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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
February 26, 2018

Kentucky High Court Upholds Bad Faith Determination Despite Reservation of Rights Defense and Filing Declaratory Judgment

James Demetre carried liability insurance on his vacant lot, which was previously a gas station. Demetre was notified that a family occupying a nearby residence was bringing environmental claims against him stemming from the alleged migration of petroleum from his property. Indiana Insurance Company provided a defense under a reservation of rights, sought declaratory judgment on its coverage dispute, and ultimately indemnified Demetre in relation to the final settlement. Nevertheless, Demetre sued Indiana Insurance for bad faith breach of his insurance contract. These claims went to trial and Demetre was awarded $925,000 in emotional distress damages and $2.5 million in punitive damages. The resultant question is: how is such a result possible?

Bad Faith Blog
June 11, 2015

Kentucky Would Reject Reverse Bad Faith Sixth Circuit Predicts

Summary: State Auto sued Hargis contending she intentionally set fire to her house. She counterclaimed with common law and statutory bad faith claims. State Auto thereafter amended its Complaint alleging damages for insurance fraud as well as a common law claim for reverse bad faith. The district court granted Summary Judgment allowing the insurance fraud claim, but denied the claim for reverse bad faith. The Sixth Circuit affirmed that ruling predicting Kentucky would not recognize a common law tort claim for reverse bad faith.

Bad Faith Blog
May 5, 2015

Providing a Defense and Filing a DJ Approved

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.