The Effect of an Insured’s Failure to Cooperate with Insurance Company on a Bad Faith Claim

Bad faith insurance claims can arise when an insurance company unreasonably denies a claim of either its insured or a third-party injured by its insured. Such claims typically focus on the actions (or inaction) of the insurance company and the manner in which it responds to the request for payment of a claim. In some cases, however, the actions and behavior of the individual presenting the claim can impact the success of a bad faith lawsuit. This is the difficult and costly lesson Arizona resident John Boesel, III learned the hard way.

Boesel Files a Claim Following a Theft

Boesel was the owner of two jade carvings. When these carvings were stolen from him, he filed a claim with his insurance company, State Farm. Boesel’s policy contained provisions that declared the policy void if Boesel were to intentionally conceal or misrepresent a material fact before or after a loss occurred. The policy also contained a provision requiring Boesel to cooperate with State Farm’s investigation by doing the following: (a) preparing an inventory of stolen personal property; (b) providing State Farm with documents and records it requests; and (c) taking other reasonable actions necessary for State Farm to conduct its investigation into the loss. When State Farm denied Boesel’s claim, it cited violations of both of these provisions. Boesel thereafter filed a bad faith claim against State Farm.

The District Court Grants Summary Judgment to State Farm and an Appeal is Taken

Before the trial court, State Farm filed a motion for summary judgment, alleging that there was no genuine issue of material fact in the dispute and that State Farm was entitled to judgment as a matter of law. In particular, State Farm argued that it did not unreasonably deny Boesel’s claim because its insured had failed to comply with his obligations under the policy. The trial court granted State Farm’s motion, and Boesel appealed.

The Ninth Circuit Court of Appeals affirmed the trial court’s ruling in State Farm’s favor, finding that Boesel had failed to show that a genuine issue of material fact existed as to whether State Farm acted in bad faith. In reviewing Boesel’s behavior after filing a claim for loss, the appellate court noted:

  1. Boesel had failed to disclose to State Farm a report indicating the two jade carvings were worth only about $30,000, which was substantially less than the value Boesel had ascribed to them; and
  2. Boesel failed to provide State Farm with contact information for a person of interest in its investigation and failed to disclose to State Farm the author of the jade carvings’ Certificates of Authenticity.

The appellate court determined that these actions hindered State Farm’s ability to investigate the claim.  Further, the court indicated that as long as there remained a legitimate question of coverage, State Farm did not act in bad faith by denying Boesel’s claim. Because State Farm had a legitimate question regarding Boesel’s coverage and the insured did not allege any other bad conduct, the appellate court found that an order of summary judgment in favor of State Farm was appropriate.

A Florida Bad Faith Claims Attorney Can Evaluate Your Case

It is unlikely that Boesel would have fared any better had Florida’s bad faith law applied instead of Arizona’s. Bad faith exists in Florida where an insurance company fails to settle a claim when its obligation has become reasonably clear. Because there was still a legitimate question as to whether Boesel’s claim was covered due to his inactions and violations of the policy, a Florida court also might well have ruled in State Farm’s favor.

If you have questions about an insurance claim, you are invited to contact our law firm to speak to an experienced Miami insurance claims attorney.  My law firm specializes in representing policyholders in claims disputes in Miami and throughout Florida. Click here to read about some of our case results.  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. 

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