Bad Faith Blog

Salvati’s husband died as a result of a work injury. Ms. Salvati sued several parties she believed responsible for her husband’s death. The parties in the underlying action and their primary carrier agreed at mediation to a $6,000,000 settlement. The primary carrier tendered its $1,000,000 in coverage, but the excess carrier (American Insurance Company (AIC) refused to pay. The case against AIC asserted breach of contract, declaratory judgment, Massachusetts Consumer Protection violation, unfair and deceptive acts in insurance, and professional negligence for failure to settle the claims. 

Summary: In this bad faith action the issue on appeal was whether the insurer lacked “a reasonable basis in law or fact for denying the claim” which is one of the three elements that a plaintiff must allege to maintain a bad faith claim under Kentucky law.