In my October 13, 2012, blog post, I gave an overview of an ongoing blog topic for me – post-claim / pre-suit insurance policy conditions. In my October 26, 2012, blog post, I gave some insight on compliance with an insurer’s request for examination. In my November 2, 2012, blog post, I gave some insight on proofs of loss. Today’s topic is the paper cut – the insurance company’s myriad document requests.

I attended an excellent conference earlier this week primarily consisting of high-caliber public adjusters and high-caliber policyholder attorneys. Not surprisingly, the presentations were superb. During a couple of the presentations, different seasoned attorneys commented along these lines: “just give the insurance companies what they request.” I generally agree. There is generally no need to nitpick with an insurance company, and I assure you insurance companies, their adjusters, and their legal counsel do not mind your nitpicking. First, nitpicking during claim adjustment serves as a nice basis for an insurer to delay claim payment. The longer payment is withheld, the longer the money sits in the insurer’s bank account gaining interest, and the more likely it is for the insured, with resources that pale in comparison to the carrier’s resources, to fold. Second, some trier of fact might later construe nitpicking as a failure to cooperate and preclude coverage on a willy-nilly technicality. So, in my humble opinion, if a document requested by an insurer is clearly irrelevant (and there are likely to be such requests) but does not contain overly-sensitive information and is readily available or accessible to the insured, just hand it over to the insurance company despite the irrelevancy and perhaps (if you are a lawyer) include something like this in the cover letter accompanying the production:

Several of the enclosed documents (namely, bank statements and phone records) are only being produced to foster the carrier’s doing the right thing; i.e., fully indemnifying our clients for their loss. Our providing the carrier with bank statements and phone records should not be construed as some sort of concession as to admissibility. To be clear, we fail to see the relevance of these documents. Furthermore, we trust that the carrier will not invade our clients’ privacy by publically disseminating these documents.

Okay, enough of my personal opinion, let’s get into what the law has to say about compliance with an insurer’s document requests. Most case law and treatises make clear that an insured need only substantially comply with an insurer’s document requests. For example, Florida’s Fourth District Court of Appeal, in reversing a summary judgment entered in favor of an insurer due to an insured’s not producing every single piece of paper that the insurer demanded, held: “Where, as here, an insured cooperates to some degree, the issue of whether there has been a material breach of the insurance contract is one for a jury – not the trial judge.”1 “An insurer… will rarely be able to deny coverage based on the insured’s failure to cooperate. Violations of the cooperation requirement have to be substantial and material in order to affect coverage. Moreover, the duty is activated only if the company’s request for cooperation is reasonable, precise, and definite.”2  “The insured is not bound by the cooperation clause to do any act not justified by considerations of good faith… .”3 “Most importantly… the majority of jurisdictions… also insist that the company demonstrate that it was prejudiced as a result of lack of cooperation.”4


1 Schnagel v. State Farm Mut. Auto. Ins. Co., 843 So. 2d 1037, 1038 (Fla. 4th DCA 2003).
2 1 Insurance Claims and Disputes 5th § 3:2, at 1 (West, Mar. 2012).
3 16 Williston on Contracts 4th § 49:107 (West, May 2012).
4 1 Insurance Claims and Disputes 5th § 3:2, at 2.

  • Margaret

    Consumers need to beware of requests for documents that are not required.
    For instance, after Hurricane Ike, State Farm said they would only consider signed contracts from hired contractors in considering any initial underadjustment. Thus even though I had a professional hurricane inspection report by a licenced inspector and the report of a structural engineer, State Farm would not consider those documents in examining its denial of substantial damages until I provided them with signed repair contracts.
    This is simply not the law in Texas and I doubt if it is in other states.
    My heart is with the victims of Sandy because for many the nightmare has yet to begin.