Homeowners Claim And Policy Language

The U.S. District Court, Western District, Austin Division, issued an opinion on November 16, 2018, that is worth reading.  It is styled, Thomas G. Kezar and Sylva Shroyer Kezar v. State Farm Lloyds.

This is an appeal from a partial motion for summary judgement as to one issue in the case.  The issue is whether Kezars still had a claim against State Farm for breach of contract and extra-contractual damages under the dwelling coverage aspect of the claim when State Farm had already properly and timely paid that aspect of the claim after an appraisal award.  This Court ruled in favor of State Farm.

The policy language at issue states:

If we [State Farm] notify you [the insured] that we will pay your claim, or part of your claims, we must pay within 5 business days after we notify you.

That clause unambiguously implies that the amount to be paid is the amount notified, and there is no dispute that State Farm timely paid the amounts notified after the appraisal.

In making the ruling in favor of State Farm the Court said that what they found more persuasive than the Kezar’s arguments is the series of federal district court decisions interpreting materially similar insurance policy clauses in the same manner as here.  For example, in Carroll v. State Farm Lloyds, the insurance policy provided: “If we [the insurer] notify you [the insured] that we will pay your claim, or part of your claim, we must pay within 5 business days after we notify you.”  There, the court found that it was undisputed that State Farm notified Plaintiff on February 17, 2017, that it would pay the appraisal award.  At that same time, State Farm sent payment of the award.  The court concluded that “State Farm’s payment of the appraisal award, tendered contemporaneously with its notice that it would pay the award was timely under the Policy.  The court held that the full and timely payment of the appraisal award precluded the plaintiff’s contractual and extra-contractual claims.  Other courts have also held that payment simultaneous with notification complies with materially similar loss payment clauses.