With hurricane season on our doorstep, now is a good time to contemplate faith.
Not faith in divine intervention to protect us from a direct hit. What we all want, at the very least, is to know our insurance companies will act in “good faith” if the worst does strike.
Our firm recently settled a dispute with an insurance company that refused to pay to replace windows in a very expensive beachfront home that Hurricane Florence damaged back in September of 2018. After 18 months of arms-crossed, head-shaking refusal to budge, the carrier agreed to add about $850,000 to its payout. The carrier had contended it could just repair the windows with new sashes, a cheap fix, but it was clear to us that doing so wouldn't result in windows that would meet building codes in place when the windows were installed 15 years ago, let alone current codes. We contended the situation required window replacement.
What caused this recalcitrant carrier suddenly to nearly double its payment? Evidence of bad faith.
An insurance carrier that engages in unfair claim settlement practices risks a judgment for triple damages and attorney fees. The claim usually brought against a carrier that refuses to settle a claim it has acknowledged to be valid while demanding the owner take an unreasonably low amount is a claim for “bad faith” refusal to settle.
Bad faith exists where a carrier acknowledges a valid claim but for an improper purpose, such as to wear down the policyholder, delays adjusting the claim appropriately or refuses to make a reasonable settlement offer. A mere honest disagreement about the value of the claim isn’t bad faith. Where good faith disagreement ends and bad faith refusal to settle begins can be a very tricky line to identify.
In this case, however, the insurance carrier tried to show the local building inspector that window repairs would suffice to meet code by obtaining a note from the manufacturer that suggested the windows were designed to withstand certain wind pressures as required based on the beachfront location and standards when the they were installed. The carrier and manufacturer asserted that repairs would result in the windows meeting that same standard. But we pointed out that the building plans showed the windows were actually designed to meet a much higher standard for that site, suggesting the carrier was misrepresenting facts to the building inspector to avoid being required to replace all the windows — more than 90 of them.
Once we made the facts clear to everyone involved about the windows’ true pressure ratings, the carrier collapsed. The threat of triple damages and fees became too real to fight.
Especially after a major disaster like Florence, gripes about insurance carriers or adjusters low-balling repair estimates are too common to count. But know that adjusters are sensitive about their faithfulness to the settlement process, so concerted and well-placed push-back can work wonders.
But when that fails, you can’t just pray the insurance carrier will find good faith on its own. You may have to take matters into your own hands.