By Michael P. Tremoglie
After an April 2011 hail storm in Wisconsin dented the metal roof of a building owned jointly by Advance Cable Company and Pinehurst Commercial Investments, the companies submitted a claim to their carrier Cincinnati Insurance.
But the insurer denied the claim. Cincinnati claimed that the damage was cosmetic and excluded from the policy. The building owners thought otherwise. They claimed they were entitled to a new roof. Indeed, they felt so strongly they were right that they sued the insurer in federal court to resolve the matter.
The Federal District Court sided with Advance and Pinehurst. It said the policy covered the hail damage. But they denied the owners’ other allegation that the insurance company acted in bad faith. A judgment of $175,000 was entered in favor of the owners for the roof damage.
Cincinnati Insurance appealed the Federal District Court’s ruling to the U. S. Court of Appeals for the Seventh Circuit in Cincinnati. The Appeals Court ruled last month and affirmed the District Court’s ruling that the roof claim was valid. It also affirmed the District Court’s ruling that Cincinnati Insurance did not act in bad faith.
So should brokers advise their clients to take their carriers to court if they do not pay up for roof damage?
“Every situation is different,” said Melissa Wilson, AAA Insurance, Bloomington Indiana. “I do not think it is a problem if you want to do that. A claims adjuster can interpret the policy differently from a client’s interpretation. The client can go through mediation or to court. It is basically up to them. But they are within their rights.”
