When a Bad Faith Insurance Case, Isn't Bad Faith…

Port Sulphur, LAThere is little that irks a consumer more than the thought of bad faith insurance when disaster strikes. A bad faith insurance claim is the last thing anyone wants to trigger—but to protect your rights and pursue justice, oft times a call to an insurance bad faith attorney is your only option.

And sometimes it doesn't go completely the plaintiff's way, either. Sometimes even the defendant will win something. In the case of Judy and Michael Kodrin of Port Sulphur, Louisiana, they at least managed to have their home replaced after it was demolished by Hurricane Katrina.

However, they were unable to prove their insurer, State Farm, acted in bad faith.

When the Kodrin's home at Port Sulphur was demolished in the wake of one of the most robust hurricanes in modern history, the devastated family put in a claim to their insurer. However, State Farm Fire and Casualty Co. initially denied them coverage, asserting that flooding, rather from wind caused the damage. Flooding was not covered in the Kodrin's policy.

The family launched a bad faith insurance lawsuit, alleging failure to adjust claims fairly and promptly. Included was an allegation of failure to make reasonable efforts to settle the claims, together with arbitrary and capricious failure to make payment in violation of state statutes, which govern the insurance industry.

Following trial, a jury found that wind had, indeed been the cause of the loss and awarded the Kodrins $356,318 in damages and penalties, together with attorney's fees and costs.

State Farm appealed. The Fifth US Circuit Court of Appeals found with the jury in their interpretation of the loss to the Kodrin home (wind), affirming the jury's verdict as it pertained to the loss of the structure and contents.

However the appeals court vacated that portion of the original court's finding with regard to penalties, damages and attorney's fees inherent to the bad faith insurance allegation.

In a nutshell, the appeals court decided that even though State Farm erred in it's original denial and position that water, not wind was responsible for the loss of the Kodrin home, simply being wrong does not by itself support a bad faith insurance claim. Yes, State Farm was wrong about the evidence regarding the destruction of the home. However, without further evidence supporting a bad faith insurance claim, the allegation could not be sufficiently proven, in the Court's view.

Thus the Fifth Circuit Court found that the Kodrins failed to bear the burden of proof with regard to the bad faith insurance claim.

It should be noted that had the Kodrins accepted the original position of their insurer that the loss of their home was not covered by their insurance policy, the family would have borne the loss themselves. By pursuing the matter in court—with sufficient evidence by an independent expert supporting the evidence that wind from Hurricane Katrina knocked down the home—the Kodrins were in a position to replace their loss and avoid certain financial hardship.

One might argue that proof of bad faith insurance would have been icing on the cake. However, the bottom line was the replacement of the home and lost contents. The victory, while not complete, was for one family meritorious nonetheless.

The relationship between insurers and their clients have become strained in recent years, as insurers continue to deny, or delay claims in an effort to mitigate payouts and improve their bottom lines at the expense of policyholders—people who have paid their premiums diligently for the peace of mind that often eludes them when disaster strikes.

Hence the proliferation of bad faith insurance claims. A bad faith insurance claim is often the point of last recourse when an insurer's denial of coverage is the focus of a dispute. Even if it appears your insurer has you over a barrel, a call to a qualified insurance bad faith attorney could mean the difference between a devastating loss and money in the bank.