Can My Insurance Company Deny My Claim For Failure to Cooperate With Its Investigation?

Insurance policies impose a duty on insureds to cooperate with the insurer’s investigation of a claim. An insured’s duty to cooperate encompasses the insured’s obligation to appear for an examination under oath (“EUO”), if requested, and to provide documentation verifying the loss. “Cooperation clauses” generally have been held to be material provisions of insurance policies with compliance therewith a condition precedent to coverage.

In order to relieve itself of liability under the insurance policy, the insurer generally must prove more than the cooperation clause was breached. For instance, in my home state of New Jersey, coverage may only be forfeited upon a finding that there was a material and willful breach of the insured’s duty to cooperate with the insurer’s investigation that materially diluted the insurer’s ability to evaluate the claim.¹ Courts interpreting this standard have found that failure of insureds to produce income tax records and corporate books of companies controlled by them at the request of the insurers was a material breach of the policies that precluded coverage on theft and arson claims.

In a recent case,² a New York appeals court held that a lower court improperly dismissed an insured’s claim for breach of the cooperation clause in the policy. In that case, the insured’s personal property was destroyed by a fire at the property. The insurer disclaimed coverage for the insured’s personal property on the ground that the plaintiff failed to adhere to the cooperation clause of the policy. Specifically, the insurer claimed that the insured did not provide it with requested purchase documents to support much of the insured’s claim for lost contents. In response, the insured maintained that he was unable to reconstruct old invoices without knowing the date of purchase of each item. Ultimately, the court found that there was not an unexcused and willful refusal by the insured to comply with the policy’s cooperation clause.

In sum, following a loss, an insured should produce documents in response to specific, material and reasonable requests by insurers or risk forfeiting coverage under the policy. If you believe your claim was improperly denied based upon an alleged failure to cooperate with your insurer following a claim, contact your local Merlin Law Group attorneys.
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¹ DiFrancisco v. Chubb Ins. Co., 283 N.J. Super. 601 (App. Div. 1995).
² Jahinger v. Tri-State Consumer Ins. Co., 2020 WL 7759483 (N.Y.S.3d 2020).