This Florida homeowners insurance blog has previously discussed breach of contract and insurance bad faith claims as remedies for aggrieved policyholders against homeowners insurance companies. Although these causes of action (types of legal claims) can be valuable pathways to holding an insurance company accountable when it fails to pay the full value of a claim or to pay a claim in a timely manner, creative lawyering can often provide other pathways to recovery, such as alternate dispute resolution (ADR) options or novel legal theories.
In a recent Pennsylvania case, Bruno v. Erie Ins. Co., the policyholders used the novel approach of pursuing a negligence claim against their insurer. The homeowners in Bruno purchased a homeowners coverage with the defendant. Once the homeowners began renovating their new purchase, they discovered black mold caused by leaking pipes in the basement. The policyholders initiated a claim with the insurer. The insurance company enlisted an engineer and adjuster to conduct an inspection of the premises. They both informed the insured that the black mold posed no health risk, and that the renovations could continue without any significant health risk. The insureds relied on these representations and completed their renovation project. However, all of the family members in the home developed serious respiratory conditions.
The homeowners filed a lawsuit alleging that the negligence of the insurer caused their medical problems. The policyholders indicated that they became ill because they relied on the representations of the representatives of their insurance company.
Because a personal injury claim will typically result in more extensive damages than a breach of contract claim, the insurer sought dismissal of the lawsuit based on the fact that the negligence claim was really just window dressing disguising a breach of contract claim. Since the insurance company ultimately paid the mold claim, the insurer claimed that the policyholders had no valid remaining claim related to the mold. While the trial judge and appellate court sided with the insurer, the highest court in the state reversed and ruled in favor of the insured.
The Pennsylvania Supreme Court reasoned that negligence that causes injury by one contracting party to another contracting party is not considered a breach of contract claim. The injury to the homeowners was not caused by the breach of a duty under the policy according to the court. The insurance policy only served to establish a relationship between the parties.
This case demonstrates the tenacity with which insurers work to deny or undervalue claims, and the benefit of having an attorney who thinks outside the box in your corner.
If you have questions about Florida homeowners insurance claims, you are welcome to contact my Miami commercial insurance claims law firm. My law firm represents policyholders in claims disputes in Miami and throughout Florida. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.