Insurance Ruling Upholds Third-Party Fire Damage Claims

When personal items are lost to fire, the anguish one experiences can be devastating. One must sift through the remains to determine what was lost, not only as a personal inventory but also for insurance purposes. Such was the experience of Ronald and Delores Semar of Lafayette, Louisiana. Their building was destroyed after an adjacent motor home caught fire due to a defective refrigeration unit. The building housed their collection of antique vehicles, a collection that had taken the Semars 20 years to assemble. The Semars described the collection as a documentary of their lives together. It was reduced to ashes because of the fire.

Property damage to the Semars exceeded their insurance coverage, so the Semars sought to recover their uninsured losses and mental anguish damages from the manufacturer of the defective refrigeration unit. The Semars’ insurance company also sought subrogation against the manufacturer. Subrogation is a legal doctrine by which claims of an insured party (here, the Semars) against a negligent third party (the manufacturer) pass to the insurance company.

Insurance policies and laws are designed to ensure speedy payouts when an insured party properly submits evidence of its damages, even if the insured is a third-party claimant. Specifically, Louisiana Revised Statutes 22:1892(A)(4) provides that all insurers must make a written offer to settle any property damage claim, including a third-party claim, within 30 days after receipt of satisfactory proofs of loss of that claim. Failure to do so subjects the insurer to a penalty payable to the insured, if the insurer’s failure to pay is arbitrary or without probable cause.

In the Semars’ case, the manufacturer’s 2 liability insurers failed to make a written settlement offer within 30 days of receipt of satisfactory proof of their claims. A trial court determined that the insurers had satisfactory proof of loss as to the claim to the building as of November 2009. A written settlement offer was not made until August 2010. The trial court held that the failure of the insurers to comply with the 30-day timeframe was not made in good faith or with probable cause. It ruled against the manufacturer and its insurers, awarding damages in favor of the Semars in the amount of $1,628,789 and in favor of the Semars’ insurance company in the amount of $1,591,505.

The manufacturer appealed, primarily contesting that the trial court improperly concluded that its insurers did not make a written settlement offer within a reasonable time after receiving proper proof of loss for reasons that were arbitrary and without probable cause. A Louisiana Court of Appeals affirmed the trial court’s ruling. It held that proof of loss is a flexible requirement that is met as long as the insurer has sufficient information to act on the claim. The manner in which it obtains the information is immaterial. In this case, because the insurers were informed that the manufacturer was at fault and photographs and documentation proved the loss to the Semars, the court concluded that the insurers were sufficiently apprised of the claims as of November 2009. Its failure to make a written settlement offer until the following August was therefore unjustified. Further, it agreed with the Semars’ contention that the trial court erred in not awarding damages for loss of use of the antique vehicles. Evidence showed that family members of the Semars often used the antique cars when their vehicle was broken down. Accordingly, the court awarded the Semars an additional $20,000 as reasonable compensation for the loss of the use of the antique vehicles. Attorney fees for work completed on the appeal for the Semars and their insurance were assessed against the manufacturer and its insurers as well.

If you have an insurance issue, contact the Berniard Law Firm. Providing the best experts in diagnosing the cause of damages, our law firm can handle all of your litigation needs.

Call the Berniard Law Firm toll-free at 1-866-574-8005. An attorney specializing in fire damage will be more than happy to help you get the financial support to which you are entitled.

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