pay for property damage? This was one of the issues in Chateau Argonne Condominium Assoc. v. State Farm Ins. Co., 2008 U.S. Dist. LEXIS 70917 (E.D. La. Sept. 19, 2008).
Plaintiff owned four condominiums in New Orleans. It had a condominium association policy and a flood policy from State Farm. All four condominiums suffered damage during Hurricane Katrina. Plaintiff got an estimate of $283,900 to repair the four units.
Plaintiff contracted for repairs in the amount of $283,900. But due to unexpected costs and oral modifications of the contract, the repairs eventually amounted to $731,355. State Farm paid $336,568 under both policies, but refused to pay more. State Farm relied on its policy which limited its liability to "the amount the insured actually spends that is necessary to repair or replace the damaged property."
Plaintiff sued and State Farm moved for summary judgment. The motion was denied because it was possible that State Farm may have paid only a portion of the necessary repairs. Accordingly, there was a genuine issue of material fact regarding the whether State Farm would be liable for additional expenses.
A second issue arose from State Farm's motion in limine to exclude evidence regarding other Katrina insurance claims it paid. Plaintiff wanted to demonstrate that its payment from State Farm was unfairly low based on payments for similar properties in New Orleans, including property three blocks from Plaintiff's condominiums. State Farm's motion in limine was granted. The other properties differed in significant respects. The properties were located several blocks apart, were built and repaired at different times, and were a different size.
