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 supplies essential classes about correct claims dealing with and the results of failing to conduct thorough investigations.
The Declare Historical past
The dispute started when Hurricane Katrina destroyed Paul and Sylvia Minor’s house 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 Dangerous Religion
The court docket highlighted a number of elements of USAA’s conduct that had been regarding. A March 2006 engineering report indicated widespread wind harm to window techniques all through the house. Nonetheless, 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 in depth 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 out there info when adjusting claims, together with their very own underwriting recordsdata. The court docket’s choice emphasizes that insurance coverage firms can not ignore or contradict their very own knowledgeable findings with out risking unhealthy religion legal responsibility. When an insurer has info indicating coated harm, it should act promptly to research and pay official claims.
The Responsibility of Good Religion
The Mississippi Supreme Court docket’s ruling reinforces that insurers should carry out “immediate and ample investigation and make affordable, good religion selections based mostly on that investigation.”
Whereas punitive damages stay a rare treatment, this case exhibits courts is not going to hesitate to impose them when insurers reveal reckless disregard for policyholder rights.
The message is evident: Insurance coverage firms working in Mississippi should honor their responsibility of fine religion by totally investigating claims, promptly paying coated losses, and sustaining consistency between their inner findings and communications with policyholders. Failure to take action could end in important 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 in a position staff 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 numerous years.
A bit of greater than two years in the past, in USAA Slammed For $10 Million Dangerous 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 Interior 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.
…
Once I learn this choice, I questioned what number of different USAA policyholders had been topic to that sort of claims tradition and mindset. Insurance coverage claims leaders ought 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 legal professional 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?’
Until there’s a last-ditch try with an attraction to america Supreme Court docket, these post-trial motions and appeals are accomplished. I consider that is the tip of Hurricane Katrina litigation. I’m sure my buddy Paul Minor could have a glass of some excellent and costly burgundy wine as he contemplates all the pieces that has occurred in his life since Hurricane Katrina struck his house, which then led to this long-fought litigation with one in all America’s largest insurance coverage firms.
Thought For The Day
“All people desires to be well-known, however no one desires to do the work. I stay 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 might be in a 12 months, it might be in 30 years. Ultimately, 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).
