Co-operating With Insurance Investigation

Texas insurance attorneys will tell you that one of your obligations under your insurance policy is to co-operate with the insurance company investigation of your claim. A Houston Division, Southern District case illustrates how difficult matters can be when the co-operation is questionable. The case is styled, Resie’s Chicken & Waffles Restaurant, et al. v. Acceptance Indemnity Company, et al.
This case went to trial and the jury found in favor of Resie’s and against AIC. However, AIC argued that the jury finding in favor of Resie’s should be disregarded due to the jury making findings against Resie’s as it relates to Resie’s turning over financial records that were sought from Resie’s by AIC.
This declaratory judgement action was for breach of contract, violations of Chapters 541 and 542 of the Texas Insurance Code and DTPA violations.
The evidence shows that Resie’s opened for busines the latter part of August 2011. Approximately five months later,it sustained fire damage essentially resulting in a loss in excess of $100,000. At the time Resie’s opened its doors for business, it had acquired a policy of insurance in the amount of $100,000. AIC did not dispute that there was a loss according to the policy that exceeded policy limits, but focused on the origin and/or cause of the loss, namely a fire. AIC dispatched its arson investigator, Steven Chapman, to the scene. Chapman arrived at Resie’s location within three days of the fire, rendered a report and subsequently, testified in the instant case. Chapman testified that, after his first walkthrough, his initial impression was that the fire was intentionally set.He reported, primarily, that his concern was that the proprietors acted suspiciously when they refused to release film from their security cameras Later, he identified several areas in the restaurant that he called points of origin. He also opined that an alcohol accelerant was used by the arsonist He described the substance as pure “ethanol” or the type of high proof alcohol usually found in whiskey. The evidence shows that Resie’s stored both beer and wine and other supplies, including cleaning materials, on the premises.
AIC forwarded a letter to Resie’s acknowledging receipt of its claim and further advising it that an investigation was in progress The letter also detailed the coverage available to Resie’s and other applicable conditions, including potential exclusions.No further significant written communications between Resie’s and AIC was presented in evidence, except AIC’s attorneys’ letter to Resie’s on October 16, 2012, and AIC’s denial letter of December 14, 2012.The attorneys’ letter acknowledged receipt of financial documents and authorizations to obtain other documents from Resie’s accountant/bookkeeper. Within 60 days, AIC forwarded its “denial” letter to Resie’s proprietors. In its denial letter, AIC stated three reasons for its decision: (1) Resie’s failure to maintain an operational fire alarm; (2) Resie’s failure to provide requested financial information relating to its business; and (3) arson-the fire was intentionally set by Resie’s employees.
The Court discussed these issues in the opinion and ultimately denied AIC’s request for an entry of a take-nothing judgment.