In Hamm v. Allstate Prop. & Cas. Ins. Co., the court heard the insureds’ suit for breach of contract and bad faith. Pending was the carrier’s motion to dismiss the insureds’ claims. The dispute arose from the carrier’s denial of coverage for damage to a rear stone veneer outside of the insureds’ home. The carrier claimed that the loss was excluded because the damage was not “sudden and accidental,” but an ongoing problem that resulted in the wall collapsing during a storm in early 2010. The insureds had apparently made a prior claim on the wall in 2008 after they first noticed damage to the wall. The claim was denied at that point, but noted by the carrier’s agent.
The carrier claimed that the insured’s suit should be dismissed for three primary reasons: (1) the insureds failed to prove that the damage was sudden and accidental because they were on notice that the wall was damaged based on their 2008 claim; (2) the damage is excluded under a “wear and tear” exclusionary clause; and (3) the claim is excluded under a policy clause prohibiting coverage for damage caused by any weather condition. The insureds countered that the term “sudden and accidental” is ambiguous. The court reasoned that the insureds failed to rebut the carrier’s assertion that several exclusionary clauses barred coverage in this instance. Despite the parties’ differing contentions as to the “sudden” nature of the damage, the loss nevertheless occurred because of a “weather condition,” which the policy expressly excludes from coverage. According to the court, “wind,” is “plainly a weather condition,” meaning that the insureds’ claim for coverage should be denied.
As to the insureds’ bad faith allegations, the court reasoned that the claim existed separately from the carrier’s denial of coverage and might be able to survive despite the dismissal of the breach of contract count. Turning to the merits of the bad faith claim, the court held that the carrier did not act in bad faith by denying the insured’s claim. The carrier had a reasonable basis to deny coverage under one of the aforementioned policy exclusions.
The court also rejected the insureds’ contention that the carrier acted in bad faith with respect to its investigation of their claim. Specifically, the insureds argued that the carrier denied coverage solely on the basis of the claim made in 2008. However, the record indicated that an agent of the carrier inspected the wall after the 2010 collapse occurred. Even though the carrier did not conduct this visit until after its initial denial of the insureds’ claim, its conduct did not rise to the level of bad faith.
Date of Decision: November 7, 2012
Hamm v. Allstate Prop. & Cas. Ins. Co., No. 2:11-CV-00614, 2012 U.S. Dist. LEXIS 159348, U.S. District Court for the Western District of Pennsylvania (W.D. Pa. Nov. 6, 2012) (Hornak, J.)