The Mississippi Supreme Court docket has affirmed a $10 million punitive damages award towards USAA for its unhealthy religion dealing with of a Hurricane Katrina declare, sending a transparent message about insurers’ obligations to their policyholders.1 The case offers necessary classes about correct claims dealing with and the implications of failing to conduct thorough investigations.
The Declare Historical past
The dispute started when Hurricane Katrina destroyed Paul and Sylvia Minor’s dwelling in 2005. Whereas USAA’s coverage coated wind harm however excluded storm surge, the insurer’s dealing with of the declare revealed troubling patterns of delay and denial. Most notably, USAA had performed two prior underwriting inspections of the property in 1994 and 2001, which included detailed documentation of the house and its contents. But when adjusting the declare, USAA repeatedly requested info it already possessed in its underwriting recordsdata.
Proof of Unhealthy Religion
The court docket highlighted a number of facets of USAA’s conduct that have been regarding. A March 2006 engineering report indicated widespread wind harm to window techniques all through the house. Nevertheless, USAA’s adjuster marked associated communications as “confidential,” and the corporate later contradicted its personal engineer’s findings in communications with the policyholder. Regardless of having an engineer’s report displaying intensive wind harm, USAA did not make a well timed provide for structural harm and delayed contents funds for almost 4 years.
Classes for Insurers
This case demonstrates that insurers should make the most of all accessible info when adjusting claims, together with their very own underwriting recordsdata. The court docket’s resolution emphasizes that insurance coverage corporations can’t ignore or contradict their very own skilled findings with out risking unhealthy religion legal responsibility. When an insurer has info indicating coated harm, it should act promptly to research and pay authentic claims.
The Responsibility of Good Religion
The Mississippi Supreme Court docket’s ruling reinforces that insurers should carry out “immediate and enough investigation and make cheap, good religion choices based mostly on that investigation.”
Whereas punitive damages stay a unprecedented treatment, this case reveals courts won’t hesitate to impose them when insurers display reckless disregard for policyholder rights.
The message is evident: Insurance coverage corporations working in Mississippi should honor their obligation of fine religion by completely investigating claims, promptly paying coated losses, and sustaining consistency between their inside findings and communications with policyholders. Failure to take action could lead to vital punitive damages awards designed to discourage such conduct sooner or later.
This case represents the exclamation level for the tip of Hurricane Katrina litigation. Paul Minor and his very ready workforce are to be congratulated for by no means giving up. This litigation successfully ends Mississippi litigation, which I used to be additionally very concerned in for quite a few years.
Somewhat greater than two years in the past, in USAA Slammed For $10 Million Unhealthy Religion Award, I wrote:
USAA misplaced a jury unhealthy religion trial in Mississippi with a $10 million verdict towards it. The plaintiff policyholders are Paul Minor and his deceased spouse. Paul Minor was a premier Mississippi trial lawyer and member of the Internal Circle of Advocates. For a number of weeks we mentioned his upcoming unhealthy religion trial towards USAA, which arose out of Hurricane Katrina. Hurricane Katrina struck in 2005. This have to be the final Hurricane Katrina case.
…
After I learn this resolution, I questioned what number of different USAA policyholders have been topic to that kind of claims tradition and mindset. Insurance coverage claims leaders needs to be trying to totally and promptly pay policyholders for his or her losses. They shouldn’t be sad to take action.
So, the case went again to trial and now leads to a really public and embarrassing unhealthy religion verdict towards USAA for actions that occurred way back….
Paul and his lawyer appeared happy after I spoke with them final night time. After the decision, I believed, ‘now comes the post-trial motions by USAA, and can it attraction this verdict?’
Except there’s a last-ditch try with an attraction to the US Supreme Court docket, these post-trial motions and appeals are performed. I imagine that is the tip of Hurricane Katrina litigation. I’m sure my buddy Paul Minor may have a glass of some excellent and costly burgundy wine as he contemplates every thing that has occurred in his life since Hurricane Katrina struck his dwelling, which then led to this long-fought litigation with one in every of America’s largest insurance coverage corporations.
Thought For The Day
“Everyone desires to be well-known, however no person desires to do the work. I dwell by that. You grind onerous so you possibly can play onerous. On the finish of the day, you set all of the work in, and ultimately it’ll repay. It could possibly be in a 12 months, it could possibly be in 30 years. Finally, your onerous work will repay”
—Kevin Hart
1 United Servs. Auto. Ass’n v. Property of Sylvia F. Minor, No. 2023-CA-00049 (Miss. Dec. 5, 2024).
