The insurance claim process can be a particularly stressful experience for a homeowner. In the event of a burglary, a homeowner is likely left feeling violated and not as safe as before the theft. Challenges with the insurance company can add to an already harrowing experience. In Glinsey v. Allstate Property and Casualty Insurance Company, a homeowner claimed she was harassed by her insurance company after sustaining thefts at two properties.
In 2009, Ms. Glinsey was insured by Allstate. She was out of town when she learned that someone stole property from her Mississippi home. Ms. Glinsey became concerned and called a relative in Louisiana to check on her deceased father’s residence and learned it had also been burglarized. Ms. Gliney reported both to the police and submitted two claims to Allstate.
Ms. Glinsey later withdrew her Mississippi claim and explained during her Examination Under Oath that her mother admitted to taking the stolen items. Ms. Glinsey later claimed that it was Allstate, not her mother, who told Ms. Glinsey that her mother admitted taking the items from her Mississippi home, and Allstate’s adjusters induced Ms. Glinsey into withdrawing the Mississippi claim by threatening to incarcerate her mother. Ms. Glinsey also stated that at the time of the EUO, she was in a fragile state, suffering from bio-polar disorder and effects of narcotics, among other conditions. Ms. Glinsey then submitted an affidavit executed by her mother, in which her mother denied stealing from the Mississippi home.
Allstate denied the Louisiana claim on grounds that the loss was not accidental as required by the policy. Allstate also alleged that she made fraudulent and material misrepresentations in presenting the Louisiana claim.
Ms. Glinsey sued Allstate on both claims, alleging that Allstate wrongfully denied her Louisiana claim and wrongfully coerced her into withdrawing her Mississippi claim. Her complaint included a number of counts, but I will limit this post to the bad faith claim.
When evaluating the bad faith count against Allstate, the Southern District Court in Mississippi started with the principles regarding both the carrier’s and the insured’s duties under the law:
Under Mississippi law, insurers have a duty ‘to perform a prompt and adequate investigation and make a reasonable, good faith decision based on that investigation’ and may be liable for punitive damages for denying a claim in bad faith…To recover punitive damages for bad faith denial of their insurance claim, the [insured] ‘must show that the insurer denied the claim (1) without an arguable or legitimate basis, either in fact or law, and (2) with malice or gross negligence in disregard of the insured’s rights’…[The insurer,] on the other hand, ‘need only show that it had reasonable justifications, either in fact or in law, to deny payment.’ The question of whether [the insurer] had an arguable basis for denying the … claim ‘is an issue of law for the court’.
The Court determined that there should be a trial regarding the Mississippi claim for bad faith and punitive damages because a jury could very well find punitive damages if Ms. Glinsey proves Allstate’s agents threatened to put her mother in jail if she did not withdraw her Mississippi claim.
With regard to her Louisiana claim, Allstate argued that it was entitled to summary judgment because it had a reasonable, arguable basis for not paying the theft claims because Ms. Glinsey provided no evidence that she actually owned the items alledegly stolen. The Court determined that Allstate had an arguable basis for denying the Louisiana claim because Ms. Glinsey failed to produce documents that were material to the insurer’s investigation of the claim, so Allstate did not deny her claim in bad faith.
The rulings above are set forth in an unreported decision from the Southern District of Mississippi. Other jurisdictions might rule differently on the same or similar issues.