Insurance policies have certain provisions that must be complied with in a property insurance claim. These are called duties after loss, and if reasonably requested by the insurer, they must be complied with. Recently, an insurer in New York became involved in litigation over whether the policyholder had shown it the damaged property following a claim.1 The insurer claimed the policyholder failed to show it the damaged property, which affected the insurer’s ability to determine whether there was a loss and the extent of any damages. There are often a couple policy provisions at play in this scenario. There is a duty to mitigate damages and perform necessary repairs as quickly as possible. On the other hand, there is a duty to show the insurer the damaged property.

The insured home suffered extensive water damage resulting from a burst pipe in the second floor bathroom. It caused the dining room ceiling to collapse, drywall in most of the house to be ruined, and water to cascade to the first floor and into the finished basement, which had two to three feet of standing water. Within a day, the policyholder notified Allstate of the occurrence. Approximately two weeks later, a claims adjuster for Allstate inspected the premises. According to Allstate’s adjuster, he told the policyholder to mitigate damages, but to not perform actual repairs until he could inspect the property. When he inspected the property two weeks later, he found repairs were made, and he claimed he could not tell whether a loss occurred. Allstate denied coverage on the ground that the policyholder failed to show it the damaged property.

The policyholder filed a lawsuit for damages. Both parties eventually filed motions for summary judgment, which the trial court denied, holding there were issues of fact so the case should go to a jury. Allstate appealed.

In support of its position, Allstate submitted and affidavit of its claims adjuster, who stated that, upon receipt of the claim a day after the loss, he instructed the policyholder to mitigate the loss but told him not to make “actual repairs” until he could inspect the damage. He also stated in that affidavit that when he visited the home two weeks later, significant repairs had been made which made it impossible for him to tell whether a loss occurred and what caused the alleged loss.

The policyholder submitted evidence that his home was rendered uninhabitable by the occurrence and required immediate repair, he took 145 photographs of the damage and even preserved the broken pipe for Allstate’s inspection. He also stated in his affidavit that he allowed access to the property on the first date Allstate’s claims adjuster was available.

The appellate court held that the trial court properly denied Allstate’s motion and remanded for trial. That is good news for the policyholder who seemingly complied with his insurer’s requests by acting with diligence to conduct necessary repairs and mitigate any further loss.

What gamesmanship in the insurance claims process. With the legal maneuvering by insurers in the claims process, it is difficult to run that gauntlet alone. Who would want to step into this ring without qualified and experienced representation?

1 Farokhpour v. Allstate Ins. Co., 955 N.Y.S.2d 185 (N.Y.A.D. 2nd Dept. Dec. 5, 2012).


    Dear Attorney Marker:

    The further reality is that, in this case, Allstate got to hang onto their $ through the trial and appellate court levels (i.e., mission accomplished).

    Shirley Heflin
    (Tampa, FL)

  • Doesn’t Allstate have a duty to inspect sooner than 14 days? And further, that is a long time to allow water damaged floors, walls and ceilings to be wet which would have caused more damages. Thanks Shaun for a great article.
    Gary Rowland

  • expatriate insurance

    I think it is clear that home owner had genuine issues and it had all the proofs required to back the claim. I wonder why insurers make tall promises when they would go all out to back off from the promise they make to their clients?

    I guess home owners and others who want to be insured, need to be very cautious while choosing their insurer.

  • Jeff Childs

    Insurance claims can definitely be a game, but you are right, if you don’t have capable representation on your side, it may be a game that you end up losing. Along with that representation, you need a quality expert witness that can provide your attorney with beneficial information that will aid in your defense.

  • JC

    I am a restoration contractor, and I just had this very same scenario happen to me two weeks ago. The insured filed a claim for water damage, they were told by Allstate to mitigate the damages and the homeowner retained me to facilitate the mitigation. The adjuster could not meet with the homeowner for several days after the loss date, so the mitigation was already performed and the equipment removed by the time he arrived. He agreed with everything I had done to the structure with the exception of cutting a few square feet of carpet that had been saturated by level 3 water contamination. He disagreed that the contamination was level 3 and therefore told the homeowner Allstate would not be paying for the carpet.

    Her argument was they initially told her to mitigate her damages and her carpet sitting in water (no matter the level of contamination) for multiple days against a wooden subfloor would in no way benefit her home or the safety of her family.

    I showed multiple pictures constituting my assessment of the damages, but the end result is, she had to pay to replace the carpet that was removed.