(USA Herald) – When a policyholder suffers a loss and makes a claim on their insurance policy, they expect their insurer to act in good faith and fairly evaluate and pay the claim. However, not all insurers live up to their obligations. In some cases, insurers may engage in bad faith conduct by denying valid claims or delaying payments without a valid reason. The recent case of Vandervert Construction Inc. v. Allied World Specialty Insurance Co. et al. in the U.S. District Court for the Eastern District of Washington highlights the consequences of such bad faith conduct.
In this case, Vandervert Construction, a contractor, filed a claim for over $7.5 million in storm-related damage to a Hilton hotel it was building. The damage was caused by water leaking from the hotel’s unfinished roof in 2016. The contractor held builder’s risk policies with Allied World Specialty Insurance and Westchester Fire Insurance. However, the insurers denied the claim, citing a rain exclusion in the policies.
U.S. District Judge Mary K. Dimke issued an order granting the insurers partial summary judgment, saying the rain exclusion in the policies prevented coverage. The judge wrote in her order, “The inevitable conclusion is simple: It rained. Vandervert’s invention of a separate peril would vitiate all meaning from the rain exclusion.”
While the court’s decision may seem reasonable on the surface, it’s important to note that the judge declined to rule on whether the insurers acted negligently or in bad faith, or whether they violated the state’s Consumer Protection Act.
Vandervert attempted to argue previously that damage to the hotel it was building was caused by ponded water, which the insurers called an improper re-characterization of rain damage. The judge also wrote that she was not ready to say whether the insurers’ delays in responding to Vandervert’s claim were “motivated by a frivolous or unfounded reason.”
This case highlights the importance of thoroughly investigating and evaluating insurance claims. A fair and prompt investigation is essential to determining whether the insurer’s denial of the claim is justified and to prevent bad faith conduct. As investigative paralegal with the USA Herald, Samuel Lopez, has stated, “Insurance bad faith conduct not only harms policyholders but also undermines the integrity of the insurance system as a whole.”
The failure of an insurer to properly investigate and evaluate a claim can lead to severe consequences for both the policyholder and the insurer. Policyholders may be left to bear the financial burden of their loss, while insurers may face bad faith claims and penalties.
It’s important for policyholders to understand their rights and for insurers to fulfill their obligations. Policyholders should consult with legal experts if they believe their insurer has acted in bad faith. Insurers, on the other hand, should ensure that they are conducting fair and thorough investigations of claims and acting in good faith towards their policyholders.
In conclusion, the recent case of Vandervert Construction v. Allied World Specialty Insurance Co. et al. serves as a reminder of the importance of insurers acting in good faith and thoroughly investigating and evaluating insurance claims.
