Co-authored by: Lauren Hamilton
Insurance carriers are required to investigate claims promptly, communicate honestly, and take clear coverage positions. When they fail to do so, insureds are often left in an impossible position and forced to protect their property while their insurer delays or refuses to act. A recent federal appellate decision underscores just how costly that conduct can be for insurers.
In Maxus Metropolitan, LLC v. Travelers Property Casualty Company of America, No. 24-1176 (8th Cir.), the Eighth Circuit affirmed a jury verdict exceeding $27 million against Travelers for both breach of contract and vexatious refusal to pay, finding that the insurer’s claims handling crossed the line into bad faith
After a catastrophic fire destroyed part of a multi-building apartment complex, the insured promptly notified Travelers. Yet Travelers failed to issue a coverage determination for more than two months, only doing so after the insured filed a complaint with the state insurance department
As the claim progressed, Travelers repeatedly delayed responding to expert findings showing widespread soot and water damage. Further, Travelers used testing methods that a jury could reasonably find were designed to minimize the detection of damage. Notably, Travelers also withheld its own consultant’s findings until after the insured had already begun remediation.
Rather than guiding its insured, Travelers repeatedly stated it could not “take a position,” effectively forcing the policyholder to act alone to protect tenant safety and preserve the property.
The court made clear that an insurer cannot hide behind silence. Even where coverage issues are disputed, insurers still have a duty to conduct a reasonable investigation and communicate in good faith. The jury was entitled to conclude that Travelers’ conduct was unjustified, supporting a finding of bad faith.
Importantly, the court rejected the idea that a “reasonably litigable” coverage dispute automatically shields an insurer from bad-faith liability. Under Missouri law, and echoed by courts nationwide, an insurer may still be liable where its claims handling conduct, including delays, inadequate investigation, or refusal to explain decisions, is unreasonable.
Here, Travelers’ prolonged refusal to take a position, coupled with selective testing and delayed disclosure of reports, supported the jury’s bad-faith verdict, even though coverage issues were contested.
At Biller, Sachs & Robert, we see this conduct far too often. Insurers delay decisions, dispute obvious damage, or refuse to meaningfully engage in the hope insureds will exhaust their resources or give up.
Our firm represents homeowners, businesses, and associations in complex property-loss and bad-faith claims, holding insurers accountable when they delay coverage determinations, when they ignore or minimize expert findings, and when they place profits over policy obligations.
The Maxus decision is a powerful reminder: insurers can be held responsible not only for what they deny, but for how they handle claims along the way. When carriers cross that line, experienced policyholder counsel matters. If your insurer is delaying, deflecting, or refusing to take responsibility after a loss, our office is prepared to step in and assist you.