A Missouri jury discovered that State Farm Fireplace and Casualty Firm acted in breach of its insurance coverage coverage and engaged in vexatious refusal to pay, awarding The Progress Challenge, LLC substantial damages. 1 The case centered on a industrial property loss that occurred on July 22, 2022, following a extreme rainstorm that precipitated water infiltration and harm to the roof and inside of the insured premises. The jury awarded $796,931.80 in compensatory damages for breach of contract, $79,993.18 in statutory penalties beneath Missouri’s vexatious refusal statute, and $92,209.80 in attorneys’ charges.
This case highlights that Missouri legislation protects policyholders from unreasonable declare denials and delays by a explanation for motion often known as the Vexatious Refusal to Pay. I’ve beforehand famous Missouri’s view on unhealthy religion actions in Missouri Dangerous Religion Legislation—Understanding Missouri’s Vexatious Refusal to Pay Legislation. Drew Houghton wrote a wonderful publish on the subject, Dangerous Religion and Vexatious Refusal in Missouri.
In line with the Grievance, State Farm didn’t correctly examine and modify the declare in a well timed and honest method. The insurer’s adjuster initially inspected the property on August 10, 2022, practically three weeks after the loss. Though he reportedly advised the insured that State Farm would put together an estimate of damages, no such estimate was ever offered. As an alternative, State Farm issued a denial letter on August 22, 2022, citing an exclusion associated to clogged roof drains and improper upkeep. Nonetheless, The Progress Challenge had employed consultants, together with an engineer from the Metropolitan St. Louis Sewer District and an unbiased forensic roofing knowledgeable, who concluded there was no proof of clogs, backups, or maintenance-related points that may bar protection.
The Grievance detailed how State Farm repeatedly modified its rationale for the denial. At totally different occasions, State Farm relied on totally different coverage exclusions to justify its refusal to pay, together with claims of preexisting harm, put on and tear, and, later, exclusion for harm from standing water as a result of drainage points. The insured argued that these shifting justifications had been proof of a pretextual denial fairly than a respectable investigation, particularly provided that State Farm by no means ready an estimate of the damages and as an alternative summarily concluded that nothing was owed.
Considerably, the Grievance highlighted that State Farm’s personal declare consultant failed to stick to the coverage’s requirement to find out the quantity of loss. Underneath the phrases of the coverage, State Farm had an obligation to both pay the worth of the loss or in any other case decide it primarily based on precise money worth. But the insurer allegedly didn’t carry out this evaluation and denied the declare outright. The insured’s personal knowledgeable in the end ready an in depth valuation utilizing Xactimate, the identical industry-standard software program utilized by insurers. The jury accepted the policyholder’s estimate as the suitable measure of the loss.
Missouri legislation offers a robust treatment for policyholders when insurers fail to behave fairly. The statute governing vexatious refusal to pay permits restoration of not solely coverage advantages but in addition statutory penalties and attorneys’ charges when an insurer refuses to pay a declare with out affordable trigger or excuse. On this case, the jury discovered that State Farm’s conduct met that threshold. The award of practically $80,000 in statutory penalties and over $92,000 in attorneys’ charges displays the jury’s conclusion that State Farm’s denial was not merely a breach of contract however a calculated and unjustified refusal to pay what was owed.
This verdict serves to remind everybody within the property claims {industry} that beneath Missouri legislation, insurance coverage corporations have a authorized obligation to promptly and pretty modify claims. After they fail to take action, and particularly when their conduct seems designed to delay or keep away from fee with out affordable justification, they could be held accountable not just for the contract advantages but in addition for added damages designed to punish and deter unhealthy religion conduct. The Progress Challenge’s victory towards State Farm demonstrates the significance of those protections and the necessity for insurers to honor their contractual and statutory obligations fairly than interact in what others might deem to be outcome-oriented investigations.
Thought The Day
“The primary precept is that you could not idiot your self—and you’re the best particular person to idiot.”
— Richard Feynman
1 The Progress Challenge v. State Farm Fireplace & Cas. Co., No. 4:23-cv-00710 (Mo. Cir. Ct.).