The insurer never altered its coverage denial, and the insureds sued for breach of contract, negligence, and bad faith. The insurer moved to dismiss the bad faith and negligence claims, but the motion was granted as to the negligence claim, but denied on bad faith. The court found that the insureds had adequately alleged that one adjuster told them the loss was covered, that they relied upon this information to begin repairs on the motor home, and then a second adjuster inexplicably informed them without explanation that the loss was not covered. The court found that these facts were sufficient to state a plausible bad faith claim.
This case illustrates the importance of clear and consistent communication from insurers when handling claims. Policyholders have a right to know if their claim is covered and should be treated with honesty and fairness.
