When the holder of an insurance policy disputes the amount they are owed by the insurance company, the difference in the dollar amounts each side imagines is a fair payout can be quite dramatic. In a local example, the owner of a Louisiana commercial property that was damaged by Hurricane Isaac in 2012 says that it is entitled much more than the approximately $55,000 the insurance company, Louisiana Citizens Property Insurance Company, offered.
The insured party, Hiker LLC, has sued the insurance company, though the company reached essentially the same conclusion three times regarding the extent of the damage to the property. It is seeking more than $1.6 million in compensation and penalties for alleged bad faith insurance conduct.
Hiker made a claim on its policy after Hurricane Isaac struck New Orleans in August 2012. An adjuster inspected the property and estimated that the damage would cost $42,373 to repair. Hiker disputed that conclusion, claiming the costs would be far higher. It later claimed that its own investigation found that the property had sustained $1,644,514.03 in damage.
Several months later, Louisiana Citizens Property sent another adjuster to the property. It had a “Business Damage Evaluation” prepared, which disputed that doors at the property had been damaged to the extent claimed by Hiker.
In an attempt to reach a settlement, the insurance company met with Hiker representatives at the property in October 2013 and issued another report, which drew largely the same conclusions. That December, the insurer increased its damage estimate to $55,287.27, but Hiker again rejected the offer.
This suit is still in its early stages, so its outcome is not yet clear. Insurance companies in this position could face significant financial losses, even when they are in the right, if they do not have proper legal representation.
Source: The Louisiana Record, “Louisiana Citizens Property Insurance Company sued for more than $1.6 million in damages to commercial building,” Max Schramel, Sept. 15, 2014