In a Hurricane Katrina - related First-Party Bad Faith Case, a Federal Judge recently directed a verdict on Insurance Coverage and awarded the full Policy Limits as Compensatory Damages. The case is Norman J. Broussard and Genevieve Broussard v. State Farm Fire and Casualty Company (S.D. Miss. Civil Action No. 1.06CV6). The Federal Court then let a Jury decide the issues of entitlement to Punitive Damages and amount of Punitive Damages. The Jury assessed $2,500,000.00 in Punitive Damages. More facts of this case, reported and coaxed from the available reporting and the Court file online, were discussed at length in a post here on January 15, 2007.
As of January 31, 2007, the Federal Judge reported more facts in an Order entered that day. In it, the Federal Court reduced the Punitive Damages assessment to $1,000,000.00, or 40% of what the Jury assessed. Here is a link to the January 31, 2007 Order: Norman J. Broussard & Genevieve Broussard v. State Farm Fire & Cas. Co. (S.D. Miss. Civil Action No. 1.06CV6, Order entered January 31, 2007).
In denying all Coverage and before the Bad Faith Claim against it, the Insurance Company's investigation concluded that Mr. and Mrs. Broussard's "home (which was reduced to a slab by Hurricane Katrina) 'was more damaged by flood than wind.'" (Page 2 of Order.) In other words, wind caused some of the damage, but not all. Yet, as the Federal Court pointed out, the Insurance Company denied all Coverage and among other things:
The Defendant did not obtain any expert evaluation on this particular loss. Defendant used the debris line as its sole investigative guide in spite of the probability (as assessed initially) that some damage occurred from a cause other than flood.
Id. [Emphasis added.] The lesson is easy to state, but perhaps it is not so easy to learn. Even if the result is not going to be different, the chances of defeating a Bad Faith Claim are greatly increased if the Coverage determination is supported by independent testimony of an Expert in the first place.
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