Justice served

Insurance Company Investigators are not exempt from liability for negligence arising out of a post-loss claim investigation.

After a loss, insurance companies will frequently send out a variety of inspectors such as engineers, remediators, and contractors.  Last month, the Wisconsin Court of Appeals held that an insurance company’s agent is not exempt from liability when the agent conducts a post-loss investigation. See, Cincinnati Insurance Company v. Ropicky, 2020 AP 791.

Case Facts

Following a storm, homeowners discovered that their home was damaged by water infiltration. They then filed a claim with Cincinnati Insurance—their home insurer.  Cincinnati Insurance hired Infratek Engineering Investigations to inspect the damage Infratek concluded that the water intrusion was entering the home since day one of construction due to construction defects. Based on the inspection report, Cincinnati denied the policyholder’s claim other than coverage under a fungi provision and a couple thousand for interior water damage.

During the repairs, the homeowners learned from their repair contractor that the latent portion of the loss was more severe than what had been revealed during the inspections. The homeowners then demand that the loss be re-evaluated and re-adjusted. Infratek then conducted an additional inspection.  Following its inspection, Cincinnati reiterated its initial position and advised that it would not make additional payments on the claim.

The policyholders filed suit against Cincinnati and Infratek contending that the expert consulting work Infratek undertook on Cincinnati’s behalf was negligent and that Cincinnati had acted in bad faith.  Infratek filed a motion for summary judgment, which is a motion to end the lawsuit against it.  Infratek argued that it had immunity for claims that it performed as Cincinnati Insurance’s agent. The circuit court agreed with Infatek and dismissed the case.  The homeowners appealed but the Court of Appeal’s reversed the trial court.

DISCUSSION

The Wisconsin Court held that insurance companies’ investigators do not have immunity for their negligence during a post-loss inspection. Cincinnati hired Infratek to abide by its contractual obligations under the property policy, which required an investigation into the cause and scope of the property damage. The post-loss investigation was not intended to prevent future loss. The court also held that the immunity statute’s language makes it clear that contractually obligated services are not exempt from liability, only voluntary loss prevention services (for example, a voluntary visit to a property to make sure that everything is up to code prior to issuing an insurance policy).

Murdock Law’s Comments

This is a good decision for Wisconsin policyholders.  The decision will help keep the insurance company‘s investigators honest.  Investigators may have liability if they perform a negligent investigation and offer conclusions that they know will benefit the insurance company that hired them when those conclusions are based on negligent inspections.

Has your insurer denied coverage because it has failed to identify the full scope of your property damage?  The lawyers at Murdock Law have helped policyholders like you recover money owed from insurance companies for property damage claims and liability claims. Call us at 884-744-7529 or email us at [email protected] if you need help navigating your insurance claim.

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