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Homeowners: insurer owes $60 million on property damage claim

Homeowners: insurer owes $60 million on property damage claim

In Florida and all other states, an insurance contract to cover fire damage and homeowners’ protection is enforceable like any other legal agreement. If the insured’s house burns down, the insurance company has a duty to pay up to the policy limits for property damage caused by fire. When an insurer does not pay, the homeowner must sue the insurance company for breach of the contract and claim reimbursement for damages sustained.

In some instances, the insurer’s failure to act fairly in processing and honoring the claim may amount to bad faith or what is called a breach of the covenant of good faith and fair dealing. The insurer is bound in every insurance contract to act with good faith and fair dealing. When that legally implied promise is broken, the homeowner may be able to collect punitive damages against the insurer.

In that context of insurance law, a homeowner couple sued Chubb National Insurance Co. in Feb. 2014 for $59.9 million in damages from a raging fire that destroyed their home valued at $4 million in Indian Hills, Ohio. The home was a sprawling 10,000 sq. ft. mansion that was totally consumed by the fire. The lawsuit asserted that Chubb Insurance did not pay the claim, and although it is unclear, the plaintiffs also presumably sued for punitive damages. That would explain the claim being for far more than the actual monetary loss of the home and its contents.

The recent twist in the case is that, in addition to filing an answer and affirmative defenses to the complaint, the insurance company filed a counterclaim saying that the husband lied to investigators and the insurer as to his whereabouts on the date of the fire, and also that the plaintiffs misrepresented the amount or nature of some of their property damage. The counterclaim is an aggressive strategy in response to a $60 million complaint that demands punitive damages. It puts the plaintiffs on the defensive and switches the focus, for the time being, on to their alleged failures to perform the contract appropriately. The same key issues would be litigated if the case was before a Florida court.

Source:, “Indian Hill fire: Insurance company files counter-suit, states homeowners ‘misrepresented’ claims“, Brian Mains, April 8, 2015

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