Lipscomb University Bad Faith Report Example

Web Version of Bad Faith Claims Handling Report

Report Details

• Date: May 15, 2026
• Addressees: Timothy W. Burns and Nathan M. Kuenzi, Burns | Bair LLP, Madison, Wisconsin
• Matter: Lipscomb University v. The Travelers Indemnity Company
• Court: United States District Court for the Middle District of Tennessee, Nashville Division
• Case No.: 3:25-cv-00230
• Category: Bad faith report example
• Report Type: Expert report concerning insurance industry standards and claims handling

Engagement Summary

JSA was retained by Burns Bair LLP on behalf of plaintiff Lipscomb University to give expert opinions regarding The Travelers Indemnity Company, insurance industry standards, and claims handling in the matter.

The report states that discovery was not complete at the time of the report and reserves the right to change, amend, supplement, or modify the opinions based on additional information.

The report's central opinion is that, by the summer of 2021, Travelers' conduct constituted a dramatic departure from industry standards for proper claims handling in a number of areas and forced Lipscomb to incur substantial additional costs.

Methodology

The report states that the methodology used to determine whether Travelers met the industry standard is the same methodology Jim used at Fireman's Fund when reviewing claims files and the same methodology he uses when reviewing claims files on behalf of insureds or insurance companies.

The methodology includes review of documents such as the insurance policy, depositions, claims notes, emails, internal memoranda, proof of loss, and supporting documents where appropriate. The standard applied is whether the insurance carrier acted reasonably.

Background of Claim

The report states that numerous properties owned or controlled by Lipscomb were damaged by a March 25, 2021 hailstorm. The damage was described as severe and wide-ranging, affecting structures, windows, roofs, electrical and gas connections, HVAC systems, air conditioners, and heaters across 112 properties.

Don Kennedy Roofing performed an initial inspection on March 26, 2021 and a secondary inspection of additional buildings on April 13, 2021. Christopher Scarlett at Phoenix Claims Consulting assisted Don Kennedy as a consultant.

On May 11, 2021, Lipscomb's broker submitted the hail loss claim to Travelers. Travelers sent Envista Forensics and Rimkus Engineering to perform an initial inspection on June 3 and 4, 2021. The report states that Travelers chose to inspect only a small number of damaged buildings even though Travelers' representatives were advised that Phoenix had observed significant damage during a more comprehensive review and that Lipscomb had previously informed Travelers that all buildings on the property schedule would need to be inspected.

The report also states that Travelers was informed during the June 2021 onsite investigation that there was almost certainly subsurface damage to membrane roof systems that would require destructive testing to properly investigate, but denied that such damage had occurred without conducting additional inspections.

Travelers Valuation and Payments

Travelers adjusted Lipscomb's loss at $1,493,396.65, which the report describes as only a fraction of the actual loss. The report states that Travelers' line-item valuations and payments almost uniformly reflected a practice of undervaluing the property damage.

• On July 15, 2021, Travelers paid a $450,000 advance for immediate repairs after receiving Lipscomb estimates of nearly $1.1 million in damages for two buildings.
• On July 23, 2021, Travelers submitted estimates for Crisman, McFarland, and Ward with an RCV of $126,737.80 and ACV of $106,834.57. The Umpire later valued Crisman and McFarland/Ward at a combined $1,201,709.58 RCV and $990,196.67 ACV.
• On August 9, 2021, Travelers submitted HVAC hail damage estimates reflecting RCV of $148,704 and ACV of $69,363. The Lee Company estimate reflected $471,657.50.
• Additional Travelers payments included $95,353.28 on November 16, 2021, $11,830.38 on December 17, 2021, $349,353.19 on July 28, 2022, and $117,183.56 on March 27, 2023.

The report states that, before the appraisal process, Travelers paid $1,493,396.65 compared to Phoenix's estimated damages reflecting an RCV of $8,066,854.35.

Public Adjuster, Proof of Loss, and Appraisal

Lipscomb formally hired Phoenix as a public adjuster on October 21, 2021 to conduct an independent assessment of the damage. Phoenix retained GRK Engineering to conduct an additional inspection, structural analysis, and destructive testing of roofing material.

The report states that Phoenix and GRK ultimately found evidence of more than $8,000,000 in covered property damage to campus buildings and other properties controlled by Lipscomb, much of which had not been discovered by Travelers because of its refusal to acknowledge membrane roof system damage.

Lipscomb invoked the appraisal condition on November 18, 2022. Travelers responded on December 2, 2022 that there was no genuine disagreement because it had paid the undisputed ACV of the loss and had not received monetary demands from Lipscomb for the remaining properties. Lipscomb then sent a proof of claim on January 23, 2023, updated on February 2, 2023, reflecting RCV of $7,966,835.54.

On April 10, 2023, Lipscomb again invoked appraisal based on what the report quotes as the large discrepancy between Lipscomb's RCV of $8,068,854.35 and Travelers' RCV of $1,888,036.22. An appraisal panel was convened with Luke Bowman as Umpire, Toby Johnson as Lipscomb's appraiser, and Mike Whitford as Travelers' appraiser.

In March 2024, nearly three years after the hail damage, the appraisal panel inspected more than 50 Lipscomb locations, including approximately 26 new locations that Travelers had previously declined to appraise because it said they had not been inspected.

Appraisal Award

The report states that the Appraisal Panel found in favor of Lipscomb and issued a Final Umpire Appraisal Award on June 10, 2024, later amended on August 12, 2024. The award reflected damages more than ten times Travelers' prior valuation.

• Travelers' payments before appraisal award: $1,493,396.65
• Lipscomb's proof of loss value: $7,966,835.54
• Lipscomb's updated proof of loss value: $22,506,024.87
• Final valuation (ACV): $16,167,881.46
• Final valuation (RCV): $20,051,887.22

After the appraisal award was rendered, Travelers made payments totaling $16,167,881.46. The lawsuit was filed on February 28, 2025.

Findings and Opinions

Based on Jim's experience as an adjuster, supervisor, assistant vice president, and vice president at Fireman's Fund, and his work as an expert for both insurance carriers and policyholders, the report states that Travelers failed to meet the industry standard for proper claims handling in a number of areas.

• Travelers failed to conduct a full, fair, thorough, and reasonable investigation.
• Travelers failed to conduct a prompt investigation.
• Travelers failed to give equal consideration to the insured's interest.
• Travelers failed to look for ways to provide coverage.
• Travelers looked for ways to deny coverage.
• As a natural result of failing to conduct a full, fair, and thorough investigation, Travelers failed to document that one had occurred.

Reasonable Investigation

The report states that Travelers failed to perform a full, fair, thorough, and reasonable investigation by refusing to value over 21 new locations damaged by the hailstorm and by refusing to acknowledge an entire category of roof damages.

According to the report, many of the new locations were on-campus buildings close to other buildings where Rimkus reported damage, and Lipscomb instructed Travelers on several occasions to inspect all properties on campus. The report states that Travelers inspected only 83 out of roughly 185 locations on Lipscomb's Statement of Values, then ended its inspection and demanded that Lipscomb identify the exact additional locations to inspect.

The report also states that Travelers refused to acknowledge membrane roof system damage even though Phoenix and GRK found evidence of more than $8,000,000 in covered property damage and even though Travelers was informed that subsurface membrane roof damage would require destructive testing.

Prompt Investigation

The report states that Travelers failed to perform a prompt investigation. Lipscomb attempted to schedule inspection of all campus properties soon after notice of the claim, informed Travelers that all properties would need to be inspected, and provided information needed to investigate, including a campus map. Travelers nevertheless elected to inspect only a limited number of properties in the initial June 2021 inspection.

The report states that Travelers' refusal to continue its inspection meant that Travelers did not fully inspect 21 properties until March 2024, over three years after the initial claim. The report contrasts this with a comparable nearby hail investigation at Belmont University that was described as concluding within six weeks after a comprehensive campus inspection.

Undervaluation and Additional Costs

The report states that Travelers' failure to perform a reasonable, prompt investigation caused it to systematically undervalue Lipscomb's damages. It notes that Travelers valued the claim at $1,493,396.65, less than 20% of Lipscomb's pre-appraisal estimated damages and less than 10% of the total RCV awarded by the Umpire.

The report further states that Travelers' conduct forced Lipscomb to hire Phoenix and GRK, prepare its own estimates, prepare a proof of loss after the claim had been filed, invoke the appraisal condition twice, and incur substantial appraisal-related and consultant costs.

Conclusion

The report concludes that, based on the reviewed documents and Jim's experience as an adjuster, supervisor, vice president, consultant, and expert, Travelers failed to meet the industry standard. The opinions are based on currently available documents and information and may be supplemented based on later information provided.

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