Duty to Cooperate in Property Damage Claims

An insurance policy is a contract that is binding and enforceable on both the policyholder and the insurance company. Within the policy, both parties have certain obligation and duties.

The “duty to cooperate” is one of the most important policyholder duties. From a practical viewpoint, the duty to cooperate requires the policyholder to allow an insurance company to investigate the claim. For a property damage claim, such as a loss resulting from a fire or weather event, the duty to cooperate simply means that the policyholder will not impede the investigation and will timely respond to the insurance company’s requests for information, access to property, or documents supporting the claim.

The cooperation clause is often used by an insurance company to deny a claim where a policyholder fails to comply with information and document requests or refuses to allow an insurance company access to the damaged property. The rationale for such a denial is that the policyholder’s failure to cooperate prevents the insurance company’s ability to investigate the claim. If an insurance company cannot investigate the claim, it cannot determine its liability to pay under the policy.

A frequent example of this scenario is where a policyholder experiences a fire at their residence. An insurance company will typically retain a fire investigator to determine the cause of the fire. If a fire is determined to be incendiary (intentionally set), then an insurance company will often demand volumes of financial records including loan documents, income records, bank records, utility bills, etc. The practical reason for these requests is that an insurance company may deny coverage for a fire where there is a financial motive for a policyholder to set the fire.

These types of requests may feel invasive, intrusive, and inappropriate for a homeowner who just experienced a traumatic house fire, particularly if the policyholder has made a legitimate and compensable claim. However, the insurance company is entitled to request this information and documents and the policyholder is obligated to produce them. If a policyholder refuses or fails to provide these requested documents, then an insurance company will often deny coverage for lack of cooperation.

There are limits to these requests. Generally, the insurance company must request all information and documents at the beginning of the claim. The insurance company cannot demand information the does not affect the outcome of the claim and multiple and cumulative information and document requests may be unreasonable.

If you have a property damage claim with your insurance company and have questions regarding your obligations to cooperate or comply with any requests made by your insurance company, then please contact our office for a free consultation.