Insurers Should Not Ignore Facts They Don’t Like

Suppose your house burns down.  You have thoughtfully obtained homeowners’ coverage from a reputable insurance company (at least in part because your mortgage lender requires you to do so.) You submit your claim to the insurer describing the facts of the fire, which you say occurred due to an electrical short while you were out of town.  The insurance company investigates and, relying on the fire marshal’s report finding the fire to be consistent with arson, denies your claim. You submit your own report that includes facts contradicting the finding of possible arson. The insurance company denies the claim in reliance on the arson finding and your mortgage company forecloses on your property because you have not been able to keep up with your monthly payments. You sue the insurance company for breach of contract.  Can you also claim that the insurer acted in bad faith, opening the possibility of attorneys’ fees and punitive damages?

A recent federal court decision out of Mississippi says yes.  The court denied a motion to dismiss the bad faith claim, due in part to the insurer allegedly ignoring facts that did not support the denial of coverage. The court noted the bad faith standard in Mississippi that the insurer must have “lacked an arguable or legitimate basis for  denying  the  claim,  or  that  [it]  committed  a  willful  or  malicious  wrong,  or  acted  with  gross and reckless disregard of [plaintiff’s] rights.”  In allegedly relying solely on its own expert report and ignoring contradictory facts supplied by the insured, the court found the insurer to have provided a sufficient basis to support the bad faith claim.

In particular, the court relied on precedential cases finding that where “the plaintiff presented evidence to the insurer that contradicted [the insurer’s] stated basis for denial and the insurer ignored such evidence, choosing to rely on its own experts reports and opinions, …the facts as alleged contradicted the insurer’s stated basis for denial and sufficiently provided a factual basis for the bad faith claim.”

Of course, this was only a determination that the plaintiff pleaded a cause of action that withstood a motion to dismiss—she  must still prove her allegations in order to recover. But the decision stands as a cautionary tale—insurance companies must give their insureds a fair shake and cannot simply ignore the facts that are consistent with a finding of coverage.

The case is Jonika K. Nelson & Trustmark Bank v. Allstate Vehicle & Property Insurance Company, No. 4:26-cv-17-RPC-DAS (USDC ND Miss ( (8/25/2026)