STORY FROM: Superstorm Sandy Insurance Litigation

Prompt Payment of Appraisal Award Bars Policyholder’s Breach of Contract Claims, 5th Cir. Affirms

NEW ORLEANS — A federal appeals court has upheld a trial court’s award of summary judgment to an insurer in a Hurricane Ike property damage action, ruling that its prompt payment of an appraisal award bars the policyholder’s breach of contract and bad faith claims.

In a July 7 opinion, the 5th Circuit U.S. Court of Appeals further held that the insurer’s overpayment compensated the policyholder for the penalty interest that accrued due to its delay in notifying the policyholder of acceptance, rejection, or the need for more time on his claims.

In September 2008, Hurricane Ike damaged a warehouse ...

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