Larry and Drenda Swaim v. State Auto Property and Casualty Insurance Company

Insurance - Breach of Contract - Bad Faith Claim - On April 21, 1996, the Swaims' home in Van Buren was damaged
by a tornado. At the time, they had a homeowners insurance
policy with State Auto which was sold to them by Bob Miller
Insurance Agency. The policy covered damage and losses to the
building and personal property and specifically provided for
replacement costs. Three days after the tornado, State Auto sent
adjusters to the Swaims' home and issued a $2,500 advance check to
the couple. Adjuster Greg Miller then calculated the initial
losses to be $34,230.89, and the Swaims agreed to this figure.
On May 2, 1996, State Auto paid the Swaims $31,730.89 (the agreed
losses to date less the $2,500 advance check and a $250
deductible) and issued a check for $1,500 for contents losses.
On June 19, 1996, State Auto issued another check in the amount
of $3,971.72 for contents losses. These payments total
$39,702.61.

At the end of June 1996, the Swaims discovered further damage
to their home and contents. They made additional claims to State
Auto for $32,299.68, which included damage to the brick on the
house, the overhead cabinets in the kitchen, the attic
insulation, the cabinets surrounding the fireplace, the fireplace
itself, the patio (which was cracked), appliances, countertops, and sheet
rock in the kitchen, windows that needed repainting, and repairs approved
by the insurance company and performed but not paid.
State Auto sent another adjuster, Martin Brown, to handle these items.
On October 9, 1996, Brown determined that $19,892.80 was an appropriate
amount to pay the Swaims for these claims. The balance of the amount
claimed was denied because in State Auto's judgment some of the items were
not covered under the policy, some of the repairs were not necessary, and
other damaged items were not available for inspection.

On October 31, 1996, the Swaims filed a lawsuit against State
Auto and Bob Miller Insurance Agency, alleging breach of contract
and bad faith. They prayed for $31,226.65 in compensatory
damages, $50,000 in punitive damages, and their costs and
attorney's fees.

Plaintiff's awarded special verdict for $28,5000 on the breach of contract and $4,000 for the bad faith claim

Unknown

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Affirmed in part, and reversed and dismissed in part by the Supreme Court of Arkansas. See: 991 S.W.2d 555 (Ark. 1999). The above date reflects the appellate court decision date, not the original trial date. Reported by kkm.