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Posted in Torts Blog, Consumer & Class Action Blog

Homeowner Receives $1M from Allstate for Defamation

April 17th, 2008 by John Campbell

By John Campbell and Brian J. Connolly

A recent jury verdict drives home the potential liability for insurers who wrongfully deny claims to policy holders. In Johnson v. Allstate Indem. Co., a man whose home had recently been damaged in a fire was denied an insurance claim that he filed with his homeowner’s insurance carrier, Allstate Indemnity Company.  In support of its denial, the insurance carrier’s representative sent a letter to the man falsely accusing him of concealing facts during the investigation of the fire by the insurance company.  The accusations embarrassed and humiliated Mr. Johonson and caused him to be unable to obtain homeowner’s insurance from other carriers.

Upset by the insurance carrier’s actions, the man filed a lawsuit against Allstate in the City of St. Louis in 2004.  The suit alleged that the insurance representative’s false accusation caused the man deprivation of insurance as well as humiliation, embarrassment, mental anguish, and pain and suffering.  The petition also sought punitive damages, asserting Allstate made the statements in the letter with reckless disregard for the truth.   Ultimately in 2007, after a jury trial, Mr. Johnson was awarded $1,000,000 in damages, including $100,000 in punitive damages. 

In this day of corporate misconduct, insurance carriers would be wise to honor their contractual commitments to their own customers, rather than accusing them of fraud.  If wrongful denials by giant, rich insurance companies continue, jurors will almost certainly continue holding them accountable.  On behalf of all of those who pay insurance premiums, thank you to the jurors in Johnson v. Allstate for their service.

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