The battle between policyholders and their insurance companies has been going on for many, many years. The 1972 case of Hanover Insurance Company v. Hallford is a finding of bad faith arising from a windstorm claim. In the underlying lawsuit, Mr. Hallford filed an insurance claim with his carrier, Hanover Insurance Company, for windstorm damage to his home. When the claim could not be resolved, Mr. Halford filed a lawsuit for the benefits for the damage to his home and personal property, additional living expense and he alleged bad faith. Although Mr. Hallford indicated that he was seeking damages in the total amount of $15,000, no other specified amounts were itemized in the complaint. Hanover defended the allegations, stating that Mr. Hallford had not given notice of the loss, had not filed a windstorm claim with Hanover before filing suit, and that Mr. Hanover breached the policy by failing to comply with policy provisions that required him to give immediate written notice of the loss and a submit a sworn proof of loss within 60 days of the date of the loss.

The Georgia Appellate Court analyzed Mr. Hallford’s testimony that he gave notice of the loss to Hanover on the same day as the loss, and that soon after a Hanover adjuster inspected the home in connection with the claim he filed. Hanover offered $210 to resolve the claim, but Mr. Hallford refused the payment. Mr. Hallford incurred expenses to conduct repairs and then made a demand to Hanover for payment on the claim, but no payment was made within 60 days of the loss.

The Court carefully evaluated the evidence provided by the parties and found that there was undisputed evidence that Mr. Hallford promptly notified Hanover’s agent on the day of the loss and that the very next day Hanover’s adjuster inspected and investigated the damage at the insured property. Hanover’s agent went so far as to advise Mr. Hallford during the inspection that he did not need to do anything else at that point. The knowledge of Hanover’s agent and adjuster of the loss and the date is imputable to Hanover. The discrepancy as to the exact date is not conclusive in these circumstances.

The Court also determined that Mr. Hanover’s demand to Hanover was made more than 60 days before filing suit and, as a result, that was sufficient to satisfy the statutory requirement that a demand for payment of the loss be made more than 60 days prior to filing suit to authorize recovery of attorneys’ fees and penalty for bad faith refusal to pay claim. The fact that the demand was not made for a particular sum did not negate Mr. Hanover’s compliance with the requirements.

To recover attorney’s fees or penalty for bad faith a demand for payment of the loss must be made more than 60 days prior to filing of the suit . . . no particular language is necessary to constitute a demand. In Clark the statement of the insured to an adjuster insisting upon payment of his loss and if not paid he would resort to the court constituted a sufficient demand. Applying that holding to this case, the demand made by plaintiff’s attorney here more than 60 days prior to the suit would be sufficient and the failure to demand payment in any particular sum would not render the demand insufficient.

Additionally, the Court found that the Hanover adjuster waived the proof of loss requirement.

The Court determined that the evidence presented by the parties supported the award of the bad faith penalty and attorney’s fees against Hanover. Please consider that rulings on these or similar issues by courts in other jurisdictions may vary.