We cover current issues, highlights and best practices exclusively on claims of bad faith and extra contractual damages.
Summary: Allstate insured Valentine and Christina Zagorski’s home suffered a fire loss. Allstate’s Special Investigation Unit (SIU) assisted with the investigation of what was ultimately concluded to be an arson fire. Allstate’s retained counsel took an Examination Under Oath (EUO), and otherwise assisted with the claims handling before the claim was denied. After the denial, the Zagorskis filed suit for breach of contract, fraud, and sought extra-contractual damages for vexatious delay and refusal to pay. During the course of that litigation Allstate was ordered to disclose information through discovery, it refused, its attorney was held in civil contempt, and the matter was appealed to the Appellate Court, which then ruled on the various discovery issues, mostly in the Zagorskis’ favor, but also making some rulings in favor of Allstate. The Court also admonished Allstate’s counsel regarding properly responding to discovery.
Summary: The Hadarys were involved in an automobile accident with Carlos Velez, a rental car driver. Both the Hadarys and Velez had automobile insurance at the time of the accident. Velez declined to purchase the supplemental liability insurance offered by Hertz at the time of the rental, and his insurance policy limit was too low to cover the injuries incurred by the Hadarys. The Hadarys had underinsured motorist coverage through Safeway, but Safeway pointed to an “exhaustion clause” in its policy providing that Hertz had to first exhaust its financial responsibility liability before Safeway would have to pay. The trial court agreed with Safeway, but the appellate court reversed holding that the lower court’s result was against public policy. Furthermore, the trial court found that Safeway did not engage in unreasonable and vexatious conduct. The appellate court affirmed the trial court ruling reasoning that Safeway’s interpretation of its policy was reasonable but wrong because its interpretation contravened public policy.
Summary: Kevin Fox won a $15.5 million jury verdict (including $6.2 million in punitive damages) against Will County detectives. After the verdict, the parties agreed to a settlement in which Fox was assigned any claims the detectives had against the county’s insurance companies. Fox filed this suit seeking a declaratory judgment that AAIC, the insurer, had breached its duty to defend the detectives in the earlier suit. The suit also included two breach of good faith duty claims: (1) failure to reasonably settle the claims within policy limits, and (2) failure to inform the detectives of conflicts of interest created by joint representation and Fox’s punitive damages claim. The Seventh Circuit affirmed the judgment of the district court and determined that no good faith duties were breached.
A $1.275 Million Ouch? What Can Happen When an Omnibus Insured Slips Through the Fingers of Allstate’s Good Hands
Summary: Hamiti borrowed Skenderi’s truck and hit motorcyclist Kirk resulting in a leg amputation. Allstate, Skenderi’s insurer, failed to obtain a release for Hamiti when it settled on behalf of Skenderi for Allstate’s policy limits. The Appellate Court in Illinois reversed and remanded the trial court’s award of partial summary judgment in favor of Allstate.