Related Practices
Insureds’ Failure to Comply with Their Duties Under a Policy Could Bar Claims
The Zelle Lonestar LowdownSeptember 11, 2024
A court can deny coverage if insureds fail to comply with their duties under a policy as a court in the Southern District of Texas, Houston Division recently explained in Ansah v. Nationwide Property and Casualty Insurance Co., No. H-23-2488, 2024 WL 3929895, at *5 (S.D. Tex. Aug. 23, 2024).
The policy in that case contained the following provision:
- Your Duties After Loss
In case of a loss to covered property, we have no duty to provide coverage under this Policy if the failure to comply with the following duties is prejudicial to us . . .
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d. Protect the property from further damage....
e. Cooperate with us in the investigation of a claim;
f. Prepare an inventory of damaged personal property showing the quantity, description, “actual cash value” and amount of loss. Attach all bills, receipts and related documents that justify the figures in the inventory;
g. As often as we reasonably require:
(1) Show the damaged property;
(2) Provide us with records and documents we request and permit us to make copies ...
On February 18, 2021, the insureds submitted a claim for freeze damage to their dwelling and personal property that occurred the day before. On March 5, 2021, the insurer contacted the insureds to begin the investigation and ultimately paid $87,122.07 for dwelling damage and at least $35,984.83 for personal property damage.
The insureds disputed the insurer’s valuation of the loss and demanded appraisal. The appraisers determined that the actual cash value of the dwelling damage was $78,936.05—less than what the insurer already paid.
During the appraisal of the personal property, it became clear that none of the claimed personal property was available for inspection because the insureds supposedly disposed of it. Additionally, the insureds did not have any photos or documentation of the alleged personal property damage. Instead, the insureds merely provided a list of items claimed.
The court held that the evidence showed that the insureds disposed of the allegedly damaged personal property without submitting an inventory supported by bills and receipts and without showing the property as required by the policy. Because the insureds’ failures prejudiced the insurer’s appraisal rights, the insurer had no obligation under the policy to make further payment for the damaged personal property.
The court also found that the insureds’ remaining claims for bad faith, unfair insurance practices, fraud and ongoing conspiracy, violations of the DTPA, and their TPPCA claims failed for lack of evidence, lack of independent injury, and inadequate pleading.
Consequently, the court granted the insurer’s motion for summary judgment, and the court explained that the action would be dismissed with prejudice.
Ansah is a good reminder to insurers that when insureds are not cooperating with an investigation and failing to comply with their duties under a policy, the insurer may want to explore whether it has an obligation under the policy to make further payments in the claim.
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The opinions expressed are those of the authors and do not necessarily reflect the views of the firm or its clients. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
