Earlier this month, a California appellate court held that a policyholder can assert a negligent misrepresentation claim against an insurance adjuster.1

In the underlying bad faith suit, the homeowners (the Bocks) sued Travelers for lowballing their claim for property damage caused by a large tree limb crashing into the home and damaging among other things, the chimney, the windows and the home’s interior. As part of the lawsuit, the homeowners also sued the claims adjuster (Hansen) individually for negligent misrepresentation. At the initial pleadings stage, the lower court held that as a matter of law the claims adjuster could not be held liable for negligent misrepresentation. Consequently, the claims adjuster was able to obtain a dismissal. The appellate court said, not so fast. In reversing the judgment that was in favor of the claims adjuster, the appellate court found that when supported by appropriate facts, an insurance company’s agents and employees do have a duty to the policyholder and can be held personally liable for committing an independent tort in the course of handling a claim.

The misrepresentation at issue, at least as alleged by the homeowners, was the claims adjuster informing them that their policy did not cover the cost of the clean up when in fact it did. What I actually found more interesting was the other alleged conduct of the adjuster:

  • When the adjuster arrived at the home to inspect the loss, he told the homeowners that he only had minutes to review the damage, and in fact spent no more than ten to fifteen minutes at the home.
  • Before the adjuster took pictures of the damage, he pushed several branches out of the living room window. When the adjuster was asked why he had not taken the pictures first, he ignored the homeowner as told her to “clean up the mess” and demanded that she clean up the living room.
  • The adjuster also removed the tree limbs leaning against the chimney before taking any pictures.
  • In addition to telling the homeowners that cleanup was not covered under the policy and that they should contact “friends and family members with chainsaws” to clean up the limbs and the mess in the house and backyard.

Assuming that the above is what actually happened, does anyone think that this is a proper claims investigation?

1 Bock v. Hansen, No. A136567, 2014 WL (Cal. App. Apr. 2, 2014).