Damage from severe storms can be devastating to a homeowner, and can also raise complicated issues related to their property insurance policies. When a policyholder believes that their claim has been unjustly denied, or that they’ve received a lower payment than they deserve, they often react by filing a bad faith lawsuit. While there are instances where an insurer’s decision lacks a reasonable basis, a large percentage of bad faith actions lack the specificity and support necessary to win in court. 

One example is a recent Fifth Circuit decision in Spinosa v. Foremost Insurance Company. The plaintiff in this case had property damaged during Hurricane Ida, which ripped through Louisiana in August 2021. He filed a claim and disagreed with the resolution. Subsequently, Spinosa sued Foremost, alleging bad faith in their claim review process based on his belief that the company failed to conduct a thorough investigation of the matter. 

The Middle District of Louisiana dismissed Spinosa’s lawsuit and the Fifth Circuit affirmed that decision. In a unanimous ruling, the panel held that a bad faith action requires much more than “generic, conclusory allegations.” His complaint did not detail the type of damage that occurred or provide specifics as to why the investigation was conducted unreasonably. 

Even if someone else agreed with Spinosa’s contention that the decision to deny his claim was incorrect, that would not support a ruling that the process was tainted by bad faith. The burden of proof is on the policyholder to show that no credible evidence supported the outcome. As in the Spinosa case, many bad faith allegations fall apart in the face of a strong legal defense. Lawsuits stemming from hurricanes and other types of severe storms might be particularly prone to unwarranted bad faith actions because the damage is so extensive and the insured lacks a true understanding of the specific policy provisions. 

Pullin, Fowler, Flanagan, Brown & Poe defends insurance companies in bad faith litigation and other types of matters across West Virginia, Kentucky and Ohio. Please call 304-344-0100 or contact us online to discuss the best way to combat the case against you with a knowledgeable attorney.