House Fire Insurance Claim Settled Successfully

The Fire

On a night at her Lake Charles, Louisiana condominium that started out like any ordinary night, my client (whose name is withheld for privacy reasons) went to bed, her minor son sleeping soundly nearby. She didn’t know that her life would soon be turned upside down. Nor did she know that she’d soon have to file a house fire insurance claim.

A couple of hours later, the condominium became engulfed in flames. Acting quickly, my client awoke her son and the two escaped to safety. The fire, caused by faulty electrical wires in the attic, was major. After the smoke cleared, there was nothing left. The condominium and all of the family’s personal possessions were replaced with ashes.

The Insurance Claim and Denial

Being a responsible parent, my client had purchased renter’s insurance in case of a loss such as this. The insurance proceeds were badly needed to replace things like bedding, electronics, an engagement ring, clothing, and major appliances. So my client made a claim with her insurer, Allstate Insurance Company.

Allstate denied the claim. Allstate’s excuse for not paying the claim was that my client had failed to disclose a prior small theft claim on her insurance application.   The trouble with this reason was that she had answered all of the application questions truthfully. The agent who wrote down the answers failed to record the small theft claim.

The Lawsuit

Knowing that her options were running out, my client searched for an attorney. After finding online, she called and completed a questionnaire. I accepted the case and began working for her.

Because of the prior claims exclusion cited by Allstate, I knew that pre-suit negotiation would be futile. So, after studying the law applicable to disclosure of prior claims, I drafted and filed a lawsuit in the United States Middle District of Louisiana. A redacted copy of the lawsuit is available here. The suit alleged the truth that all of her prior claims were disclosed, made clear that the claim should have been paid, showed how Allstate itself had made material misrepresentations concerning the claim, and explained how my client was entitled to damages.

Allstate defended the suit vigorously. But I knew the law was on my client’s side. Fortunately, I was able to find some historic case precedents from the Louisiana Supreme Court showing that the agent who takes the insurance application is responsible for completing it accurately. The case law also says that if the agent makes a mistake on the application, the error cannot be used against the insured. In due course I filed a Motion for Summary Judgment with the Court. A redacted copy of the Memorandum in Support of that Motion is available here.

The Settlement

Not long after filing the Motion, we moved forward with a settlement conference mediated by the presiding federal magistrate. Fortunately, Allstate and my client were able to reach a fair settlement on her house fire insurance claim.