Pioneer State compelled to pay mold loss after mismanaging claims procedure
Barbara Pearson's cottage in Iosco County was damaged when a pipe broke and the furnace malfunctioned. She alleged that the insurer re-started the furnace without adequately addressing the leaked water, resulting in a pervasive mold problem. The insurer was not satisfied with the Proof of Loss Pearson filed and demanded supplemental proofs. When those were provided it demanded a supplemental, signed proof of loss. When that was filed, Pioneer's counsel refused to authorize a settlement of the claim because the [amended] Proof of Loss was not "timely" filed (within 60 days). Pearson sued, and ultimately the Court of Appeals upheld her claim, although the judges' reasoning differed. Two judges deemed the insurer at fault in failing to adequately document to Pearson the deficiencies in her original Proof of Loss and supporting data. The third judge concluded that regardless of Pioneer's conduct, the insured had "substantially complied" with the policy terms, rendering her claim enforceable.