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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
June 17, 2019

Colorado Supreme Court Holds Insurers Must Evaluate and Pay Each Separate UM/UIM Component or Risk-Prompt Payment Penalties

The Supreme Court of Colorado, interpreting the state’s prompt-payment statute which provides that an insurer “shall not unreasonably delay or deny payment of a claim for benefits owed to or on behalf of any first-party [insured] claimant,” held that an insurer violated the statute when it withheld payment for undisputed medical expenses on the basis of the presence of separate disputed payments. 

Bad Faith Blog
May 6, 2018

Claim Professionals Beware: Adjusters Can Be Held Liable In Their Individual Capacity For Bad Faith In Washington State

Insured motorist who was injured in an accident with an at-fault motorcyclist brought action against the automobile insurer’s adjuster who handled the claim for bad faith and violation of the Consumer Protection Act. After the trial court dismissed the action and certified it for appellate review, the Court of Appeals held the duty of good faith imposed on “all persons” involved in insurance applies equally to individuals acting as insurance adjusters. Also, the appellate court held individual insurance adjusters can be liable for a violation of the Consumer Protection Act, even if no contractual relationship exists with the individual insured.

Bad Faith Blog
June 25, 2017

No Independent Cause of Action for Stand Alone Regulatory Violations of Washington’s Insurance Fair Conduct Act

Perez-Crisantos sustained injuries resulting in more than $50,000 in medical bills. After settling with the underinsured motorist (UIM) and collecting $10,000 in medical expenses and $400 in lost wages under the PIP coverage from State Farm, his insurer, he sought additional funds from State Farm, claims which eventually went to arbitration. The arbitrator largely ruled in favor of Perez-Crisantos who then filed claims for bad faith, negligence, violation of Washington’s Consumer Protection Act (CPA), and violation of IFCA. After a reduction for the sums already paid, there was a net UIM award of $24,000. Perez-Crisantos’s “IFCA claim [was] based on the violation of IFCA regulations relating to unfair settlement practices[,]” contending “that State Farm forced him to litigate in order to get payments that were due to him.” The trial court granted State Farm’s motion for summary judgment after concluding there was no “scintilla of evidence” that State Farm’s actions were “unreasonable and there must have been some ulterior motive” for them, such as “some sort of incentive program to ‘lowball claims.’” On direct appeal to the Supreme Court of Washington, the court affirmed.

Bad Faith Blog
May 9, 2017

Wisconsin Insurer’s Thorough, Adequate, and Timely Investigation and Proper Settlement Negotiation Tactics Bar Bad Faith and Statutory Pre-Judgment Interest Claims

Elizabeth Baires was in a car accident with an underinsured driver while insured by State Farm. After State Farm consented to settling with the underinsured motorist for its $100,000 limits, plaintiff and her husband demanded that State Farm settle her claims for the $200,000 UIM stacked limits. State Farm refused her demand, leading to plaintiff and her husband filing suit for breach of contract, loss of consortium, and bad faith refusal to pay plaintiff’s claim. Thereafter, the federal district court granted State Farm’s motion for partial summary judgment on the bad faith claim.

Bad Faith Blog
April 9, 2017

Pennsylvania Requires Clear and Convincing Evidence of Bad Faith

State Farm provided automobile insurance to Barry and Kimberly Shaffer which provided medical payments and UIM coverage. Barry was involved in a head-on collision which resulted in multiple serious injuries to his neck, back, eyes, and knees. At that time, Barry was on Social Security and military disability for several physical ailments. Shaffer underwent back surgery and six months later asked State Farm to assign a UIM adjuster. The Shaffers settled their liability claim with the adverse driver for roughly $28,000 below that driver’s liability limit. After a $250,000 UIM settlement demand was met with a $10,000 settlement offer, the Shaffers filed suit more than four years after the accident. The District Court granted State Farm’s motion for summary judgment on the bad faith claim and thereafter the UIM breach of contract claim was tried, which resulted in a $250,000 award in favor of the Shaffers. The Shaffers appealed the bad faith summary judgment, which was affirmed by the Third Circuit.