Insurance Company Claims Delays Hurt Policy Holders: How a Burned-out Lancaster County Bowling Alley is Being Harmed by a Slow-Pay Insurer

By Dean I Weitzman, Esq. on May 17th, 2012

The owners of a Lancaster County bowling alley paid their property insurance premiums and successfully ran their business in their community for years, even giving special discounted rates for local groups that wanted to put on special event s and fundraisers.

But since a huge fire burned The Garden Spot Bowl in Strasburg to the ground a year ago this month,   their insurance company apparently hasn’t been in a big rush to help the business get back on its feet.

After the fire, the owners vowed to rebuild and come back stronger than ever.

As of this week, though, their insurance company, North Pointe Insurance, still hasn’t paid a full settlement to allow the business to rebuild, according to a story in the Lancaster Intelligencer Journal/New Era newspaper.

The bowling alley’s sign out front was all that remained after the blaze, but instead of reading “Reopening Soon,” the sign reads, “DELAY BY INSURANCE,” according to the paper.

That’s got its owners Don and Cheryl Kercher upset, since they expected to be rebuilding by now.

The insurance company hasn’t avoided paying all of the business’ claims, however, according to the story. “The insurer provided four checks, each for $32,500, to cover operating losses for May, June, July and August,” the paper reported. “In September, it sent $400,000 and notified the owners that it would be the last money until the claim was settled.” That payment went to the bank and is being held in escrow for the mortgage.

Now the business owners and the insurance company are in a stalemate over how much money it will take to rebuild the bowling alley. Originally, the insurance company asked the owners what it would take to rebuild, but they rejected that figure, according to the paper. The insurers later rejected a lower figure and asked the business owners to give an exact accounting of all the equipment in the destroyed building at the time of the fire. That was difficult, of course, because all the records and receipts were burned up in the blaze.

That put the owners behind in their schedule to reopen because they thought the insurance company was working with them to come up with a settlement figure so they had not yet begun creating such a detailed list of property, the story reported.

North Pointe’s parent company, QBE, declined to comment to the newspaper about the case, citing privacy for the business owners.

But that wasn’t the end of the story. Even after the owners submitted lists of what was destroyed, the insurance company continued to ask for receipts to prove that the items had been in the building. Those were the same receipts that were burned in the fire. It was a bowling alley “Catch-22” if there ever was one.

And that’s where things apparently still stand, the owners say.

“We don’t know where to turn,” Don Kercher told the paper. “We really don’t.”

The whole scenario is just not fair, and it’s a tactic used all too frequently by insurance companies in all kinds of cases, from property claims to auto accidents to personal injury cases, says Saul Langsam, a partner with MyPhillyLawyer.

Once fire marshals have investigated a fire and ruled out such factors as arson, insurers should move in to pay claims swiftly so that property owners can get their lives and businesses back together as quickly as possible, Langsam said. “Once arson has been taken out of the equation then there’s absolutely no reason that there should be any delay in the processing of a claim.”

What can happen, though, is that the little guy is basically defenseless and insurance companies often try to hold on to their money as long as possible so that it earns interest and dividends for the companies and their shareholders, Langsam said.

“It almost borders on ‘bad faith’” by insurance companies, when they don’t fulfill their obligations to their policyholders, he said. “Insurance companies have to be mindful of being sued for bad faith, especially if their intention is to drag their feet to avoid paying a claim.”

It’s not a new practice, Langsam said. “That’s just the way of the insurance industry. It’s sad but true. They do what they do best, which is drag their feet. If your payment to them is late, they penalize you, but if they delay they don’t worry about you.”

To fight this, you need to bring in competent and experienced legal help to protect your rights.

“Your lawyer will investigate to determine whether the insurance company has properly completed its own investigation and if there are any alleged delays, can determine whether they are legitimate or of the insurance company’s own doing,” Langsam said. If the delays are unfounded, your lawyer can then send a demand letter by certified mail which makes a demand for the insurance proceeds. Usually that includes a payment deadline or timetable, or else the attorney will proceed with litigation in the courts. That will mean additional interest, costs, and legal fees for the defendant insurance company in pursuing a collection that you never should have been forced to file.”

We hope that The Garden Spot Bowl will soon receive their insurance payouts and finally be able to get their rebuilding project on track.

If you or a loved one is ever involved with an insurance company that is slow to pay your legitimate claims, be sure to talk to a lawyer to move your case forward.

When Winning Matters Most, Call MyPhillyLawyer.