Superior Court Confirms Re-Denial of Coverage Unnecessary Absent New or Novel Information
In a recent slip opinion in Jill Sherwood v. Erie Insurance Exchange, No. 17 WDA 2025, 2025 WL 3241349 (Pa. Super. 2025) the Pennsylvania Superior Court considered whether an insurer is required to continuously communicate its denial of coverage in response to subsequent claim submissions.
This case involved two separate homeowners claims wherein the insureds sustained water damage to their property twice in one week. The carrier issued coverage for the structure, contents, and loss of use but, denied coverage for additional claimed contents and replacement of the HVAC system at the property. The insureds claimed that the HVAC system was damaged by water and asbestos which was released when the tile flooring was removed. The insureds filed a breach of contract action against the carrier which proceeded to a jury trial. At trial, the insured attempted to introduce her contractor’s proposal for replacement of the HVAC system into evidence. The proposal alleged that the HVAC system had been exposed to water damage and “hazardous debris.” Counsel for the carrier objected to the entry of the proposal based on hearsay since the contractor was not present to testify. The court did not allow the proposal into evidence but refused to strike the adjuster’s testimony confirming that he may have looked at the proposal. The jury ultimately determined the carrier did not breach the insurance policy and entered a judgment in favor of the carrier.
On appeal, the insured argued that the court erred by excluding an HVAC proposal from her contractor which was not being admitted to prove contamination but rather to demonstrate that the carrier failed to respond to the proposal which the insured argued was a breach of the insurance policy. Thus, the insured argued that “it is the receipt of the documentation that is relevant, not whether the statements are true.” The carrier argued that they never contested notice of the proposal. Instead, they advised that coverage for the HVAC system had been denied several times prior to receipt of the proposal. They further stated that there was no new or novel information presented in the proposal that necessitated a re-denial of coverage.
The Court held that the trial court did not misconstrue the insured’s argument and recognized that the proposal was being offered to prove the failure to respond to claim documentation. Further, the court did allow portions of the proposal to be read into evidence during the adjuster’s cross examination. Accordingly, the insured suffered no prejudice as the jury was still permitted to consider the exact information the insured claimed they were precluded from considering.
In support of their position, the Court relied on Greene v. United Servs. Auto. Ass’n, 936 A.2d 1178, 1187 (Pa. Super. 2007) in which the court concluded that an adjuster’s failure to respond to a letter and a few phone calls would not be considered ill will or bad faith but rather inadvertence. The Court determined that any alleged failure to respond in this case was also likely unintentional. Likewise, the Court stated that the insured failed to cite to any authority stating that the carrier had to re-deny coverage for the HVAC system every time the issue was re-raised by the insured.
The Sherwood decision can be found here.
For additional questions, please contact Robert J. Cahall, Esq. and/or Nicole Dovishaw, Esq.
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