Property Insurance Coverage Law Blog : Florida Insurance Lawyer & Attorney : Merlin Law Group Law Firm : Tampa, Houston, Coral Gables, Gulfport

The Joneses also argue that the trial court erred in entering a summary judgment for Alfa on their “abnormal” bad-faith claim. They argue that Alfa intentionally or recklessly failed to investigate the claim because neither Ralph Jones nor Bradshaw ever inspected the roof of the Joneses' house or their attic. Specifically, they argue that Ralph Jones focused exclusively on the foundation to the exclusion of all evidence available to him even though they had made a specific claim for roof damage and the hurricane had blown a tree onto the eave of their house. They also argue that neither Ralph Jones nor Bradshaw gathered any “before and after” evidence from the Joneses or from any other source. The Joneses note that their expert witness, Andrew Beverly, stated that “[a]ny investigation by Alfa that did not include the above-described activities would not satisfy proper claims handling practice.”

Neither Bradshaw nor Ralph Jones inspected the roof or the attic during their investigation, even though the Insureds filed a claim with Alfa for roof damage, the roof had clearly visible damage from the hurricane, and the Insureds contended that the damage to their house was caused by the hurricane. Alfa waited until after the Insureds' house had been extensively damaged by fire and after Alfa had canceled their policy to send Ralph Jones, along with three other engineers, to reinspect the house, including the charred attic and roof. Alfa's own attorney admitted during oral argument that Alfa sent the engineers to the house after the fire only because Alfa was afraid that litigation may arise due to Alfa's denial of the claim following Hurricane Opal, its cancellation of the Insureds’ policy, and the fire damage to the house.

The Supreme Court of Alabama also explained that several facts created a jury question: after Hurricane Opal, Alfa never investigated any records it had of the condition of the Insureds’ house before the hurricane; the record reflects that Alfa never contacted a realtor who visited the house three days before Hurricane Opal made landfall, even though, according to Harold Jones, Bradshaw had inquired about purchasing the residence; Alfa never inquired of the Insureds as to who would have seen their house before Hurricane Opal and never attempted to interview anyone who may have visited the home before Hurricane Opal. Furthermore, Alfa never considered its own “rewrite” inspection of the property, including photographs of the exterior of the house and never inquired of Sanders, its own employee, as to the condition of the house when he conducted the “rewrite” inspection, even though Sanders testified that he did not recall seeing any cracks in the interior or exterior walls of the Joneses' house when he conducted the “rewrite” inspection three months before Hurricane Opal.

An insurance company has a ‘responsibility to marshal all ... facts' necessary to make a determination as to coverage ‘ before its refusal to pay.’ ... This duty must include a duty to investigate a covered event that an insured claims has caused his loss [citation omitted]. Considering the evidence contained in the record that is before this Court, there is certainly a question of fact as to whether Alfa met its duty to marshal all facts necessary to make a determination as to coverage before it denied the Joneses' claim. Thus, the trial court erred in granting Alfa's motion for a summary judgment as to the Joneses' claims of “abnormal” bad-faith failure to properly investigate the Joneses' insurance claim and failure to investigate the condition of the house before Hurricane Opal. We therefore reverse the summary judgment entered by the trial court in favor of Alfa on the “abnormal” bad-faith claim.

Please consider that the opinion discussed above is specific to Alabama and that other jurisdictions might rule differently on this issues. Please tune in for another bad faith discussion next week.