The recent decision of Marcantel v. State Farm Fire, No. 2:22-CV-01511, 2024 U.S. Dist. LEXIS 111077 (W.D. La. June 24, 2024) offers valuable lessons for policyholders regarding the importance of cooperation in the insurance claims process.

In Marcantel, the plaintiff suffered damage from Hurricane Laura at two properties in Louisiana.  Both properties were insured by State Farm under policies that required the plaintiff to comply with certain “Duties After Loss,” which included exhibiting the damaged property, submitting information requested by State Farm, and preparing a detailed inventory of the damaged items. Following the hurricane, plaintiff submitted an insurance claim with a detailed contents list for $663,682 in personal property losses. However, State Farm questioned the accuracy of the valuations due to inconsistencies and a lack of documentation. Moreover, plaintiff failed to preserve many of the damaged items for inspection and did not provide photographic evidence for many items listed in the claim.

The plaintiff subsequently filed suit for breach of insurance contract and bad faith, arguing that State Farm failed to provide timely and adequate compensation for the covered losses. In response, State Farm filed a motion for partial summary judgment on the basis that plaintiff’s valuations and failure to preserve the allegedly damaged contents for inspection did not comply with his duties after a loss. However, plaintiff contended that he had submitted sufficient proof of loss and cooperated to the best of his ability under the circumstances.

Upon review of the motion for partial summary judgment, the Court found that plaintiff failed to fulfill his duty to cooperate in State Farm’s investigation of the claim. The plaintiff failed to preserve many of the claimed items and did not provide sufficient photographic documentation, which significantly hindered State Farm’s ability to investigate the damages. The Court noted that while the cooperation clause is “not an escape hatch” for insurers to avoid liability, State Farm had established actual prejudice due to plaintiff’s lack of cooperation. Consequently, the Court ruled that State Farm was not obligated to compensate the plaintiff for his personal property losses.

The ruling in Marcantel emphasizes the importance of cooperation in the insurance claims process. Policyholders play a crucial role in this process, and failing to cooperate can lead to disputes or a denial of the claim. Marcantel reinforces the insurer’s right to deny claims when policyholders do not meet their contractual obligations, particularly if it results in actual prejudice. Ultimately, both parties must adhere to their contractual responsibilities to ensure a fair and effective claims process.