QBE Insurance Prevails in Hail Damage Coverage Case
In a recent ruling, QBE Insurance Corporation received significant support in a lawsuit concerning hail damage coverage. A U.S. District Court judge in Colorado affirmed the insurer’s actions in a case brought by a homeowners’ association.
The case stemmed from a 2021 hailstorm that impacted the Players Club Villas community, damaging 86 townhomes. Following the storm, the Homeowners Association of Players Club Villas Townhomes (PCV) filed a claim with QBE, their commercial property insurer.
However, QBE’s assessment resulted in a payment of just over $1,500, leading PCV to file a lawsuit against QBE. The association alleged breach of contract and bad faith, seeking punitive damages, after QBE applied a deductible to the claim.
U.S. District Judge Nina Y. Wang disagreed with PCV’s claims, upholding the validity of QBE’s actions.
Judge Wang’s ruling supported QBE’s application of a per-building hail deductible, dismissing the association’s claims that QBE had acted in bad faith.
Deductible’s Validity Confirmed
PCV argued that QBE inappropriately reduced the payment by applying the deductible, likening it to a penalty. The court rejected this argument, emphasizing that the deductible was clearly and unambiguously stated in the policy, calculated per building.
The court stated, “A deductible is neither a penalty nor a benefit…a mechanism for shifting risk from the insurer to the insured.”
Bad Faith Claims Dismissed
In addition to confirming the deductible, Judge Wang granted summary judgment to QBE on both bad faith claims. The association’s arguments, which included a “minimal payment” and a delay in sharing an engineering report, were deemed legally insufficient because the association could not prove that QBE’s actions deviated from industry standards.
“PCV has simply not come forward with any evidence of the standard that should have governed QBE’s conduct,” Judge Wang wrote, underscoring that both statutory and common law bad faith claims require proof of unreasonable actions relative to established industry norms, which PCV failed to provide, either through expert testimony or any other admissible evidence.
The court also dismissed the claim for punitive damages due to the plaintiff’s failure to comply with Colorado’s statutory requirements.
Remaining Issue: Breach of Contract
With the bad faith claims dismissed, the breach of contract claim remains for trial. The homeowners association contends they are entitled to a replacement cost payment of at least $118,159, based on an estimate from QBE’s expert.
The court determined that there were factual disputes regarding whether repairs were completed and if the replacement cost claim was submitted in a timely manner, which precluded summary judgment on that issue.
A status conference is scheduled for May 1 to establish a trial date.
Case: Homeowners Association of Players Club Villas Townhomes, Inc. v. QBE Insurance Corp.
Court: U.S. District Court for the District of Colorado
Judge: Hon. Nina Y. Wang
Plaintiff’s counsel: Alan T. Dickey
