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Bad Faith Blog

We cover current issues, highlights and best practices exclusively on claims of bad faith and extra contractual damages.

Bad Faith Blog
October 22, 2019

Seventh Circuit finds a “mere possibility of liability” against an insured is insufficient for an insurer’s duty to settle to arise under Illinois law.

The Seventh Circuit Court of Appeals concluded the mere possibility of liability against an insured is insufficient for an insurer’s duty to settle to arise under Illinois law.

American Physicians Assurance Corporation, Inc. and American Physicians Capital, Inc. (“APA”) issued a medical malpractice insurance policy to Surgery Center at 900 North Michigan Avenue, LLC (“Surgery Center”) with a $1 million limit of liability. APA defended Surgery Center for medical malpractice claims brought against it by Gwendolyn Tate for complications resulting from a surgery performed by Dr. Harrith Hasson at the Surgery Center. Dr. Hasson was an outside physician with privileges at Surgery Center but not its employee.

Bad Faith Blog
June 3, 2018

New Missouri Interpleader Law Caps Insurer Exposure for Multiple Claims

On June 1, 2018, legislation affording new protections to insurers when interpleading policy limits was enacted. The legislation, known as HB 1531, amends R.S.Mo. § 507.060, which governs the joinder of parties in an interpleader action. Specifically, the amendment modifies existing language with insurance-specific terminology and adds five additional subsections with definitions, procedural mechanisms for interpleader, and rights and limitations of an interpleading insurer.

Bad Faith Blog
November 19, 2017

Insurer’s Conduct Created Issues of Fact as to Non-Party’s Right to Bring Bad Faith Claim

The Oklahoma Supreme Court held that whether a property owner under a contract for deed is owed a duty of good faith and fair dealing by an insurer of previous owner’s insurance policy is a question of fact. Hensley v. State Farm Fire and Casualty Company, 398 P.3d 11 (Ok. 2017) State Farm Fire and Casualty Company (“State Farm”) issued a homeowners policy to named insured Kenneth Hensley and his wife (“Hensleys”).

Bad Faith Blog
November 12, 2017

Insurer’s Conduct in Investigating and Settling Claim against Insured Did Not Constitute Bad Faith

The West Virginia Supreme Court of Appeals found an insurer, who defended and settled claims brought by downhill homeowners against its insured, a residential construction company, was not liable for first party common law bad faith or statutory bad faith as a matter of law. State ex rel. State Auto Property Insurance Companies v. Stucky, -- S.E.2d -- , No. 17-0257, 2017 WL 4582607 (W.Va. Ct. Oct. 10, 2017) State Auto Property Insurance Companies (“State Auto”) issued a CGL policy to its insured, CMD Plus, Inc. (“CMD”), a residential construction company, with $1 million in policy limits. CMD contracted to build a custom home on a parcel of property uphill from and adjacent to property owned by Barry and Ann Evans (“Plaintiffs”).

Bad Faith Blog
March 19, 2017

As Luck Would Have It: Evidence Insured Would Reject a Settlement Offer Excused Insurer from Notifying Insured of Such Offer

If a tree falls in the woods, and no one is around to hear it, does it still make a sound? If a claimant offers a settlement, and the insured would have rejected it had she known of the offer, is it bad faith? The Ninth Circuit said no. Rejecting a settlement without contacting the insured is never wise, but if evidence shows the insured would have rejected such an offer, a valid bad faith claim may not exist for lack of injury.