The insurer's attempt to dismiss the insured's multi-count complaint for failure to provide full coverage for flood damage failed. Ragusa Corp. v. Standard Fire Ins. Co., 2014 U.S. Dist. LEXIS 40812 (D. Conn. March 27, 2014).
The insureds' house suffered significant damage due to flood associated with Hurricane Irene. The insureds submitted a claim. Standard Fire paid $35,216.75, well below what the insureds thought they were owed. The insureds returned the check and demanded what they believed was full payment. The insureds demanded an appraisal because the parties did not agree on the amount being paid under the policy, including disagreement about the amount owed for items that both sides agreed were covered under the policy. Standard Fire refused to participate in an appraisal.
The insureds ended up suing Standard Fire, alleging, among other things, breach of contract, negligent misrepresentation, and breach of the implied covenant of good faith and fair dealing.
Standard Fire argued the insureds' breach of contract claim failed because they did not submit a timely proof of loss. The timeliness of the proof of loss was unclear, and, consequently, this count could not be dismissed.
Standard Fire argued it was not obligated to submit to an appraisal because the procedure was not designed to address the scope of coverage. The insureds contended, however, that the parties did not agree on the amount to be paid. Because the court had to accept the insureds' well pleaded allegations, this count could not be dismissed.
Finally, Standard Fire argued that extra-contractual claims were expressly preempted by federal law and barred by the Standard Flood Insurance Policy. Where, however, the allegations involved actions by the insurer that were outside the scope of the Standard Flood Insurance Policy, such as issues of negligence, the public treasury would not have to reimburse the insurance company. Therefore, the allegations survived Standard Fire's motion to dismiss.
