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Choose Your Words Carefully

By Jo T. Wetherill

In adjusting claims, it is important that the insurance adjusters carefully choose their words and properly represent their position to the insureds at the scene.  While words of comfort are seemingly appropriate, they can be taken out of context and become the basis for a lawsuit.  Claims adjusters need to make sure the insureds understand the context of their representations and coverages. 

I recently defended a claim arising out of a fire loss in Knox County.  Plaintiffs filed a three-count Complaint, alleging breach of contract, promissory estoppel, and vexatious and unreasonable delay.  They had originally included a count for consumer fraud, which was dismissed by the court. 

The claim arose out of a fire which took place in a child’s bedroom, with only minor smoke damage to the remainder of the residence.  The claims adjuster arrived on the scene within 24 hours of the fire.  She represented to the plaintiffs that they should discard any items that were not cleanable and place them on a property inventory.  She specifically advised they should throw away any consumable items, such as food items from the kitchen and toiletries, as she felt they were not safe for use or consumption after being involved in the fire loss.  She then told them to have those items that were cleanable sent to various service providers for cleaning.

The plaintiffs became increasingly concerned when they realized that the cost for cleaning the various items in the house came out of their policy limits, which they allegedly did not understand when they met with the adjuster.  Eventually, they did complete a personal property inventory, which they submitted to the company, who reviewed the same.  However, the adjuster quickly realized that once the cleaning costs were paid, there was very little policy limit left to cover the property inventory.  Thus, they tendered the remainder of the policy.  Plaintiffs were upset that they had been told to discard items that were not cleanable and that “the insurance company would take care of everything.” Some items, however, were not replaced due to the exhaustion of the policy limit. 

As part of the promissory estoppel claim, plaintiffs claimed that the field adjuster made an unambiguous promise to pay for items that were discarded.  They admitted in their deposition testimony and at trial that the insurance adjuster never promised to pay beyond the policy limits. 

In order to prevail on a claim for promissory estoppel, plaintiff must prove that: (1) defendant made an unambiguous promise to the plaintiff; (2) plaintiff relied upon such promise; (3) plaintiff’s reliance was expected and foreseeable by defendant; and (4) plaintiffs relied on the promise to their detriment.  The party claiming estoppel bears the burden of establishing by clear and unequivocal evidence. 

Motions for Summary Judgment were filed with regard to all three remaining counts of the Complaint.  However, they were denied by the court.  The matter then went to trial in October of 2010.  As part of the trial, plaintiffs tendered a jury instruction, which was accepted by the court over my objection, that allowed the jury to answer the promissory estoppel questions in sequence.  Basically, the jury first had to answer whether the plaintiff proved that the adjuster stated that the insurance carrier would replace items that were discarded.  If the jury answered in the affirmative, they were then asked to determine if the plaintiffs actually discarded the items. Again, if they answered in the affirmative, they were asked to answer whether the insurance adjuster should have reasonably expected the plaintiffs would discard property she told them to discard.  Finally, if they answered that in the affirmative, they were asked to determine a dollar amount that was reasonable for the items that were discarded.  Ultimately, this structure of the jury instruction made it relatively easy for the plaintiffs to prove a promissory estoppel claim based just on words of comfort put forth by the insurance adjuster.

Ultimately, the jury could not reach an unanimous verdict on whether an unambiguous promise was made by the field adjuster.  However, in preparing this matter for trial, the adjuster realized that she should have chosen her words more carefully.  She should have clearly told the insureds that the insurance company would do everything they could to help them through this process, but should not have gone so far as to assure them that the insurance company would “take care of everything.”  The insurance adjuster, a very compassionate and qualified individual, thought she was comforting the plaintiffs, who then turned those words of comfort against her. 

Originally published in the Winter 2010 edition of Quinn Quarterly.