There must be a good reason for the denial of a homeowners claim. The decision to deny coverage is complicated. It may sound simple, but it isn’t.
In Oklahoma, you really need an attorney involved before denial. Not just any attorney, but one familiar with Oklahoma law. There is a balance the courts strike in being fair to the insurance company and the homeowner. You don’t want to end up on the wrong side of the courts.
Nearly every insurance policy has a clause requiring cooperation during the claim. You can rest easy knowing the Oklahoma courts honor the insurance policy terms. As an insured, you have the obligation to reasonably cooperate with a claim. If you don’t, the courts protect against prejudice to the insurer. The insurance company has a right to information about how the loss occurred and the damages. A homeowner who blocks that right can end up not being paid.
If you’re an adjuster trying to pay a claim, nothing is more frustrating than an uncooperative insured. Here you are ready and willing to pay what you owe. But, you don’t just write checks for no reason. You have to document the loss. Otherwise, you can’t make payment. When the insured ignores your efforts, it’s really aggravating because your claim count expands.
One question that springs to mind is why wouldn’t the homeowner want to cooperate. Common sense suggests giving the information to the adjuster will result in faster payment. As the adjuster, you see all sorts of claims and most people cooperate. Still, there’s always a few who don’t return calls and refuse to reply to e-mails.
There are several reasons a homeowner may not cooperate. Many homeowners don’t have a great deal of experience in claims. If your a homeowner making a claim, you may not understand the normal adjusting practices. It may be that you don’t trust the insurance company. Maybe you are concerned the adjuster isn’t going to be fair.
Here’s the deal. Information is vital to paying claims. As the adjuster you can’t pay without proper validation of the cause of the loss and the amount of the damages. As the insured homeowner, you shouldn’t expect to be paid on a whim.
Courts balance the competing interests between the insurance company and the homeowner. The courts want justice. There are occasions where the homeowner may not be able to comply. If you’re the insured and can’t provide the necessary information, then you should let the adjuster know.
Situations arise where the homeowner is slow in giving the needed information. As the adjuster, it’s important to know the courts don’t want to see insurance companies looking for “legal loopholes“. The courts expect valid claims to be paid. Judges aren’t going to approve of insurers looking for ways to deny legitimate claims. This is why experienced attorneys are needed to guide you in following Oklahoma law.
Denial of a claim for the wrong reason can be bad faith. As insurance companies know, bad faith occurs when a claim is denied for an improper reason. Although bad faith is more than making the wrong decision, the motive for denial will be examined. If the facts suggest the insurance company adjuster was looking for reasons to deny a claim that should have been paid, then there’s a problem.
The hard question for you as the adjuster becomes, “Do I have to beg for information? If so, for how long?” Sorry, there’s no hard fast answer. You have to treat the homeowner reasonably and in good faith in the claim adjustment. As the homeowner if you don’t cooperate, you could end up not getting your claim paid.
In Johnson v. Geo Vera Specialty Ins. Co., 2016 U.S. App. LEXIS 17530 (5th Cir. September 27, 2016) the homeowner, Johnson, had damage from strong winds. Later, in a separate event, the house was damaged by fire. The homeowner asked for payment for both losses. However, the adjuster was not given information about the claims in a timely manner. Like most homeowner policies, the insurance policy required cooperation.
” GeoVera’s policy imposed the following duties of cooperation on Johnson: (1) “cooperate with GeoVera in the investigation of a claim,” (2) “prepare an inventory of damaged personal property showing the quantity, description, actual cash value and amount of loss,” (3) “attach all bills, receipts and related documents that justify the figures in the inventory,” (4) “show the damaged property as often as GeoVera reasonably required,” (5) “provide GeoVera with requested records and documents,” and (6) “submit to examination under oath.” The policy provided that GeoVera would owe no coverage if Johnson’s breach of any cooperation duty prejudiced GeoVera.
The Court found Johnson, in violation of numerous cooperation duties. Johnson invoked her contractual appraisal right under GeoVera’s policy, but demolished and remodeled a significant portion of the house before GeoVera could conduct its appraisal. Johnson “almost completely gutted the interior, performed extensive framing repairs, and then terminated the appraisal process.” GeoVera, after invoking its own contractual appraisal right, subsequently requested that Johnson produce “several videos and thousands of photos of the fire damage” known to be in Johnson’s possession. Johnson refused to provide the requested videos and photographs until well after the coverage litigation had commenced. Johnson refused to testify under oath regarding the incident until over a year following the loss. Johnson further refused to provide documentation justifying the figures in her proof-of-loss list. The Court concluded that Johnson had clearly not complied with Johnson’s cooperation duties under GeoVera’s policy. “
In Oklahoma, two basic rules come to mind from the 30 plus years of litigating coverage disputes and bad faith cases. First, the insured needs to cooperate with the investigation of the claim. If the homeowner feels the insurance adjuster is being unreasonable, the homeowner should consult with a knowledgeable insurance attorney to find out their rights. Second, the adjuster should document any refusal to cooperate with letters, e-mails, or clearly stated requests for assistance. The right to cooperation does not exist in a vacuum. It has to be asserted by the adjuster and evidenced by documentation of the requests.
Oklahoma coverage questions like denial of a claim for the refusal to cooperate should be made with the advice of counsel. The risks in a wrongful denial can be severe which is why an adjuster should seek legal advice. Oklahoma policy holders need to cooperate with their insurance company. Any decision not to cooperate should be made with the help of an attorney who understands insurance law in Oklahoma. The risk in not cooperating can be high.
We enjoy the area of insurance law and helping to reach the right decision about insurance claims. Let us know if we can assist you. Call us 918-940-2222.