Holding Insurance Companies Accountable: SJJ Fights for Policyholder Rights After Unreasonable Delays

Smith Jadin Johnson attorneys Alex Jadin and Ross Hussey recently won a motion to amend a complaint, adding a cause of action for bad faith against a community association’s insurance company. You can read the order here.

Unfortunately, some insurance claims can take years to resolve due to extensive procedural requirements contained in most policies. Unreasonable delays can cost time, money, and undue anxiety for the average policyholder.  The attorneys at Smith Jadin Johnson understand this pressure and pursue claims of bad faith if the insurance company denies a claim that either (1) a reasonable insurance company would not have; or (2) the insurance company knew they had no reasonable basis to deny a claim and denied it anyway. 

In this case, the parties were disputing whether damage occurred from a hailstorm. The association submitted a claim for damages after the storm occurred. The insurance company initially concluded that the damage had not been caused by the storm and denied the claim.  An appraisal panel disagreed and found substantial damage from the storm in question, but the insurance company refused to pay. Five years after the loss and after submitting extensive documentation, multiple examinations under oath, and an appraisal award, the insurance company now refused to pay the appraisal award because they claim the policyholder failed to give prompt notice of their claim.  It was the first time the insurance company had raised that alleged coverage issue. 

The court concluded that the delays and investigation by the insurance company may not have been reasonable, and agreed the association could amend its complaint (in Minnesota, an insurance company needs the court’s permission to pursue a bad faith claim). The court stated that altering the reason for denial after the appraisal award found damage without a factual basis showed a lack of objective reasonableness by the insurance company in handling the claims process.  Adding a claim for bad faith allows the association to pursue punitive damages, including attorney’s fees and hopefully discourages future mishandling of insurance claims.

Holding an insurance company accountable when it acts in bad faith is another important way that SJJ continues to fight for the rights of policyholders throughout the claims process. Contact our team today to discuss your claim!