Lax Claims Handling Basis for Award of Emotional Distress and Punitive Damages

In K.N.T. v. American Family Mutual Insurance Company, 2015 Iowa App. LEXIS 576 (Iowa Ct. App. July 9, 2015), the Iowa Appellate Court addressed emotional distress arising out of the claims process and whether lax claims handling warranted awarding punitive damages.

Eleven-year-old K.N.T. was involved in a serious accident as a passenger in an all-terrain vehicle. She was in the hospital for twenty-three days and incurred approximately $250,000 in hospital expenses. K.N.T.’s mother filed an uninsured motorist claim.

A claims manager reviewed the claim …

Continue Reading

Eighth Circuit Confirms Focus on Global Settlement is Not Bad Faith

In Purscell v. Tico Insurance Co., the U.S. Court of Appeals for the Eighth Circuit affirmed summary judgment in favor of the insurer on a bad faith claim. The insured sued his motor vehicle carrier for alleged bad faith failure to settle third-party claims made against him following an automobile collision. The court held that the insurer did not breach the duty to act in good faith.

The case involved claims from multiple parties – two people who were injured and one who was …

Continue Reading

Presumption of No Bad Faith Upheld Where District Court Interpreted Exclusion Like the Insurer

In Global Management Enterprise, L.L.C. v. Commerce & Industry Insurance Co., the insurer provided workers’ compensation coverage to the plaintiff-employer. 2015 U.S. App. LEXIS 9179, *3 (5th Cir. June 2, 2015). The policy excluded employees eligible for benefits under the Longshore and Harbor Workers’ Compensation Act (LHWCA), but, by endorsement, the policy extended to “street cleaning.” An employee injured while cleaning a beach sought to recover benefits. The insurer originally disclaimed based on the LHWCA exclusion and later denied that the employee was covered …

Continue Reading

Bad-Faith is a One-Way Street in Kentucky, Sixth Circuit Holds

In State Auto Property & Casualty Insurance Co. v. Hargis, 2015 U.S. App. LEXIS 7475 (6th Cir., May 6, 2015) the United States Court of Appeals for the Sixth Circuit, interpreting Kentucky law, refused to recognize an insurer’s reverse bad faith claim against a policyholder that intentionally set fire to the insured property in order to collect insurance proceeds. The insurer brought a declaratory action to declare the policy void. The policyholder asserted counterclaims for bad faith.

The policyholder filed an $866,000 claim under her …

Continue Reading

No Bad Faith Where Insurer’s Valuation of Claimant’s Injuries is in the Ballpark

In Hicks v. Progressive Casualty Insurance Co., 2015 U.S. Dist. LEXIS 71985 (C.D. Cal. June 1, 2015), the district court held that Progressive did not breach the implied covenant of good faith and fair dealing through its investigation of, and subsequent dispute of, plaintiff Chris Hicks’ damages in an arbitration of Hicks’ underinsured motorist claim.

Hicks was a passenger in an automobile driven by his mother and insured by Progressive when, on August 12, 2006, the automobile was involved in an accident with a …

Continue Reading

Exceptional Circumstances are Required for Relief in a Claim for Bad Faith

In a favorable decision to insurers on the issue of bad faith, the New York Northern District was recently called upon to determine whether an insured under a Homeowner’s policy had stated a viable cause of action. In Ripka v. Safeco Ins., 2015 U.S. Dist. LEXIS 67595 (N.D.N.Y May 26, 2015), the District Court made it clear that New York courts will not, except in very limited circumstances, award tort and punitive damages in addition to contract damages against insurers who deny claims.

Following …

Continue Reading

State-Created Insurance Entity Exempt from Florida’s First-Party Bad Faith Statute

In Citizens Property Insurance Corp. v. Perdido Sun Condominium Ass’n, the Florida Supreme Court was asked to decide “whether the Florida Legislature intended … [for] a state-created entity that provided property insurance to be liable for statutory first-party bad faith claims as an exception to its statutory immunity from suit.” After prevailing in a breach of contract action against Citizens, Perdido Sun sued Citizens for bad faith under Florida’s Section 624.155(1). Citizens sought to dismiss the bad faith complaint based upon its statutory immunity. …

Continue Reading

Louisiana Supreme Court Expands Failure to Settle and Misrepresentation Claims Against Insurers

In Kelly v. State Farm Fire & Casualty Co., 2015 La. LEXIS 697 (La. May 5, 2015), the Louisiana Supreme Court answered two critical questions regarding an insurer’s claim handling responsibilities. First, the court held that an insurer can be found liable for bad faith failure to settle, notwithstanding that the insurer never received a firm settlement offer. Second, the court held that an insurer can be found liable for misrepresenting or failing to disclose facts that are not related to the insurance policy’s …

Continue Reading

Trial Court Judge Erred in Requiring Insurer to Produce Claim Files in Bad Faith Lawsuit

The South Dakota Supreme Court found that an insurer did not waive its attorney-client privilege and, thus, was not required to produce 200 unredacted workers’ compensation claim files in a bad faith lawsuit. The Supreme Court found that the trial court judge erred in allowing the evidence in by not conducting an in camera inspection of the files before finding that the insurer had implicitly waived its attorney-client privilege regard its claim files.

This case involved a policyholder that sued his employer and the workers’ …

Continue Reading

Policyholder’s Breach of Insurer Consent To Settle Clause Precludes Bad Faith Claim

In Piedmont Office Realty Trust, Inc. v. XL Specialty Insurance Co., 2015 WL 1773620 (Ga. Apr. 20, 2015), XL had provided Piedmont an excess policy with limits of $10 million excess of $10 million. The policy provided that XL will only pay for a “loss” that the policyholder became “legally obligated to pay.” The policy required the insurer’s consent to settle a claim, although it stated that the insurer would not unreasonably withhold consent. Further, the policy contained a provision prohibiting actions against XL …

Continue Reading