• Bob Siems

Adcock v. Automobile Insurance Company of Hartford Connecticut, 13-00005, (May 9, 2013).

Insurer acted in bad faith by not thoroughly investigating claim and making settlement offers without any basis in the evidence.


Plaintiff insured a house in Knoxville Maryland with Automobile Insurance Company of Hartford Connecticut (“Hartford”), one of the Travelers Insurance Companies. Dwelling policy limits were $233,000 with a $1000 deductible. (Op. 4.)

On June 30, 2012, a fire occurred at Plaintiff’s home (“the Property”). The fire was not Plaintiff’s fault. On July 3, Hartford’s claim representative met with Plaintiff’s husband and Mr. Sanbower, a builder with experience performing fire restoration work, to inspect the Property. (Op. 4.) Mr. Sanbower concluded that the Property had sustained excessive smoke and water damage to all three floors (basement, first floor, and second floor). He put the repair bill at $120,582.65. (Op. 4-5.)

On July 31st, Hartford sent Plaintiff a letter putting the total repair bill was $61,468.19, withheld $7,322.39 for recoverable depreciation, $178.38 for non-recoverable depreciation, and the $1000 deductible, and then issue a check for $52,967.42. (Op. 4.)

Plaintiff subsequently contacted the company that built the Property for a second opinion. The builder concluded that Mr. Sanbower’s valuation was fair and accurate. (Op. 56)

On August 7, 2012, Hartford met with Mr. Sanbower and reinspected the home. At the inspection, Mr. Sanbower found that the damage was heavier than he had previously estimated. Defendant therefore reevaluated and determined that the total repair cost would be $76,559.51. Defendant deducted recoverable and non-recoverable depreciation, and the deductable, and then issued a supplemental check for $13,219.57. Hartford also offered to reevaluate its bill if “ ‘it becomes clear that something we have estimated to repair or clean versus replace will not bring the item to pre-loss condition.’ ” (Op. 6.)

Plaintiff subsequently sold the Property before making any repairs. (Op. 7.)


Plaintiff asserted that despite Hartford’s initial oral agreement with Mr. Sanbower’s “scope of work” and despite Sanbower’s valuation, Hartford lowballed them. Plaintiff further argued that Hartford improperly withheld depreciation of $9,157.17 under the terms of the policy. Finally, Plaintiff argued that Hartford ignored Sanbower’s estimate, especially since it was independently verified by the company that built the house. (Op. 7)

Hartford countered that the policy allowed it to account for depreciation and to pay the costs of repair and refurbishment rather than replacement. Hartford further claimed that Sanbower had originally told them that the building needed repair, not replacement. (Op. 8).

Hartford acted in bad faith by not properly investigating the claim or assessing the information it did have.

The MIA found that Hartford acted in bad faith because it did not properly investigated the claim. The MIA could not conclude that Hartford had originally agreed to Mr. Sanbower’s estimate because Plaintiff bore the burden of proof and had no documentary evidence to support her claim. (Op. 10.) That said, Hartford’s “own notes” indicated that it thought that whether some sheetrock on the second floor was salvageable depended on whether there was smoke intrusion to the second floor. But instead of investigating, Hartford assumed that there was no smoke intrusion and therefore no reason to replace the drywall. (Op. 10.) This improperly required the Plaintiff to do the investigation and, if there was damage, take it up with the Defendant when they found it. (Op. 10-11.) The MIA found that this course of conduct violated the bad faith statute. (Op. 11.)

The MIA also found that Hartford acted in bad faith by not properly analyzing what evidence it had. After the first valuation, Hartford failed to include all the damage it knew about in its first valuation. After the second valuation, it increased its offer, but did not attempt to itemize the bill. It simply noted that the fire had also damaged “ ‘many other items [that] had been missed in the first estimate (on the scope notes).’ ” Instead of itemizing the bill, “the Defendant offered an amount that was based on an insufficient investigation that did not take into consideration the damage caused by the fire.” (Op. 11.)

The MIA also noted that Hartford’s attempts at mitigation failed. Even though Hartford continued to ask for information, that did not “absolve the Defendant from its fundamental responsibility to fully investigate the Plaintiff’s loss.” (Op. 11.)

The MIA then found that Hartford had improperly withheld deductions because the policy had not mentioned depreciation. Although the policy used the term “actual cash value” which includes depreciation according to the dictionary definitions, the policy did not define the term. Plaintiff therefore “would never have known this.” Hartford therefore had no right to withhold depreciation. The MIA further stated that even Hartford had the term in the contract, Hartford had failed to support the depreciation anyway.

Attorney’s Fees

For litigation costs, Plaintiff wrote “ ’$ per statute’ ”. (Op. 1.) The MIA felt that this claim failed to establish expenses and litigation costs, and therefore did not award any. (Op. 15.)

#HomeownersInsurance #BadFaithClaimHandling #InsuranceBadFaith #MarylandInsuranceAdministration #CaseLaw

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