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Insurer's bad faith on display in denied-coverage litigation

Sometimes an insurance company's response to a bona-fide property damage claim in Minnesota or elsewhere is sufficiently puzzling to leave any reasonable person baffled.

There is really no other way to describe an insurer's actions when, ultimately, they are roundly excoriated in a court of law, with a judge slapping on punitive damages in an amount many times the size of the actual claim itself. When an insurer's bad faith is manifestly revealed, it often points to two obvious and distinct things: a blatant disregard for contractual terms and legally mandated performance and short-sighted business acumen that harms rather than promotes the company's best interests.

In other words: It’s often quicker and cheaper, and far better for an insurer’s reputation, to simply perform with honor and as required by law rather than to engage in bad-faith conduct that seeks to undermine an insured party’s legitimate claim demands.

A recent story spotlighting claim denials by Farmers and Foremost Insurance Companies patently bears that out. Those insurers (Farmers owns Foremost) refused to compensate three policy holders in Oklahoma for property damage suffered by their homes following a recent tornado. The plaintiffs sued the companies, alleging bad faith and non-performance.

It didn’t take much to convince the judge. He consolidated the cases and then issued a default judgment in favor of the plaintiffs.

Notably, the $15 million awarded the three plaintiffs in damages clearly exceeded by multiple times the value of their claims. Each plaintiff was awarded $2 million in actual damages and an additional $3 million in punitive damages, a total amount plainly reflecting the court’s ire.

The judge’s view of the case was amply evidenced by his comment during the litigation that Farmers “acted with complete indifference to its duty to treat the plaintiffs fairly.”

Unfortunately, similar cases occur across the country with regularity. When one does, an injured policy holder can turn to a proven insurance recovery attorney for aggressive representation and an unstinting focus on an outcome that fully promotes the property owner’s legal interests.

Source: KFOR-TV, "Ruling: Farmers Insurance to pay millions to Oklahoma tornado victims," Sarah Stewart, March 4, 2014

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