What If An Adjuster Is Negligent In Handling My Claim?

Fort Worth insurance lawyers will often times be asked the above question. The answer is that there are many things an adjuster can do wrong for which they and the insurance company can be held liable if that wrong causes harm to the insured. However, the Texas Courts do not recognize a claim for negligent claim handling. This is told to us in the 2008, Houston Court of Appeals [14th Dist.] case, Justice v. State Farm Lloyds Insurance Company and FTI Consulting. Here is the relevant information taken from that case.
A tree fell on the Justices’ house in 2000, the Justices made a claim under their State Farm homeowner’s insurance policy and State Farm paid the claim. In 2001, the Justices discovered mold in the walls of their house and reported the claim to State Farm. State Farm sent the Justices a reservation of rights letter, hired FTI to conduct an industrial hygiene evaluation, and paid the Justices over $137,000 for remediation of their home, alternative living expenses, and cleaning costs on this claim. Thereafter, the Justices filed suit against State Farm and FTI for additional mold damage. State Farm and FTI each filed a motion for summary judgment, which the trial court granted.
State Farm moved for summary judgment against the Justices’ claim for breach of contract on the ground, among others, that this claim was barred by the mold exclusion in the policy. The Justices contend that the mold exclusion is somehow overcome by a provision of the State Farm Adjuster’s Guide, purportedly stating that if the original claim is covered, such as the damage from a wind blown tree, then any loss that proximately results is therefore covered. However, the Justices’ brief provides no legal authority suggesting that a provision of the Adjusters Guide could be controlling, relevant, or even admissible concerning the meaning or scope of coverage of the policy. Nor does it indicate how such a provision, even if applicable, could overcome an express exclusion in the policy. Therefore, this contention affords no basis for relief, and the Justices’ challenge to the summary judgment against their breach of contract claim was overruled.
The Justices alleged that: (1) State Farm was negligent in failing to identify a part of their house that had been damaged by the tree; and (2) water from subsequent heavy rains entered the house through this damaged area, causing additional mold damage. State Farm moved for summary judgment against this negligence claim on the ground that Texas law does not recognize a cause of action for negligent claim handling. The Justices’ brief asserts that the holding in a prior case does not apply to their claim because the adjuster assumed a duty to determine water leaks and the origin of water entry. However, their brief cites no legal authority or evidence supporting the existence of such a duty or explaining how any such negligence would fall outside the scope of claim handling for which Texas recognizes no negligence duty. Accordingly, this contention is without merit.
FTI was hired by State Farm to perform an industrial hygiene test of the Justices’ house to determine the extent of any mold growth. As relevant to this appeal, the Justices’ sued FTI for negligence in failing to initially detect some of the areas containing mold, causing them to: (1) be without the use of their home and personal items stored there; and (2) incur additional expense. FTI moved for summary judgment on the grounds, among others, that there was no evidence that FTI breached any duty it owed to the Justices or that any breach by FTI proximately caused any of the damages claimed by the Justices.
The Justices’ brief does not address what legal basis establishes that FTI owed a negligence duty to them, and agents of insurance companies generally have no duty to insureds for negligence in investigating claims. In addition, to the extent that FTI was hired by State Farm to identify mold damage that could be covered by the policy, the Justices summary judgment response and brief on appeal do not explain how any negligence by FTI in failing to initially locate the full extent of the mold in their house could have caused them damage if the mold was not covered by the policy in any event, as we have concluded in the preceding section. Because the Justices’ second issue thus affords no basis for relief, it was overruled, and the judgment of the trial court was affirmed.