Courts have looked carefully at whether Insurance Companies involved in First-Party Bad Faith Cases addressed the clearly covered parts of Coverage Claims, particularly those involving Property Insurance Claims.
In order to invite this level of attention from Insurance Companies and Courts alike, however, there is more involved than making a Claim and saying to the Property Carrier that part of it is covered, you go figure out what part and pay it.
Proofs of Loss in such cases must still be as accurate as they would otherwise be required to be under the local law, or Coverage will be forfeit by a Court holding that the Policyholder failed to comply with this condition precedent to recovery under the Policy. See, e.g., Garden-Aire Village South Condominium Ass'n v. QBE Insurance Corp., 2013 WL 864570 *4 Point 47 (S.D. Fla. March 8, 2013)(Policyholder Condominium Association presenting Hurricane Wilma Claim "did not comply with the Proof of Loss requirements because it submitted items for insurance coverage that were not in fact damaged by Hurricane Wilma. First, it asked for replacement of every single window, not just those damaged by the storm. When pressed to clarify whether it was submitting claims for undamaged windows, [the Condominium Association's attorney] refused, suggesting that insurance coverage had been demanded at least in part for windows that had not been damaged by Hurricane Wilma.... Second, Plaintiff claimed damages that its own contractor ... had said were not Wilma-related. Both overstatements violated Plaintiff's post-loss obligation regarding the proof of loss.").
In addition, the Policy's requirements concerning Examinations Under Oath remain in effect in such cases, of course, and if a Court determines that the EUO provisions have not been complied with in a given case, the Policyholder runs the risk once again of forfeiting all Coverage where compliance with a Policy's EUO provision is a condition precedent to Coverage, as was the case in Garden-Aire Village South Condominium Ass'n v. QBE Insurance Corp., 2013 WL 864570 *5 Point 71, *6 Points 72-75 (S.D. Fla. March 8, 2013).
In short, it is generally true that in most jurisdictions Property Insurance Carriers and other First-Party Insurance Companies have a legally enforceable obligation to pay clearly covered parts of claims made upon the Policies they issue. However, in order to trigger payment in such circumstances there is more involved than simply making a Claim and saying to the Property Carrier that part of the Claim is covered, you go figure out what part and pay it. When conditions precedent to recovery under the Policy are met, including where Proofs of Loss and Examinations Under Oath are conditions precedent and are met in the given case, the Policyholder's Claim to Coverage may not necessarily be a guaranteed success depending on other facts and the applicable law, but in such cases the First-Party Policyholder's Coverage Claim can continue to move forward beyond these stopping points.
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