Here is an example of how claims handling can affect the resolution of an insurance coverage question.
In an unusual move, a crop insurance carrier offered to pay its insured's claim without waiting for the insured to agree. As things turned out, the insured did not agree with its carrier's offer. The insured disputed value. As noted by the Eighth Circuit in this case, the dispute over value was "likely sufficient" by itself to trigger an appraisal.
However, in this case there was evidence in the record that the carrier and the insured continued to negotiate settlement of the claim and that the insured was "led to believe" (presumably by the carrier) that the carrier might even up the value of its offer.
This evidence was summarized somewhat ambiguously by the Eighth Circuit but it was enough to foreclose summary judgment for the carrier when the insured in this case did not demand an appraisal as the policy allowed.
There was also a legal dispute about which one of these two parties had the burden to demand an appraisal -- the carrier or its insured -- but regardless of who bore the burden, the appellate court saw a genuine issue of material fact which prevented the entry of judgment for the carrier on the insured's breach of contract claim. Bruhn Farms Joint Venture v. Fireman's Fund Ins. Co., 823 F.3d 1161, page numbers not provided by Westlaw but paragraphs falling within "Headnotes 7 and 8," which Westlaw has provided (8th Cir. 2016).
The Court also discussed and applied the Iowa law of insurer bad faith in this case which recognizes an insurance carrier's right to debate claims that are fairly debatable. In this case, however, the same record raised genuine issues of material fact which prevented the entry of summary judgment in favor of the crop carrier at bar: "Numerous instances of conduct by the insurance representative and adjusters at the very least raise jury issues on bad faith, most specifically the delay in adjusting the fields and then, for the next several months, leading Bruhn [the policyholder] to believe that the claim would be favorably settled without having to go through the hassle of a joint appraisal."
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