Insurance is supposed to be a contract. The consumer pays premiums to the insurance company. In return, the insurance company pays benefits to the consumer if one of the things that the consumer is paying premiums to protect against – property damage, flooding, medical disability – happens. Sometimes, though, unscrupulous insurance companies do not fulfill their end of the bargain. Instead, the insurance company will deny the claim, delay payment or defend the claim in court.
After Hurricane Katrina, Robert Fresh Market, a New Orleans grocery chain, made a claim for hurricane damage to five of its stores. According to a New Orleans jury, its insurer, United Fire & Casualty Insurance Co., failed to properly pay that claim. The jury awarded $21.6 million in favor of Robert Fresh Market. That was the largest insurance verdict after Hurricane Katrina.
The United States Fifth Circuit Court of Appeals recently affirmed that award. That court also ordered United Fire & Casualty Insurance Co. to pay Roberts Fresh Market an additional $1 million in bad faith damages for unreasonably failing to pay what was necessary to fix Hurricane Katrina windstorm and other damage on the five supermarkets.
The jury’s verdict and the decision by the appeals court reminds that insurance companies may not engage in the same type of free-wheeling profit motivation like other companies and owe a special duty to their insureds.
Richard J. Arsenault, 2011
