Residence Mutual Must Pay $8 Million in Suit With Couple Over Damaged Home

Residence Mutual Insurance Co. has been ordered by a jury to pay $8 million in punitive damages in a case involving a home severely damaged when a truck crashed into it.

In 2008, a truck speeding downhill on a road in the Hollywood Hills overturned and crashed into the home of Robert Christopher and Patricia Freiling, according to court documents. The crashed truck ignited a fire that briefly trapped Christopher and Freiling, who were able to escape.

Residence Mutual paid Christopher $146,534, though he had coverage of up to $231,000 under his policy, according to court records. Estimates of restoration of the dwelling came to $434,942.

Residence Mutual said its policy was to withhold some benefits until the insured completed restoration of the property, according to court records. Christopher claimed Residence Mutual charged costs of its own to him in connection with an independent investigation of his policy benefits, and it had part of his claim evaluated by a person married to the adjustor. Similar conduct had been had been cited as bad faith conduct by an insurer in a previous California case.

A Los Angeles County Superior Court jury found Residence Mutual acted in bad faith and did not pay policy limits. The jury awarded Christopher a little more than $500,000 for actual bad faith damages to his dwelling, plus $7.5 million in punitive damages. The punitive damages were doubled at trial by the jury for elder abuse because Christopher was 86 years old at the time the truck crashed in to his house.

Attempts to get comment from Residence Mutual were not immediately successful.

Los Angeles Attorney Mark Geragos, who along with Brian Kabateck represented Christopher in the case, said they don't know yet if the case will be appealed. "This insurance company did everything possible to torpedo this World War II veteran's claim," Geragos said in an email. "The jury recognized the need to punish Residence Mutual for their clearly malicious behavior. This should be a message to insurance companies that you never put your interests before the interests of the insured."

Residence Mutual Insurance Co. is a member of the Western Mutual Insurance Group, a group of property/casualty insurance companies which includes Western Mutual Insurance Co. and Arizona Home Insurance Co. It has a current Best's Financial Strength Rating of A (Excellent).

The top five writers of homeowner's multiperil insurance in California are State Farm Group, with 22.02%; Farmers Insurance Group, with 16.98%; Allstate Insurance Group, with 9.24%; California State Auto Group, with 6.45%; and Liberty Mutual Insurance Cos., with 5.10%.

(By David Hodes, associate editor, BestWeek: David. [email protected])