Plaintiffs’ home was damaged by a fire. Based on the fire damage and mold, it was determined that the entire dwelling should be gutted. Plaintiffs rejected the insurance company’s (Defendant) offer of $575,000 and demanded an appraisal which estimated the cost at over $1 million.

A referee determined the cost to be $832,982, which the Defendant agreed to pay. Plaintiffs were forced toremain out of theirhome for 18 months due to the settlement delay and a consequent delay in construction. Under the their insurance policy, Plaintiffs were entitled to additional living expense for a maximum of 12 months which Defendant refused to extend.

Plaintiffs sued for reimbursement of their expenses covered under their insurance policy and forconsequential damages for theDefendant’s bad-faith delay in settling their claim.

While New York does not recognize an independent tort claim for an insurer’s failure to perform its contractual obligations, if an insurer breached its duty to settle claims in good faith, consequential damages for breach may be recovered not limited by the amount specified in the insurance policy.

The Supreme Court, Westchester County, New York ruled that Plaintiffs suffered damages because of delays in reconstruction due to Defendant’s bad faith. Therefore, Defendant was liable for Plaintiffs’ additional living expenses in excess of 12 months and the costs of the mold inspection and appraisal.