Summary: Boesel brought action against State Farm claiming bad faith when the insurer denied his claim for coverage. The District Court granted summary judgment finding Boesel failed to raise a genuine issue of material fact. The Ninth Circuit Court of Appeals affirmed.
Boesel, a State Farm insured, claimed losses for the theft of two jade carvings. The insurance policy had both a concealment or misrepresentation exclusion and a cooperation requirement. If Boesel intentionally concealed or misrepresented a material fact, before or after a loss, the policy was void. Additionally, the policy required Boesel to cooperate with State Farm in investigating the claimed loss. The record demonstrated that Boesel concealed a report showing the carvings were worth substantially less than originally indicated. In addition, he failed to provide State Farm with necessary information during the course of its investigation.
In Arizona, to establish a breach of the duty of good faith two things must be shown: (1) the insurer acted unreasonably in investigating, evaluation, or processing of the claim, and (2) the insurer either knew or was conscious of the fact that it acted unreasonably. So long as there is a legitimate question of coverage, the denial of a claim, without more, does not give rise to a bad faith claim. Here, Boesel’s violation of two insurance policy provisions demonstrated a legitimate question of coverage. Since Boesel failed to allege any other unreasonable conduct, summary judgment was properly granted.