The case is Horak v. Nationwide Insurance Company, 2007 WL 2119861 (Ohio App. 9 Dist.).

In 1984, the Horaks built a house for $120,000.00. The house was damaged by a fire. A homeowner policy provided dwelling coverage of $132,000.00. Nationwide's policy provided: “If the amount actually and necessarily spent to repair or replace the dwelling is more than Coverage A, we will pay up to a maximum of an additional 20% of Coverage A for the additional costs…“ The Horaks were paid $160,622.40 for the dwelling; $74,818.87 for the contents; $56,177.50 for additional living expenses; and $11,542.60 for demolition and landscaping.

The Horaks alleged that Nationwide failed to completely pay claims, or failed to act in good faith and fair dealing in the handling and payment of the claims. Nationwide filed a motion for summary judgment which was granted.

On appeal, the insureds argued that a fiduciary relationship existed with their agent, and that it was breached. The court noted that a fiduciary relationship can arise when both parties understand that a special trust or confidence has been reposed. However, a fiduciary relationship must be mutual. The insureds failed to present any facts showing a genuine issue of material fact with respect to whether the agent owed them a fiduciary duty. The issue then became whether the agent was negligent.

The court found that the insurance agent has a duty to exercise good faith and reasonable diligence in obtaining insurance for his customers. The insured has a corresponding duty to examine the policy, know the extent of its coverage, and notify the agent if coverage is inadequate.“ An agent or broker is not liable when a customer's loss is due to the customer's own act or omission.“

The Horaks further argued that the agent failed to carry out his duties under the “valued policy statute.” The court noted that statute “creates a duty on the part of an insurance agent to inspect property and assign an insurable value at the time coverage is sold. It prevents insurers from over-insuring property and then paying less than the policy limit in a total loss.“ Crawford testified that he checked square footage and for additions and additional hazards. So, the court found no ongoing duty to ensure that the value of the property had not changed. The Horaks were paid the full amount of their coverage, so the purpose of the statute was satisfied. That argument was overruled.

The Horaks also contended that the trial court erred in granting summary judgment to Nationwide on their bad faith claim. The Ohio Supreme Court has determined that an insurer “fails to exercise good faith in processing a claim… where its refusal to pay … is not predicated upon circumstances that furnish reasonable justification therefore.” The court found that the fire occurred on May 17, 2000, the agent and company adjusters arrived the next day and Horak received a check for $10,000.00 at that time. On June 2, 2000 a check for $142,582.00 was issued followed by another for $62,482.87. By mid-August, 2000 the Horaks had received more than $200,000.00.

The fact that the Horaks were mistaken as to the amount of coverage available does not entitle them to additional coverage nor does it indicate that the company acted in bad faith in refusing to pay. The trial court noted, “Nationwide complied with the terms and conditions of the policy, acted expeditiously in the settlement, and it did not breach any terms of the policy.” All of the insured's arguments were overruled and the judgment of Summit County Court of Common Pleas was affirmed.