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ARTICLE ID 184822

$________ GROSS - INSURANCE MALPRACTICE - INSURANCE AGENT NEGLIGENCE - FAILURE TO PROVIDE PROPER INSURANCE COVERAGE FOR THE HOTEL - BREACH OF CONTRACT - BAD FAITH DENIAL OF INSURANCE CLAIM.

Imperial County, California

In this professional negligence and insurance breach of contract matter, the plaintiff alleged that the defendant insurance company breached its insurance contract and acted in bad faith when it failed to honor the plaintiff’s claim for loss when his hotel was destroyed by fire. The plaintiff also alleged that the defendant insurance agent was negligent for failing to obtain proper insurance coverage for the plaintiff and his hotel.

The defendants denied the allegations and disputed negligence and damages.

The plaintiff was the owner of the historic Planter’s Hotel which had stood in the town square since the 1920s. The building was destroyed by fire in March ________. At the time of the fire, the hotel was covered by a $3.1 million insurance policy with the defendant Chubb Insurance Company. The policy had been obtained through the defendant agent’s employee, Kuiper. The plaintiff submitted timely claim to the defendant insurance company which was denied based upon exclusionary language in the policy regarding protective safeguards.

The plaintiff discovered that a few months prior to the fire, a representative of the defendant insurance company was at the hotel to do an inspection and had sent an email of his findings and recommendations to the defendant agent. The agent failed to advise the plaintiff of the findings and recommendations, one of which was that the hotel was very much underinsured and a cost estimate showing the actual reconstruction costs would be in excess of $6.2 million. The defendant offered that it would increase the policy limits to an amount in line with the true value of the property. The defendant agent failed to ever relay this information or the information regarding the protective safeguards to the plaintiff.

The plaintiff alleged that the defendant agent failed to ever discuss the increased insurance opportunity or the recommendations of the inspection with the plaintiff. Indeed, the plaintiff alleged that the defendant took it upon himself to advise the defendant insurance company not to increase the limits of insurance and to change the policy from a replacement cost policy to an actual cash value property. The plaintiff brought suit against the defendant insurance company alleging breach of contract and bad faith and against the insurance agent alleging professional malpractice and negligence.

The defendants denied the allegations. The plaintiff settled with the defendant insurance company prior to the trial and the matter proceeded to trial as to the defendant insurance agency. The defendant agent argued that it was unaware that a policy could be issued for replacement cost and assumed that the policy written for the plaintiff was actual cash value. When he learned that it was not, the agent changed it back to what the agent had thought it was all along, which happened to be inferior coverage.

The matter was tried over a period of eight weeks. At the conclusion of the trial, the jury deliberated for just short of two weeks and returned its verdict in favor of the plaintiff and against the defendant. The jury entered an award in the amount of $________ in damages.

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