Bad Faith Insurance And Fire Claims

When a house burns in Grand Prairie, Arlington, Colleyville, Keller, Mansfield, Fort Worth, Azle, Aledo, or Weatherford, or anywhere else in Texas; What happens when the house catches on fire? Will the insurance company pay for the damages?
In, State Farm Fire & Casualty Insurance Company v. Simmons, the answer was no until the case went to court. At that point, State Farm Fire & Casualty Company (State Farm) was eventually ordered to pay the damages. This is a 1998, Texas Supreme Court case. In this case, the Simmons had moved into a new home and spent monies improving the property and buying items for the inside of the house. Their house had been burglarized in the middle of the day and later those responsible were located.
Mr. Simmons, a construction supervisor, had experienced down time from work and the Simmons had missed house payments. They later refinanced the house. They continued to experience problems with vandalism and other strange occurrances around the house.
Eventually, one day they left the house for a trip and the house burned down. They made a claim to State Farm for benefits. State Farm denied the claim. State Farm asserted that the Simmons burned down their own home on purpose.
The Simmons sued State Farm for breaching its duty of good faith and fair dealing, violations of the Deceptive Trade Practices Act (DTPA) and punative damages. The jury found in favor of the Simmons and awarded $275,000 in actual damages and $2 million in punative damages. The Supreme Court took away the punative damages.
In supporting the jury finding that State Farm violated its duty of good faith and fair dealing the court pointed out the following;
1) the earlier burglary claim, which State Farm said was suspicious, later the culprits were found and Mr. Simmons returned merchandise to State Farm that State Farm had paid for when the police returned it to Simmons, yet State Farm still considered this “suspicious.”
2) State Farm refused to investigate for other suspects in the fire even when there was evidence that others may have been involved;
3) State Farm’s claims supervisor conceded that State Farm’s investigation was not properly conducted;
4) on expert testimony of eight reasons why people commit arson, six did not apply to the Simmons; the seventh had to do with people removing furniture and personal items from the property and even though they had taken some of the kids summer clothes out of the house, other items, some very personal in nature were not taken, and the eigth reason dealt with financial burdens. Here, the Simmons had always had problems but State Farm relied on the Simmons burden of a $1,343 monthly house payment. The evidence showed they had refinanced and that their actual burden was $540 a month less;
5) the Simmons mortgage obligation exceeded the policy limits on their homeowners insurance by several thousand dollars, thus leaving them still in debt;
6) conflicts in the investigation process which could have been addressed by talking to the Simmons were never resolved because State Farm did not talk with them.
The bad law in this case is the court setting a high standard for punative damages by way of the Texas Civil Practices & Remedies Code, Section 41.001.
The court did allow for the damages under the Texas DTPA, and remanded the case to the trial court for a finding on those damages.