Homeowner claims guide · September 2026

What "Bad Faith" Actually Means for Your Claim

Short answer: possibly. On September 10, 2026, the Court of Appeals of Indiana ruled that when an insurer tells homeowners not to repair without approval — then takes 18 months to grant it — a jury should decide whether those delays excuse the homeowners from missing their policy's rebuild deadline.

This guide was sparked by reporting from Insurance Business on the September 10, 2026 decision. This site is independent and not affiliated with any insurer.

What happened in the case

In June 2019, tornado winds dropped a large tree on an Indiana couple's home. Their homeowners policy carried a $451,400 dwelling limit plus a replacement-cost endorsement — extra coverage (up to 150%) meant to cover the true cost of rebuilding, not just the home's cash value at the time of the loss.

Nationwide's first estimate was $226,447.19 and excluded the foundation. An appraisal panel later set the replacement cost at $557,106.51 — about $330,000 higher. The couple was also owed $16,777.40 tied to the replacement-cost endorsement, which Nationwide withheld. It eventually paid $12,780.46 in inflation protection in May 2023, more than two years late.

Meanwhile, the couple had been told not to repair without the insurer's approval. Approval for the foundation work took 18 months. The demolition payment arrived three days past the deadline, a requested six-month extension was denied, and the couple never rebuilt — missing the policy's two-year rebuild clock, the window most replacement-cost endorsements give you to finish the work before the extra coverage lapses.

How the court split the decision

The appeals court didn't hand either side a clean win. It sided with Nationwide on three points: the low first estimate, the three-day-late demolition payment, and the late inflation payment were not material breaches once corrected.

But it sided with the homeowners on the questions that mattered most:

• Unclear policy language. The court found the policy didn't make it clear when the $16,777.40 was owed. Nationwide's own adjuster couldn't identify a reason it hadn't been paid.
• Whose delay was it? There were genuine disputes over whether the insurer's own conduct — the instruction not to repair, the 18-month approval delay, and fewer than 90 days left to demolish and rebuild during pandemic-era shortages — excused the couple from the two-year deadline.

The bad-faith claim, including the possibility of punitive damages, was revived, and the case goes back to the trial court.

What this means for you (in plain terms)

Your policy is a two-way street. It sets deadlines for you — but your insurer's instructions and delays can become part of the record too. This ruling says a jury can consider whether an insurer that controls the pace of repairs can then penalize you for missing the finish line it helped delay.

That said, courts decide these cases on their specific facts. This couple's situation was unusual: documented instructions not to repair, an 18-month approval gap, and a rebuilding window compressed by a pandemic. Your policy language, your state, and your facts will differ.

Your paperwork checklist

If your home is damaged and you're heading into repairs with an insurer, these habits protect you regardless of how any case turns out:

1. Get insurer instructions in writing. If you're told not to repair without approval, ask for that in an email or letter — not just a phone call.
2. Keep a dated log of every approval delay. Note the date you submitted each request and the date approval arrived. Gaps are what courts look at.
3. Know your policy's rebuild deadline. Find the replacement-cost section of your policy and mark the completion deadline on a calendar — most give you about two years.
4. Ask about extensions in writing, before the clock runs out. If delays are stacking up, request an extension while there's still time on the deadline, and keep a copy.

FAQs

What is a replacement-cost endorsement?

It's an add-on to your homeowners policy that pays the actual cost of rebuilding your home to its prior condition — which can be much higher than the home's depreciated value. It usually comes with a completion deadline: finish the rebuild within the stated window (often two years) or lose the extra coverage.

What is the "two-year rebuild clock"?

The countdown in most replacement-cost endorsements. Once your loss occurs, you typically have two years to complete the repairs or rebuild. Miss it, and the insurer can pay only the lower, depreciated value instead of full replacement cost.

Does this ruling mean my insurer can't enforce its deadlines?

No. The court didn't throw out rebuild deadlines — it said a jury should decide whether this insurer's own delays excused this couple's missed deadline. Deadlines still matter, and courts will still enforce them in ordinary cases.

What should I do if my claim is already delayed?

Document everything now: every instruction, every request, every waiting period, in writing. Then speak with a licensed attorney in your state who handles insurance claims — they can tell you how your policy language and your state's law apply to your situation.

This article is for general information only and is not legal advice. Insurance policies and state laws vary. For guidance about your specific situation, consult a licensed attorney in your state.