Last week, a jury in California awarded a homeowner more than $1.3 million arising from a dispute with his Ameriprise insurer.1
According to the complaint, the coverage dispute arose after the insured’s home was damaged during a September 2013 burglary. The burglars not only stole property, but also turned on the water in an upstairs bathtub, causing water to flood the home and soak drywall behind kitchen cabinets downstairs.
After the insured was unable to resolve numerous disputes with Ameriprise, he filed suit. In his complaint, the insured stated that Ameriprise refused to pay his claim in full and made insufficient repairs, resulting in his family being displaced for 14 months. After returning home, one of insured’s sons, with severe epilepsy, experienced increased difficulty breathing and had to be hospitalized.
Later, at the insured’s urging, Ameriprise agreed to have a third-party vendor retest the home for mold. In 2015, the vendor issued a report finding the home tested positive for mold and recommending measures the insured had requested all along.
The complaint further alleged that Ameriprise refused to pay for additional repairs or living expenses owed under the insurance policy.
The Los Angeles jury found that Ameriprise was liable and awarded more than $134,000 in withheld benefits. The jury also awarded the insured $200,000 in damages for mental suffering, anxiety, humiliation, and emotional distress (a category of damage recoverable in a claim for breach of the implied covenant of good faith and fair dealing).
The jury also awarded the insured plaintiff $1 million in punitive damages after concluding that an Ameriprise employee engaged in wrongful conduct that amounted to malice, oppression or fraud.
This case serves as a good example of how policyholder advocates can obtain justice for their clients when insurers fail to properly adjust, investigate, pay claims on time, and treat insureds unfairly. When an insurer breaches the implied covenant of good faith and fair dealing, it exposes the insurer to a wider variety of damages than a mere a breach of contract, including economic losses (such as attorneys fees) caused by the insurer. It can also (as was the case here) subject the insurer to damages for emotional distress.
Last, while punitive damage awards are very difficult to establish and recover because they require a showing that the insurer engaged in malice, oppression, or fraud, when there is evidence to support such a showing (as was the case here), claims for punitive damages provide insureds an opportunity to “punish” insurers for their bad conduct and harmful treatment.
1 Steven Lopez v. IDS Property Casualty Insurance Co. et al., No. BC605264, in the Superior Court of the State of California for the County of Los Angeles, Central District.