Insurance Dispute Lawyer Blog
Lake Charles resident Ginger Hinch Durio sued her Insurer, Horace Mann, over the extent of payments she received for the damages she sustained during Hurricane Rita. Durio’s house was severely damaged, including her garage where her family’s belongings were being stored while they were in talks to sell the house. The ceiling inside the garage collapsed onto their stored belongings. Additionally, an engineering report obtained by Durio four months after the hurricane indicated the structural and mechanical integrity of the house was compromised, and the HVAC, electrical, and plumbing systems had failed.
Durio’s policy with Horace Mann provided for several categories of damages for which the Insurer would pay her up to their respective policy limits: Structure ($173,300), Adjacent Structures ($17,330), Contents ($103,980), and Additional Living Expenses ($103,980). After Durio submitted a claim in September of 2005, Horace Mann made several payments to her that fell far below the category policy limits. Despite Durio’s submission of re-evaluation materials, Horace Mann ultimately honored in full only her Contents claim (for all the belongings contained in the garage) of $47,061.44. This, however, was after the Insurer issued her a “sarcastic” check for $6.90 for a broken flowerpot.
The Third Circuit Court of Appeal affirmed the damages awarded by the Trial Court for a total in excess of $1.5 million. Durio received Contractual damages for the difference between what she was paid by Horace Mann and the policy limits for Structure and Adjacent Structure damages. In addition, the Court affirmed an award of $39,000 for thirty-eight months of living expenses based on Durio’s own estimation for the period in which the Insurer worked on the claim.
Beyond Contractual damages, the Court affirmed the award of General and Special damages, including compensation for Durio’s mental anguish and the egregious conduct of Horace Mann. The Insurer was found to have handled the claim in a “… dilatory and non-customer service fashion,” including the facetious flowerpot check, the assignment of eight different adjustors to the claim, and their failure to actually inspect the premises (Horace Mann relied on photographs and the notes of an adjustor).
Durio was found to have sustained damages of $3,000 a month from mental anguish, but this amount was cut in half after the Court considered other factors in her life like family, job, and other financial pressures as equally responsible for her mental and stress-related symptoms. The award for 38 months was adjusted to $57,000. Additionally, Durio was awarded $110,333 to compensate her for lost wages and lost future retirement benefits for the period when she was unable to work due to her symptoms.
Moreover, the Court upheld the award of Attorney Fees and Penalties, which together amplify Durio’s damages to the sum of $1.5 million. Durio was awarded one-third of the total amount in Attorney Fees based on a statutory amendment passed after her initial claim was made. Though Horace Mann objected, the Court upheld the award, reasoning that the Insurer has a “… continuing duty of good faith and fair dealing” during the entire litigation period. The Penalties award – calculated as two-times the damages for general, special, and contractual damages – was upheld because the Court found that Horace Mann received satisfactory proof of Durio’s loss and arbitrarily, capriciously, or without cause, failed to make payment within 30 days.
Ultimately, Horace Mann’s poor processing of their Insured’s claim cost them over $928,000 in damages and penalties, in addition to over $379,000 in Durio’s Attorney Fees. These figures each dwarf the Court’s finding of only around $210,000 in Contractual damages. The standard below which an Insurer like Horace Mann falls can therefore impose a costly consequence for such deficient conduct.